Fiat plans to bypass U.S. exec pay limits

Source: Detroit Free Press

The new Chrysler-Fiat partnership will get around U.S. restrictions on executive pay by having its top officers deemed Fiat employees. Meanwhile, Chrysler continues trying to reach a goal of reducing autoworkers by 3,500 more through buyouts.
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The details were disclosed in documents filed Tuesday by Chrysler as part of its bankruptcy case, which outline the $10.1-billion transaction among Fiat, the U.S. and Canadian governments and the UAW.

The new Chrysler is among the first companies to fall under rules outlined in February by Treasury Secretary Timothy Geithner, for companies getting "extraordinary assistance" from the Treasury that would cap pay for top executives at $500,000, excluding restricted shares of stock. The final rules for the limits have not been released.

Treasury's agreement with Chrysler for $4.1 billion in loans to survive bankruptcy also specifies that the company's top 25 senior executives will face pay limits, and the executives must agree to waive any claims against the government for changes in their compensation.

Fiat CEO Sergio Marchionne has already indicated he will replace Chrysler CEO Bob Nardelli. But under the deal, any of Chrysler's top officers can be deemed a Fiat employee who's "seconded" to Chrysler, and therefore take pay from Fiat beyond any Treasury cap.

Read more: http://www.freep.com/article/20090513/BUSINESS01/905130318

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Oh, and by the way...

Chrysler Agreement Prevents Strike by UAW Until at Least 2015

May 13 (Bloomberg) -- Chrysler LLC, seeking to sell most of its assets out of bankruptcy to a new company run by Fiat SpA, won’t have to contend with a strike by the United Auto Workers until at least 2015.

The union’s contract with Auburn Hills, Michigan-based Chrysler, ratified April 29, will be extended past its Sept. 14, 2011, expiration until that date in 2015, with any changes handled by binding arbitration, according to court documents filed yesterday.

Labor stability in its U.S. operations would help the new company compete in a shrinking auto market. The UAW contract also trims costs by reducing health-care benefits, consolidating job classifications and tightening attendance rules. By removing the strike threat, the arbitration clause gives the union less leverage should it try to recoup what it gave up.

“This sets a precedent that says, ‘In the most troubled of times, we will forgo the right to strike to ensure the survival of the company,’” said Harley Shaiken, a labor affairs professor at the University of California at Berkeley. “It recognizes the reality that in two years, Chrysler will likely still be in rough waters.”

The Detroit-based union also agreed to accept a 55 percent stake in the new company to fulfill half of the automaker’s $10.6 billion liability to a union retiree health-care fund.

http://www.bloomberg.com/apps/news?pid=20601103&sid=a5dC6O3Z2H.Y&refer=us

So much for the FIAT acolytes that seemed to be popping up.

"No one could have forseen they'd use the tax/labor loopholes we provided for them"
-(Generic Congress Critter-Asshole)

is this the same FIAT who not two weeks ago were putting screws to the collective thumbs of the UAW for more concessions?

ALWAYS get theirs :(