Arpey - Same Credentials, Much Less Pay

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Nov 21, 2003
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Posted on Wed, Jun. 23, 2004



TXU chief generating megabucks for himself

By Mitchell Schnurman
Star-Telegram Staff Writer

This is the kind of quick payday that would make A-Rod blush.

In John Wilder's first 100 days as chief executive of TXU Corp., he earned $40 million.

With no strings attached.

The huge performance payoff was the reward for a quick run-up in TXU's stock price. Wilder came to Dallas with big plans, and he's being well compensated for them.

If Wilder wants to leave tomorrow for IBM or Tahiti, the money is all his. And if TXU's stock drops by half next month, he'll still be a very rich man.

Wilder isn't going anywhere, which is good, because TXU's turnaround has hardly begun. Besides, TXU has given him a lot more reasons to hang around.

If Wilder stays at TXU for three years, he gets stock worth an additional $10 million. After six years, $10 million more.

And if TXU's stock stays hot, Wilder is promised at least an additional $30 million by 2007.

That doesn't include his salary and bonus, worth about $4 million annually.

These are mind-boggling numbers, even at a big corporation facing a turnaround.

For some perspective, compare Wilder with Gerard Arpey, who was named American Airlines' CEO a year ago and has been working 24/7 to reinvent the world's biggest carrier.

Both leaders are 45, both have MBAs from the University of Texas, and both are in their first stints as CEO. Arpey probably faces a stiffer challenge and has already overseen a sharp rebound in his company's stock price.

But Arpey's first-year pay as chief executive was $535,000, with no stock options. In his first quarter, Wilder was paid 75 times more.

The fact that the state's biggest utility is signing Wilder's check makes it even more remarkable -- or outrageous, depending on your point of view.

Is Wilder that good or TXU that bad?

And how could the TXU board approve a pay package with so much upside and such weak handcuffs?

This can't play well with TXU customers. Since Wilder arrived, TXU has raised electric rates and requested a second increase. Rising natural gas prices are the reason, but some are sure to say the company needs the money to pay the boss.

A spokeswoman said Wilder wouldn't elaborate on his pay, but others say he's earned the big bucks. After a disastrous foray into Europe, TXU's stock price was stuck in the mid-20s before Wilder agreed to come aboard.

The stock immediately jumped 12 percent and kept climbing as Wilder unveiled new initiatives. The stock is up 59 percent since he arrived in late February.

"Ask people how they feel about the $4 billion increase in market cap," James Oesterreicher, the former J.C. Penney chief who heads TXU's compensation committee, told me Tuesday. "That cost us only 1 percent."

My beef is that the pay threshold isn't that high, and there's little requirement that the gains stick. The stock topped $56 two years ago, and Wilder only had to boost the lagging stock price by a third to hit the performance standards.

If the stock hit $33 a share -- and held that level for 30 days -- he got 1 million shares.

By late May, Wilder was deep in the green. At Tuesday's close of $39.47, plus his $1 million signing bonus and $1.25 million salary, he's already above $40 million, before taxes.

Wilder has been busy. He has pushed TXU to sell assets worth billions, outsource 2,700 jobs (including some at Dallas headquarters) and form a joint venture with an investment firm.

Wilder has also shuffled the management team and reorganized the business units -- pretty standard fare for a turnaround but groundbreaking at a utility.

Oesterreicher, reached at his Texas lake house, said that Wilder has impeccable character and predicted that he would fulfill his five-year contract. He also said the executive is worth the big incentives.

"We're very fortunate at TXU to have attracted the top man in the industry," Oesterreicher said.

Wilder had been chief financial officer at Entergy Corp. in New Orleans and is the first outsider to take TXU's top job.

His arrival may be the real thing, akin to Len Roberts coming to RadioShack in 1993. Roberts reinvigorated the chain and rebuilt the brand name, and he's stayed around for more than a decade.

Or Wilder could be more like Dick Brown, brought in to rescue Electronic Data Systems in 1999. Brown was booted out in 2003, after EDS had lost two-thirds of its market value and was the target of a securities investigation.

In 2001, when EDS appeared to be flying high, Brown's pay package was valued at $55 million. Shareholders complained, but Brown joked that he had an expensive wife.

Despite the damage at EDS, Brown walked away with a $37 million severance deal. He netted about $72 million, not including stock options, in a little more than four years on the job.

No one knows how TXU will perform under Wilder, but his golden welcome ensures that he'll do just fine, regardless.

It's telling that Wilder already holds more stock than Erle Nye, the executive he replaced.

Nye, still chairman, has worked at TXU for 44 years and led the company since the mid-1990s. But the new guy has three times the number of TXU shares.

TXU was a good marriage for Nye. But the honeymoon belongs to Wilder.


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Mitchell Schnurman's column appears Wednesdays and Sundays. (817) 390-7821 [email protected]





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© 2004 Star-Telegram and wire service sources. All Rights Reserved.
http://www.dfw.com
 
He gets less because he's worth-less.

asskiss.gif
 
I'm curious Wing, if AA made you president tomorrow what are the 5 things you would do to turn around the company? You seem to know how stupid Arpey is, if its so easy tell us how you'd do it.
 
Oneflyer said:
I'm curious Wing, if AA made you president tomorrow what are the 5 things you would do to turn around the company? You seem to know how stupid Arpey is, if its so easy tell us how you'd do it.
Hand me a ten million dollar signing bonus and I'll answer your question. Until then, not unlike Arpey (Carty-Light) you won't see squat from me without a check!
 
...except that Arpey started at the bottom and worked his way up providing ideas all along the way. If you have no ideas, just say it, don't hold them for ransome...
 
flyhigh said:
...except that Arpey started at the bottom and worked his way up providing ideas all along the way. If you have no ideas, just say it, don't hold them for ransome...
Much easier to throw a hissy fit than to have to actually come up with solutions that will work AND not piss people off or hurt their feelings.

What people fail to realize (in my opinion) is that there is not a panacea to fix what is wrong with our industry with out someone getting hurt. This is not to say that what management is doing is correct.

This seems very similar to the argument that republicans want “lessâ€￾ government and democrats want more. BS! Republicans just want different government.

In al likely hood, any ideas Wing has will fail. He/she sees the problem from one perspective. This airline, or any corporation for that matter, is made up of numerous people and various work groups. What may fix one work groups problems, may cause havoc or hardship for another.

Then there is the problem with our current economy and the landscape of the airline industry. Everyone seems to be under this delusion that they are entitled to a job and that they are entitled to the best pay in the industry.

I have no idea what the answers are. I am pretty sure that Wing, $10 million bonus or not, has not clue either. I have met very few people who actually have sat down, work out ideas and then gone on to fight for them. One of our seniors is one such person. He is willing o put his job on the line for what he believes. The ideas he has seem to be good for the company, not for him, not for just for crew skd, not just for the FA’s but just good in general. He has come up with ideas that are more efficient (which means people will loose their jobs), ideas that change they way we all work. The problem seem to be that most people just want to protect their ass and go about like sheep to the slaughter.

Wing loves to harp on management. Fine, I have never said that management was innocent. They are far from it. I deal with these idiots on a daily basis. The thing is, he/she and all the rest who just blame one work group are showing their stupidity and have no credibility. There is not a work group working for AA that is innocent. We are all in this together. FA’s are not victims, mechanics are not victims, pilots, baggage … you name it.

Wing, please do not insult us by blaming management and casting your self that the poor innocent victim. Your work group is just as guilty as mine is.
 
Garfield, you make good sense about all groups sharing the blame. Few of us are willing to "die" for the "greater good".

BUT, management manages and leadership leads. When one guy screws up or performs poorly, it is that individual's fault. When a few guys screw up or make trouble, they themselves are most likely to blame, also. But, when a large group of people perform poorly, it is management's or leadership's fault.

As the US Navy defines it, if a ship runs aground, it is the captain's fault. Period.
 
WingNaPrayer said:
Hand me a ten million dollar signing bonus and I'll answer your question. Until then, not unlike Arpey (Carty-Light) you won't see squat from me without a check!
Sounds like a cop-out answer to me...
 
mweiss said:
Sounds like a cop-out answer to me...
Even if Wing got his 10 Mil he would insist on a paid 30 minute break before announcing his ideas, company paid transportation to and from the bank to deposit money, and a shop steward to accompany. :blink:
 
Wretched Wrench said:
Garfield, you make good sense about all groups sharing the blame. Few of us are willing to "die" for the "greater good".

BUT, management manages and leadership leads. When one guy screws up or performs poorly, it is that individual's fault. When a few guys screw up or make trouble, they themselves are most likely to blame, also. But, when a large group of people perform poorly, it is management's or leadership's fault.

As the US Navy defines it, if a ship runs aground, it is the captain's fault. Period.
Sorry Wrench but I do not think that argument hold water. I agree that management bears a majority of the burden for running the company. BUT, on a ship the captain is the king. There is no democracy, it is his/her way or the highway. In a company, we have more of a say in what goes on. Granted not much of one, depending on your position and level of “importanceâ€￾ but we do have a right to question the king.

I think the main point I am trying to make is that you can have the best management group in the world leading you but if they are trying to deal with work groups and individuals who are fighting them tooth and nail then we are back at square one. I was laughing a few years back when the pilots at United got that contract of theirs. I knew the economy was on the way down, but nooooooooooooooooo everyone wants more more more. When is it enough? So I want more money? Hell yes but not at the expense of someone else’s job. I make enough to get by right now. I am not asking for more money right now, and when we do dig our way out of this hole, I would not dream of asking for a huge chunk of pay like some are expecting. Take a little an hope the company looks at the future and prepares for the next dip.

I would argue we are at the point that if some of us do not “die for the greater goodâ€￾ as you put it, then we may all be going down with the ship.
 
In the last seven posts alone, even a novice would see what is wrong with AA. None of you get it and with the attitudes I see here, none of you ever will either.

Can you give me one good reason why I, or any one of you, or anyone else for that matter should cough up workable company saving ideas that fix all the problems while there are pork barrel executives sitting in judgment over you just chomping at the bit to take credit, and the pay bonuses for it?

You could hand over the magic bullet and save the company today, and corporate couldn't even look you in the eye while they run with your ideas and fire you tomorrow.

If you think producing ideas that will strengthen the company will save your paychecks then you're sadly mistaken. Once the chain of command extends outside the boardroom, you....do....not....count!

Period!

None of you are paying attention to what is going on because you are viewing this airline on your own local level. Not one of you sees the big picture. Not one, and far be it from me to wash the fog off the window so you can.

Arpey is no different in his blowing smoke up your collective fannies than Bush who is doing the same thing on a national/global scale. As with Bush, most see right through it, and just like Arpey, everyone knows that Bush really isn't the one in charge. For some reason you all think that Arpey's treks around the country holding his little pep rallys are because he gives a rat's ass about any of you. Just like you all comiserate about how to save your jobs, his little performances are nothing more than his efforts to save his own.

If Arpey was worth more money as an executive, he'd go get it, but he's not, so he can't.

You get what you pay for . . . on all employment levels.

Quite frankly, I got my money back out of this ship and I really don't care if it sinks now or not. But what I do care about is the people's lives that it will destroy if it does - something the executives don't have to worry about because, as you all well remember, they protected themselves from the sinking ship. Ergo, they have NO incentive to provide life rafts for any single one of you .

It's like a game of toy soldier to them now, if they win, they win, if they loose, well they just strap on their bankruptcy proof golden parachutes and bail out - damn everyone else, but they got theirs.

The pro-AA folks around here will eventually be singing the same tune, its just a matter of time, or they'll tuck their tail between their legs and crawl away wondering why - while they did listen, it was to the wrong spin-man.

PT Barnum gentlemen . . . PT Barnum!
 
Wing, what you fail to realize is that I do not think you have the faintest idea what should be done to “saveâ€￾ the airline industry much less American. I do not believe you have a clue because the fact that you even mention a “silver bulletâ€￾ imagined or not, indicates that you have no grasp of what is going on.

While management may not have a clue what is going on, I do not see anyone in any carrier stepping up with a better way to do it. That is because no one wants to be the one to step up and say that their work group will have to make sacrifices. And I am not just speaking of measly pay cuts. I am talking about the stuff that no one wants to hear about. I am talking about management being help accountable for their actions. Work groups being held accountable. Working harder and more efficient for less. Work groups and management going through their ranks and firing or disciplining those who abuse policies or steal from the company in other ways.

The greed and selfishness of management and the Unions needs to stop if we are to survive. I do not believe I am in any type of fog. I have a vested interest in seeing this company survive. I have no interest in seeing this company go under. I have nearly 20 years invested and am not inclined to want to go job hunting again. I like what I do. As far as I am concerned, you are the problem and those like you. If you do not choose to help or to be part of the solution, then you are part of the problem. So do us all a favor and get out while the getting is good. The culture has to change from the top down and that will be difficult enough with out the like of you hanging around.
 
Garfield1966 said:
Wing, what you fail to realize is that I do not think you have the faintest idea what should be done to “saveâ€￾ the airline industry much less American.
Okie Dokie . . . you da man! :p

I do have to ask though, if you advocate working harder for less, how do you propose bringing other costs of living down so people can afford to work for less? I mean, if what you want to say is that employees must fall into poverty for the good of American Airlines, then just come right out and say it! It IS the position of corporate you know.

You can't keep slashing wages, the cost of living will not allow people to survive on less. Plus, you can't keep adding more and more to employee work loads, it's destroying their health and you know the new rule at AA - if you're IOD lasts more than 20 days, hit the road jack!