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Washington, D.C. - On November 19th, Congressman Brad Sherman put questions to the CEO's of the Big Three automobile manufacturers. In addition to his request that the executives raise their hand if they're planning to return to Detroit on commercial planes, Sherman also asked three questions for the companies to respond to in writing.
"My three questions were designed to secure commitments protecting consumers and American workers from the risks associated with the financial difficulties of the Big Three automakers. Unfortunately, GM, Ford, and Chrysler were unwilling to make these commitments," said Congressman Sherman.
First, Congressman Sherman asked for a commitment from the three companies that as they close down plants, they would close down foreign plants making before those in the United States, when the plants make identical vehicles. Sherman’s question exempted plants in those countries which were also providing bail out funds to the companies.
In their written answers, all three companies refused to make such a commitment. All three said that they are seeking bail out funds in Mexico and Canada, though they have received no assurances.
Second, Sherman asked whether the automobile companies would establish trust funds, so that if the company went bankrupt in the next year or two, there would be funds available to pay for warranty service on cars being sold now.
All three companies refused to provide any trust fund to pay for warranty service on vehicles now being sold. All three indicated that they would try to set aside funds to deal with their warranty obligations in any bankruptcy filings, though there would be no assured funds to meet the warranty obligations.
Finally, Congressman Sherman asked whether each company would limit executive compensation to $1 million per year as the total compensation package, including salaries, bonuses, stock options and pension plan contributions.
All three companies refused to limit total compensation to $1 million per year. However all three are limiting or eliminating bonuses for 2009, and each CEO is limiting his regular salary to $1 for the next year in the event that bailout funds are used by his company.
Sherman commented, "If we want to protect American jobs and consumers, and limit executive compensation, we need to put tough provisions in the legislation. In these three areas, the companies' statements of current intention are too vague to be relied upon."
Copies of the questions and answers are attached:
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