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Posts Tagged ‘Salary’

I was in L.A. last week driving down part of Route 66 towards the Santa Monica pier and through Beverly Hills enjoying the nice California  weather.

There were more yet-to-be licensed Benzes, Ferraris and Porsches over a three-mile stretch than I’ve seen in the past year.  And here I was in an ultra-cool Nissan Cube rental, arm out the window and for a few blocks co-mingling with the rich and famous.

Speaking of… did you read that the Harley-Davidson president and CEO, Keith Wandell, opted not to have his base salary increased in 2011, according to a proxy statement filed with the U.S. Securities and Exchange Commission.

On the surface this – “we’re all in it together” – grand gesture would make a person believe that a CEO who accepts a ZERO increase in salary is saying they’re a team player who wants to make a sacrifice for the good of the company.  After all wasn’t it Harley-Davidson management that laid-off hundreds of workers, closed plants and obtained impressive union concessions in a new multi-tiered workforce structure for the survival of the company?

Call me cynical, but when I hear about these it seems more like “camouflage” to deflect scrutiny off the extraordinary set of CEO benefits or at minimum to get publicity and produce significant positive short-term market reaction.

In fact, there are a number of reports which suggest these type of salary tactics are nothing but a ruse or smokescreen as a number of CEOs have adopted these pay schemes.  It’s the kind of opportunistic behavior from those wealthier, more confident, influential CEO’s rather than sacrificial acts they are ‘projected’ out to be.

I certainly don’t know if or what Mr. Wandell’s intent was, but we do know his total compensation in 2011 rose nearly 13% to about $7.2 million, compared with $6.4 million in 2010.  We also know the motor company paid Mr. Wandell a bonus of $365,639 in 2011.  He also received a base salary of $975,037 in 2011, equal to his salary in 2010.

And to be clear this post isn’t about wealth envy or whining about how it must be nice to be rich.  We all know that rich people and bankers are beating the system.  They’re writing off multi-thousand dollar meals with rare wines at places with unlisted phone numbers that you/I can’t get into.  Unless you just woke up in North Korea, then you know that in America, if you don’t like what you earn, where you work or what you do for a living then you’re entitled to leave (quit) and go start a company, further your education or do whatever the hell you want.  It’s clear that company’s exist to make a profit for their shareholders and if the shareholders don’t like what the CEO is doing, or earning then they can fire the board of directors to include the CEO.

But wait there’s even more.  Mr. Wandell received total cash bonus payments, both discretionary and performance-based, totaling more than $2.8 million in 2011, compared with cash bonus payments of about $2.3 million in 2010.  His stock awards were valued at $1.5 million, compared with $1.4 million in 2010, while his option awards were valued at $1.7 million, compared with $1.6 million the previous year.  He also received “other” compensation totaling about $175,000 in 2011, compared with about $84,000 in 2010. The payments included $29,600 in lieu of receiving certain perquisites and personal benefits, nonqualified deferred compensation plan contributions of $68,466, 401(k) plan contributions of $31,850, and life insurance premiums of $13,727. He also received additional benefits that totaled $25,478 consisting of financial planning services, personal use of company aircraft and clothing.

What’s the punch line?

Well given that Mr. Wandell has made things happen, meaning that as “Head Honcho” he made moves that H-D insiders historically shied away from.  He played hardball with dealers, shed crappy brands, cut labor contracts, made major job cuts and closed plants. Some folks were let go just prior to Christmas, but unfazed he continued to trim the fat and raised cash by selling some old investments, like Harley’s semi-secret test track in the Everglades.  He also challenged Harley’s own traditional norms by altering its marketing strategy to attract non-traditional segments, like women and minorities.  He also embarked on an international growth strategy that will eventually bring the all the products, the parts, the lifestyle, and the American V-Twin to enthusiasts worldwide.  The financial numbers speak for themselves.

All this from a guy who came to the Motor Company and did not even ride any kind of motorcycle!  He’s earned a raise.  How hard is it to understand… Harley success = Industry success.

Photo taken by author’s iPhone and post-processed in Snapseed (Nik Software).

All Rights Reserved © Northwest Harley Blog

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Keith Wandell Resignation Letter

The news was expected.

Harley-Davidson CEO Keith Wandell, citing the pressure of obtaining a motorcycle endorsement and regularly commuting with “cagers”, today announced he is retiring at the relative young age of 60.

It’s through my privileged relations with some of the major actors of the motorcycle industry that allow this blog to offer you an exclusive first look of the resignation letter below:

Date: April 1, 2010
To: Harley-Davidson Employees
From: Office of the President and CEO, Mr. Keith Wandell
Subject: A Letter To My Colleagues

This morning I am announcing my intention to retire by the time of our next board meeting.

It has become clear that in light of the continuing leadership doubt, and the unprecedented level of negative attention about my compensation package, the company – and each of you – has had to endure, that the best thing I can do for you, our dealer network and our shareholders is to retire.

Some of you have done an extraordinary job serving our customers despite the almost daily media distraction.  I feel strongly that the attacks about my riding experience and eight month compensation package of $6.4 million are unjustified, but unfortunately, they show no signs of abating. A simple reality check tells me that people are spending more time reading about the acrimony and not enough time buying our motorcycles from the newly reduced product line up.

What matters is not what happens to me, but it’s really about the remaining employees of Harley-Davidson, our employed customers and our shareholders. The whole is greater than the sum of any 2 parts and clearly more important than me “feeling good about where we are” as a company.   Even in the midst of the first quarterly loss in 16 years, the HDFS liquidity freeze, the India expansion, the Buell distractions, the union worker delinquencies in PA., and the MV Augusta sell-off strategy… my main regret in this short, but well paid, tenure, is that I will not be here to realize the potential of this bold strategy to return the company to a “new” normal.

I will retire when my successor is appointed. The Board has begun a high profile and expensive search for a new CEO, led by the head of the Board’s Compensation, Management Development and Succession Committee. I, of course, will do everything I can to assist in this transition. I will make sure that the company firmly “stays the course” until my successor is chosen.

Let me say that it will not be easy for me to leave. I take enormous pride in obtaining my motorcycle endorsement and I’ve met a bunch of new lunch-time riding buddies.  It’s been said that the true test of a leader is the performance of the company he leaves behind. On that score, I feel my short, but well paid legacy and public record are available for all to read.  The Board has asked me to assure you of their full support as we go through the transition and into the future.

To some of you, I offer my heartfelt thanks for the extraordinary opportunity to work with and lead you during this short tenure that I’ve been in Milwaukee. Of course I will continue to see some of you in the H-D Brewers suite and have enormous faith that the best of Harley-Davidson will be lived in the days ahead.

Sincerely,
Keith “Scooter” Wandell
President and CEO, Harley-Davidson

Happy April Fool’s! Enjoy the day even with all the faux news.

Photo is courtesy of H-D.

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Keith E. Wandell, CEO Harley-Davidson

$6.4M to be exact. 

May 1st through the end of 2009 marked eight months on the job for Keith E. Wandell, the CEO of Harley-Davidson Inc., and for that privilege he was delivered a pay package valued at $6.4 million, according to the Associated Press.  

The company ended the fourth quarter with a loss of $218.7 million, its first quarterly loss in 16 years.  In addition, management spearheaded a slashing strategy which included massive employee layoffs, closing of factories, negotiated union concessions under the threat of plant re-location and shuttered or sold unwanted brands.

But, talk about an obsession with fairness!  

The board delivered a pay package to Mr. Wandell with a base salary of $650,025 from his start date and he received a bonus of $780,030 and stock and option awards valued at $4.9 million at the time they were issued.  He also received other compensation worth $22,515, which includes a cash payment of $19,733 instead of perquisites.  In total it was valued at $6.4M.

For those in the job market who survive on high-end discretionary spending by consumers, might take a moment of pause and wonder if Mr. Wandell’s approximately $26,700 per day compensation package is just a bit tad excessive?

True it was during a time that management seemed caught like a deer in the head light as they watched the company’s outbound shipments decrease by more than 25%!  I’m not taking shots at the employees.  These executive compensation issues have been around for a long time, and much of the company performance blame lays right at the feet of management and specifically the previous CEO, Jim Ziemer, who takes the golden parachute award for world-class nonperformance during his last year.  Talk about setting up his predecessor with competitiveness and cost structure issues. 

But, is it an excuse for the CEO to say, ‘Hey, the board gave it to me.’ Or should CEOs be responsible too and provide leadership when compensation packages defy economic logic?!  Mr. Wandell is a very capable executive who chalked up impressive business success.  Yet, significant rewards for great results can still be attacked. Especially if the rewards for CEOs and their teams become extraordinarily high with no link to performance – and shareholders are left holding the bag – then it undermines people’s confidence in the company itself.

What are the results at H-D?  But, it’s only been 8 months you say.  Exactly my point.  The one bit of positive news on H-D that I found is that the daily average on HOG’s stock value has risen about 20% since Mr. Wandell has moved in and taken the helm.  

Photo courtesy of H-D. 

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LeBron James

LeBron James

These days it’s hard to turn on the TV and not hear an ESPN talking head evangelize the many virtues of “King James.”

After the Blazers fell to the Houston Rockets in the first round I’ve been forced to surf basketball channels and find another team to rally behind other than the “bad boyz” of Los Angeles.  Let me start off by saying that I actually like the 6-foot-9 NBA star LeBron James.  I like the way he plays and he is good.  Very good.  So good in fact that he was named NBA Rookie of the year in 2003-04, NBA MVP in 2008-09 and has been both All-NBA and the All-Star every season since 2005.  On the US men’s national basketball team he has won a bronze medal at the 2004 Olympics and a gold at the 2008 Olympics

At just 18, LeBron was selected with the number one pick in the 2003 NBA draft by the Cavaliers and signed a $90M shoe contract with Nike before his professional debut.  Does Nike know how to pick ‘em or what?!  The Cavs have so dominated the competition this year that every game has been won in double digits, a record, and none of their playoff games have come with any drama.  There are all the no-look passes, the step-back 3-pointers from 10’ behind the arc and the reverse dunks.  Is there anyone else on the team roster that you can remember his name?  It’s as if the arm-swinging cloud of talcum powder halo follows him everywhere. It’s important to note that King James Inc. (LeBron’s wholly owned company) organizes many charity events including the annual King for Kids Bike-a-thon in Akron, Ohio.

Salary_CompareBut in these recessionary times, employee cuts and school district sacrifices along with budget shortfalls the message of collective sacrifice seems to have missed the NBA and pro athletes.  LeBron will be paid $14.4M this season by the Cavs and his annual earnings off the court were estimated by Forbes magazine at $14M.  The enormous magnitude of salary differential really hit home when I compared salaries using the Cleveland Ohio Statistics calculator.  For example, I plugged in an aspirational blogger salary of $100K. Based on 45 years of work per lifetime it would take  6.31 lifetimes to equal LeBron’s pay for just one season!  ONE SEASON!!  Let me bring it even closer for you.  Based on a 40 hour work week, LeBron’s hourly pay is $13,658.93 vs. $48.08 on a very respectable $100K annual salary.  He made over $6800 in the time it took to write this post.  Looking to raise your blood pressure?  Play with the calculator HERE

Call me crazy, but I suspect LeBron isn’t much concerned about today’s US Postal Service increase of a first-class stamp going to $0.44 cents.

Photo courtesy Nike and Cleveland.com.

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trainThe money train…. Wow … I think I just had a flashback. A warm sunny afternoon sitting on the hill overlooking the river. The birds singing in the trees, everything is so bright and colorful.  Oh wait weren’t we talking about Harley-Davidson?

Harley announced today its second round of job losses since the beginning of the year with a cut of up to 400 more positions, including up to 80 at its Milwaukee-area factories over the next two years.  The company reported a 37% drop in first-quarter profit as net income fell to $117.3 million, or 50 cents a share, from $187.6 million, or 79 cents, in the year-ago period. Revenue declined to $1.29 billion from $1.31 billion. Harley’s worldwide motorcycle sales declined 12%, and U.S. retail sales declined nearly 10% from last year’s first quarter.

And speaking of riding the money train…we learned this week that the new Harley CEO Keith Wandell, will receive a base salary of $975,000 plus other compensation according to SEC filings.  Wandell, replaces current CEO James Ziemer on May 1, and will also participate in the company’s short-term incentive plans with a total opportunity of 120% of his base salary and a maximum payout of 240% of his base salary with a cap of $3 million, his 2009 payout pro-rated based on salary earned for the year.  For comparison purposes, Forbes provides details on Ziemer’s comp plan is HERE.

Talk about a nice run up from his Johnson Controls base salary of $441,670 plus bonuses.  However that number is a bit misleading because compensation for the “chief” executive typically includes: salary and bonuses; other compensation, such as vested restricted stock grants, LTIP payouts and perks; and stock gains which is the value realized by exercising stock options.  In truth, Wandell’s total compensation as reported by Forbes was $9.7M.  Does anyone think he took a salary cut in moving to Harley?  Might I suggest it’s an over payment for services rendered?  Shall we just chant “U.S.A.!, U.S.A.!” and feel good that CEO pay is more than an order of magnitude above the average line worker?

I suspect that Wandell is pinching himself …paid nearly a $1M to lead the premier American based manufacturer of heavyweight motorcycles yet somehow landed the gig without a riding endorsement or owning a motorcycle…excuse me for a minute while I go puke.

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