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Investigators: High-Flying Perks

By Steve Wilson
November 14, 2006

It’s a subject that probably did not come up when leaders of the Big-3 sat down today with President Bush—how much of the sacrifice in the auto industry is being shared by those at the top? Our chief investigative reporter Steve Wilson has found many are still flying high.

While some folks say there’s a good bit of irony here, others say there’s actually a much bigger helping of hypocrisy when these corporate chiefs—some of the same ones who are calling for deep cutbacks and severe sacrifice from workers—have failed to ground their own fondness for a very expensive perk.

These C-E-O’s are doing it, literally, and ever-so-quietly in corporate aircraft like this $40 million, top-of-the line Gulfstream-5, one of at least half a dozen jets still operated by the terribly troubled Ford Motor Company.

Ford CEO "Bill" Ford, who promised to take just a-dollar-a-year in salary, is a very frequent flyer on Ford’s own little Air Force based here at Detroit Metro Airport.

Last year alone, he racked up at least $297,201 worth of rides on the company jets unrelated to any company business?we’re talking purely personal vacations and other such trips. And two other Ford execs? They’ve earned their wings, too, on dozens of personal flights that cost the company nearly half-a-million-dollars more in turbulent times.

Based on recent records Action News has reviewed, just three men at the top? they—and their families and friends if they chose—flew away on more than $700,000 ($716,352) worth of personal flights paid for by a company in a nosedive when thousands of its workers were also headed for a hard landing.

Chrysler says its top execs take personal trips in company planes too?but won’t say how often and because it’s now a German company, it doesn’t have to.

At General Motors which has the biggest fleet of the Big 3, CEO Rick Waggoner and four others at the top came close but took "only" $636,227 worth of personal trips on the company planes at shareholder expense last year. Nearly half of it was flown by executive V-P Thomas Gottschalk who regularly commutes to his second home in Washington.

As for suppliers?over at Federal Mogul now?106 years in business as an auto parts supplier, but in bankruptcy for the last 5 years, closing plant after plant and cutting thousands of jobs?yet still squiring CEO Jose Maria Alapont in the company’s corporate jet for business and personal trips. Here, he’s returning from a conference in Switzerland

Says David Cole, chairman at the Center for Auto Research in Ann Arbor, "?I experience this all the time. I am around people that, in many respects, as leaders of this industry, that do extremely well."

His late father was president of General Motors for several years and for David—and apparently for many industry leaders even at companies in serious trouble these days—any question about them using company resources to fly for free even as their company’s in a tailspin? Well, Cole says it’s just "silliness," an unimportant "detail" compared to The Big Picture.

"Does it bother you that they’re using corporate resources for personal use?" Chief Investigative Reporter Steve Wilson asked Cole.

"When you look at the whole equation, it does not. I mean that goes with the territory," Cole responded.

Now remember, we are certainly not talking about any company that uses one of its corporate jets to move an executive or a number of employees to a business meeting in a distant place, especially to cities poorly served by commercial airlines.

We’re talking about non-business, purely personal use—some say "misuse"—of corporate business jets to get to a vacation beach somewhere?or a game of golf at some luxury resort.

At the Weinberg Center for Corporate Governess at the University of Delaware, Charles Elson says, "I think that we pay executives quite a bit of money, number one. If they need to go somewhere on vacation, they can do what everybody else does, take a commercial flight."

Elson says there should always be a legitimate business purpose behind use of the corporate jet.

"Remember," he says,this is shareholder capital that used to purchase these things and the point of it was to use shareholder capital to create returns for the shareholder. It’s not to use shareholder capital to promote returns to an individual on a pleasure trip. It’s kind of like, to me, taking the company car to Disney World. You just don’t do it. It wasn’t why the car was bought, it wasn’t why the airplane was bought."

Yet back here in Michigan, where the Visteon Corporation has spun its local plants back to Ford where they’re now known as Automotive Components Holdings Company, Visteon’s Chairman and CEO Michael Johnston uses his company’s jet for personal travel—at least $136,982 worth last year alone.

And over at Lear where the motto is "advance relentlessly," Chairman and CEO Robert Rossiter relentless advanced himself in the company jet last year, racking up close to $200,000 at least (font: $197,930) just in personal travel. A sweet deal made even better for him when Lear also paid his personal income taxes on the free rides, something many other companies also throw in for good measure.

Lear’s CFO and Vice chairman also fly in the corporate jets on purely personal travel.

E-D-S, Michigan’s largest I-T supplier that serves the auto industry, also served up its CEO Mike Jordan with at least $185,000 ($185,276) of personal travel, and more for the company president, who also uses the company’s three airplanes and helicopter as his personal fleet.

And why do I keep saying these trips cost "at least" what the companies report? Because companies sometimes value the flights at only the cost of the fuel and pilots and such?or even just the price of an airline ticket?

But when a Gulfstream V jet takes to the air, it can cost as much as a sky-high $7,000 per hour in flight.

Some executives say their company boards of directors have told them that like it or not, they have to take all their flights on the company jet "for security reasons?
to which Professor Elson and others only chuckle.

"American airports are frankly, these days, given all the security there that all of us have to go through, are very, very secure places." He says. "Heck, you can’t even take a bottle of shampoo on the plane at this point, so I think the argument of safety, of security, is a bit of a strange one."

At the troubled Ford Motor company where the blue-collar and salaried workforce alike is about to shrink by a third, the Way Forward is clear. "Very importantly, we’re changing our culture to adopt a change or die mentality that is rejecting business as usual," Ford’s Mark Fields told an auto industry conference last August.

Fields is Ford’s Executive Vice Preidsent, the company’s "President of the Americas," and the chief architect of the automaker’s plans to cut its operations in order to be profitable again.

Fields is widely credited with steering Ford’s Mazda division on a more-successful course a few years back and now he’s the one charged with engineering the company-wide cuts, the plant closings?and the painful elimination of thousands of jobs—but Ford’s Chairman, Bill Ford insists, "we’ll do everything we can to ease the burdens.

"We all have to change and we all have to sacrifice but I believe this is the path to winning," Ford said at a recent news conference announcing severe cutbacks.

chief, Bill top leadership insists: ?

"Belt tightening across the board?" Chief Investigative Reporter Steve Wilson asked Fields at that conference last summer.

"Belt tightening across the board. Absolutely!" Fields responded, not missing a beat.

At the Center For Auto Research, Wilson asked its chairman Dave Cole: "?everybody at the company is feeling the same kind of sacrifice. Do you believe that?"

"I think so. "Cole responded.

Industry experts like Cole and Ford employees alike, widely believe—or perhaps many just hope—that company chiefs are keeping their promises so, as Ford personally pledged, the burdens on families and communities can be eased as much as possible.

"I’m not asking for a free ride, or not to be help accountable for results," Field told attendees at the industry conference. And so far, his Way Forward has been a much steeper uphill drive than he planned.

First, he said the company would be profitable again in two year but now, he concedes, profits won’t come until 2009—and far-deeper cuts are needed just to keep the company on the road.

In fairness, the road is much rockier than most expected, perhaps due mostly to circumstances beyond Fields’ control. So, last year, he still collected a million-dollar bonus—part of a pay package that totaled well over $3 million.

"In some cases you have ‘critical-skill people’ that the company can’t function without. That might be in tool making, could be a UAW employee?" explained Cole in his interview at the Center for Auto Research.

"Is Mark Fields one of those at Ford?" Wilson asked.

"Uh, I don’t think so," was Cole’s reply.

Back at the industry conference again, Fields pledged, "We are making sacrifices at every level."

But there certainly doesn’t seem to be much sign of sacrifice at home, Fields’ home in sunny South Florida, on the water, in Palm Beach County."

"Do you know how he gets there every week?" Wilson asked Cole.

"Probably not hitchhiking," was Cole’s reply.

No, this Ford executive who says he’s not looking for a free ride is getting exactly that virtually every weekend—on a Ford corporate jet.

For weeks we’ve been watching as he usually slips off every Friday afternoon to Ford’s hangar here Detroit Metro Airport and then climbs aboard one of six Ford jets that whisks him to a private airport near his Palm Beach County Florida home.

Fields is usually the only passenger—plus an aircraft crew of three—but on occasion, we’ve spotted his family riding along for free, too. Well, it’s free for the Fields’ but far from free to the floundering Ford Motor Company.

The eleven-hundred-mile, two-and-a-half hour, one-way trip from Detroit to Boca Raton in a Gulfstream-5? It’s not cheap at $7,000 an hour but then, add in the costs of the crew and their weekend meals and lodging expenses at what is said to be a luxury Palm Beach area hotel, and then the costs to fly Fields back to Detroit Sunday night?can it be $70,000 a week or more? It certainly can when the jet makes two trips to Florida, one to drop him off in another to go back and pick him up?

A Ford insider claims he’s seen paperwork that says it’s 50-grand a week but it’s unclear what’s not included in that number. Ford claims—but refuses to document—that the flights cost about $30,000 a week. At any rate, it certainly could be the cost of one worker’s job every week Fields flies home.

"You could argue that," says Cole, "but you have to realize that what Mark brings is a pretty unique quality to do this? (Wilson) Wait a minute. You told me just a moment ago he wasn’t one of the ones they can’t do without. (Cole) No, no, he is, in some respects, I want to put this into context. He led a turnaround at Mazda that was truly spectacular.

"You understand the point: the man makes, what, $2 million plus bonuses, they just gave him a million-dollar bonus," Wilson asked. "Why can’t the man pay for his own airplane tickets? How can he look workers in the eye and she he’s tightening his belt and do this?

Cole replied: "Steve, that’s a tough question."

Actually, it’s a tough answer for Mr. Fields

"Excuse me;" said Fields when Wilson approached him. "I’m going home, so if you’d please get out of the way?"

To be clear, Fields weekly commute flights to Florida are permitted by his employment contract and on the day this story was broadcast, Ford issued a written statement that said,

"Executive compensation at Ford is designed to attract, motivate and retain key leadership talent in a competitive global marketplace. In determining our own programs we look at the many ways in which executives are compensated in this and other industries with whom we compete for executive talent."

Back again at the Center For Automotive Research, Chairman Dave Cole responded to news of the Fields’ commutes by saying, "Every company, every organization, every hospital? (Wilson) Everybody does it? Everybody does it? That’s the excuse? (Cole) They do! They do!"

But remember Ford is the most troubled of the Big-3?the one seeking to show a third of its workforce the door, blue and white collar workers alike.

"These cuts are a painful last resort and I’m deeply mindful of their impact," said Bill Ford at a recent news conference. "We all have to change. We all have to sacrifice."

Meanwhile, as we first revealed, Ford himself is a frequent flyer on the company fleet of at least six corporate jets .to the tune of nearly $300,000 just last year alone. In fairness to Mr. Ford, the company board has decreed that he should use the planes anytime he needs to fly?"for security reasons"—even though most experts agree post-9/11 travel is actually safer and the list of CEO’s attacked while traveling to Aspen or Nantucket is indeed a short one.

Back at the University of Delaware, the director of the Weinberg Center for Corporate Governance says there’s a bigger problem when corporate jets are commandeered for personal trips.

"I think they promote, unfortunately, the rock star culture," he said. "A corporate executive is not a rock star. [pull-up slightly] When one begins to think of oneself as a celebrity as opposed to someone who’s doing business, I think you run into all kinds of problems, too."

Fields’ rock-star status was mentioned when WJR Radio’s Paul W. Smith interviewed him live at a recent auto show. "He’s been called a rock star of the automotive industry. What is the camera crew doing? They’re just following you around everywhere, Mark?"

Fortune magazine reports that he’s known around Detroit as "Mr. Hollywood" and even though Ford just picked an outsider as its new CEO, Mark Fields is still a star in the Ford galaxy—and paid handsomely.

Last year, his pay package totaled well over $3 million, which some say is fair compensation?but here’s the point: it is Fields that is making the necessary cuts that will devastate many families and communities, too?and all the while it is he who promises: "Belt tightening across the board, absolutely!" Fields regularly underscores what the boss keeps saying, too.

"I think very clearly Bill Ford said back in January that we were going to share the pain equally throughout the organization," Fields said.

Yet neither Ford nor its governing board have clipped his wings and grounded those $50-75,000 weekly commuter flights to his Florida home. The deeply troubled company continues to shell out what is arguably the cost of somebody’s job every week he still does it.

"Why can’t the man pay for his own airplane tickets?" reporter Steve Wilson asked auto industry expert Dave Cole. " How can he look workers in the eye and say he’s tightening his belt and still do this? (Cole) Steve, that’s a tough question."

One airline recently had a sale that seemed custom made for Mark, slashing Detroit-to-Florida fares to rock-bottom prices. Even Northwest sells First Class tickets down there for as little as only about $500 roundtrip!?a hundred times less than it’s costing Ford to give Fields the rock-star treatment.

"We know these decisions bring even more pain to the business in the short term and they require sacrifice from our employees, labor unions, dealers, and suppliers," Fields recent told auto industry insiders. But not for himself?
—and not for Bill Ford, and maybe others at the top who still regularly fly in the corporate jets on non-business, purely personal trips?

Only after Ford repeatedly refused to make Fields available, only then did we approach him on a Saturday morning in sunny Florida.

"Hey, Mark? How you doing?" Wilson said as he stretched out his hand.

"Hi," responded a somewhat confused looking Fields.

"Good to see you," Wilson went on as the men shook hands. "Steve Wilson!" he said.

Ironically, Fields was back in Florida right on schedule at the end of the very day he announced the latest rounds of deep cuts.

"Listen, it’s Saturday morning," Fields complained. "I’m here with my family."

"Yeah but you’re down here on the Gulfstream, you’re spending what? How much is that every weekend?" Wilson persisted.

"I’m sorry but I don’t have time this morning," was all the Ford exec would say.

Why he can’t pay for his own rides to work and back and save the company tens of thousands every week, well, it’s something he wants a p-r man to handle.

"No, I’m asking you, Sir," Wilson said as he leaned into Field’s Volvo S-90 after the executive climbed behind the wheel seeking a quick getaway.

"Will you give me your word that you and I can sit down and discuss this?" Wilson asked.

Fields responded: "You can talk with Ray Day, (a Ford p-r man). Can you please get out of the way? Thank you. Have a nice day," he said and then drove off.

"It doesn’t matter that he’s telling people everyone’s sharing the pain and he’s not?" Wilson inquired of Dave Cole, the industry expert.

"I think you have to keep things in perspective in the sense that the value he is contributing and their executive team is contributing," Cole said.

Fields uses the plane to commute because he can?because Bill Ford approved it and still won’t stop it. They told us he wouldn’t be available, either, so Wilson approached him at a public event.

"Hi Steve, nice to meet you," Ford said as he turned to walk away.

"I’d like to talk to you about the sacrifice that you’re asking from the workers versus? " Steve started.

Ford cut him off. "Steve, talk to our p-r department." Then, ducking behind a curtain and running for the back door, the usually unflappable Bill didn’t want to to discuss this either but Wilson didn’t give up.

"You’re asking thousands of families, Sir, to sacrifice and yet you turn your back and keep our camera behind a curtain and refuse why it’s appropriate to do this? Why would you do that, Sir?" the reporter asked.

Ford remained mum and was hustled out a back door by colleagues who were there to look out for him.

Ford has repeatedly refused our requests for an interview and to show us any documentation to confirm their claim that Mark Fields weekly commute costs maybe only $30,000 a week.

Ford insists the free flights are part of his compensation package, written into his employment contract, and part of a Ford policy designed to attract, motivate and retain key leadership talent.

What they do not say—and the point of our reports—how does this square with promises to workers and retirees that much sacrifice is needed and ever


Copyright 2006, WXYZ. All Rights Reserved.

URL: http://www.wxyz.com/wxyz/ys_investig...143902,00.html

Ashburner

Good lunch time read although I have read it all before. Working for a big company like HP, I see shit like this all the time. Executive a extremely over compensated, especially when the company is not doing so well. For me, I saw the instance where Michael Capellas left Hp on his own and we had to pay him 20 million. This is while all my peers are being laid off. Just a year or two late, Carly Fiorina gets the boot- plus 15 million. WTF??? If these people are doing a shitty job running the company, why are they getting ANY perks at all?