Feds freeze executive pay at General Motors

By Paul A. Eisenstein, The Detroit BureauPity poor Dan Akerson.  He’s delivered the sort of financial turnaround seldom seen in the business world, taking once-bankrupt General Motors to multi-billion-dollar profitability.  But that won’t be enough to earn him a pay hike this year, according to the U.S. Treasury Dept., which has the final say on compensation for the maker’s top 25 executives.

Don’t pity Akerson too much.  He’ll still take home about $9 million this year, including $1.7 million in salary and another $7.3 million in various forms of stock compensation.  But that’s significantly less than his crosstown counterparts.  Ford Motor Co. CEO Alan Mulally got a $29.5 million pay package, the maker announced last week, on top of more than $57 million in long-term stock compensation.

Hybrid Owners Unlikely to Buy Another

The federal government began overseeing the salaries of GM executives in 2009 along with those at other companies who received bailout funds under the so-called TARP program.  Most of those firms have since paid off their loans and are no longer subject to the review of a federal pay overseer.  But GM — which is still 26.5% owned by the Treasury – is still covered, as are Ally Financial, the former GMAC, and giant AIAG.

 The controls remain in place because they are “necessary to ensure that compensation … satisfies the public interest standard,” according to Patricia Geoghegan, office of the special master for TARP executive compensation.

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GM’s top 23 executives earn, on average, about $1.2 million apiece in total compensation.  While several top execs, such as Vice Chairman Tom Stephens, have recently left the company, 14 who remain will receive 0.5% pay hikes and 8.4% increases in overall compensation when stocks and other benefits are included.

But nine of the company’s top managers – who joined GM in 2011 – will receive, on average, 45.5% less than the executives they replaced.

The ongoing pay limits post problems for GM in an environment where it has to compete against other auto manufacturers – and company’s not in the automotive business – for talent, the Detroit maker complains.

American Teens Waiting Longer to Drive

“There are some people who haven’t worked in the auto industry their whole lives, people that want to try something different that pays,” Mark Reuss, GM’s president of North American operations, told reporters earlier this year.

Akerson did manage to take home more than Sergio Marchionne received from Chrysler – which also received a 2009 bailout but last year’s paid off its remaining government loans. For the second year, Marchionne chose to receive nothing for his work at Chrysler.  However, he did get $22.2 million from Fiat, the Italian automaker that currently owns a 58.5% stake in the U.S. maker.

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General Motors might report a record profit

GM employees of Maurice Vauss checks the fit and eco finish one Chevy Malibu 2013.

By msnbc.com staff

Only three years after the automaker is in the bankruptcy driving government-run, require a massive bailout by the taxpayer-funded to keep in business, General Motors his sights on more than $10 billion per year, according to a report in the Wall Street Journal.

The newspaper reported that GM is already on the way to achieve this goal, citing company sources the magazine said seen have, that the company in the fourth quarter 2011 results, which will be reported next week. GM is net profit of around $8 billion, the highest ever, and almost twice the previous year's $ 4.7 billion figure, the newspaper said.

Growth in China and strong profits in North America, where GM has to shed billions of dollars in costs and was capable of higher prices, command is the improved quarterly profit, reported the magazine.

On top of the quarterly gain, GM also to his Gewinnspanne--the part of revenue left after the payment of Aufwendungen--currently 6 percent to 10 percent in the next few years, Daniel Ammann, chief financial officer, said the magazine. It would be the highest profit margin in the automotive industry.

In the year 2009 billion of dollars to lose before dying out, GM had to take a rescue by the Government of about $50 billion and go through a Government run bankruptcy.

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General Motors to cut Chevy Cruze production

DETROIT — General Motors Co. will shut down the plant that makes the Chevrolet Cruze compact car for a week because sales have slowed and Japanese competitors now have ample supplies of competing small cars.

The factory in Lordstown, Ohio, had been running around the clock with overtime shifts on Saturdays to keep up with strong Cruze sales during the summer. Sales of the compact rose with two of its main competitors, the Honda Civic and Toyota Corolla, in short supply because of parts shortages from the March earthquake in Japan.

GM spokesman Chris Lee said in an email that the Lordstown plant, about 50 miles (80 kilometers) southeast of Cleveland, will be shut down the week of Nov. 28. It will return to around-the-clock operations the following week.

The Cruze was the top-selling small car in the U.S. from May through September, with sales in most of those months topping 20,000, according to Autodata Corp. But sales dropped to just more than 14,000 in October, and the Cruze was passed by the Civic and Corolla as production and dealer inventories started to return to normal.

GM said it had about 39,000 Cruzes at its dealers at the end of October. At the current selling rate, it would take about 70 days to sell all of them. A 60-day supply is considered optimal.

Small-car sales typically drop in the final quarter of the year. Gas prices also have fallen from around $4 per gallon ($1.05 a liter) earlier in the year.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Europe drags down General Motors' 3Q profit

DETROIT — The fragile European economy is dragging down General Motors' profits, forcing its management to look harder for cost cuts and ways to boost revenue in the struggling region.

GM said Wednesday that its third-quarter net income fell 15 percent from a year earlier, pulled down by losses in Europe and South America and weak earnings in all areas except North America and China.

The company's shares fell over 10 percent to $22.31 Wednesday as GM executives were backed off an earlier prediction that the company would break even before taxes in Europe this year.

Europe faces a financial crisis and could slip into recession. Growth is slow is several key nations. Italy, the region's third-biggest economy, is bucking under the weight of government debt. Greece faces default unless it can accept a new debt deal, and the region also is dealing with high unemployment, stingy bank lending and declining exports. General Motors Co. is among the first U.S. corporations to forecast lower earnings due to the problems.

GM CEO Dan Akerson told industry analysts that the company's performance in Europe is due in part to slower sales "which itself is a manifestation of Europe's economic morass." He said the results in Europe and South America are "not sustainable and not acceptable" and said GM must look for more ways to control costs. But Akerson stopped short of giving specifics.

Sales in Europe are about 18 percent of GM's 2.2 million global total, but they are expected to weaken as the economy slows in the fourth quarter.

Citi Investment Research analyst Itay Michaeli said other automakers have hinted at difficulties in Europe, but GM was sounding a louder alarm based on the third-quarter performance.

Michaeli said he thought GM would have been able to remove more costs in Europe by now. Third-quarter costs at GM Europe were about even with a bad quarter a year ago, so that means more cuts will have to be made, probably by cutting factory capacity with plant closures, he said.

"These guys just aren't going to sit around and let Europe lose a bunch of money," he said. "I imagine they're working on plans to rightsize capacity to make money on lower (sales) volume."

In the third quarter, GM's net income fell to $1.7 billion, or $1.03 per share, compared with $2 billion, or $1.20 per share, a year earlier. The quarter's figures also included $200 million in dividends paid on preferred stock that didn't exist a year earlier.

GM posted a pretax loss of $292 million in Europe. Its profit rose slightly in North America to $2.2 billion, but earnings at its international operations, including China, fell 29 percent to $365 million. South American operations also swung to a loss of $44 million for the quarter.

Without the loss in Europe and the preferred stock payment, GM's net income would have increased.

Chief Financial Officer Dan Ammann said GM had a solid quarter, but needs to improve its profit margins in all regions. The company also needs to take better advantage of its global scale, building the same cars for all markets to cut engineering and research costs, he said.

Ammann said that in Europe, GM will follow the formula used to turn around the company's North American operations. GM cut its break-even point in North America by closing 16 factories since 2008. It also won concessions from the United Auto Workers union, and it rolled out new vehicles that are selling well. But Ammann wouldn't say for certain if plant closures are coming in Europe.

"There's nothing that's off the table," he said.

Ammann said the company has made significant progress in Europe and is more than $1 billion ahead of last year's pretax earnings.

Cutting costs appears to be a bigger challenge than trying to sell more cars in the region. It's difficult for GM to close plants and cut staff in Europe because of strong unions and laws that protect jobs.

European sales rose 4.6 percent during the third quarter. But the growth rate was about half the 9 percent increase GM reported worldwide.

In South America, Ammann said GM is revamping an aging car and truck lineup to try to boost sales. It also offered buyouts to employees that resulted in a 4 percent reduction in the work force there to deal with cost inflation, he said. GM is coming out with nine new vehicles in the next year in South America, including the Chevrolet Cruze compact and a subcompact named the Cobalt, he said.

Ammann said GM plans actions companywide to improve profit margins. Its profit margin, or pretax profit as a percentage of revenue, is around 6 percent, a full percentage point lower than its closest global competitors, Volkswagen AG and Ford Motor Co.

While the company plans to cut costs further, it mainly will boost profit margins by increasing revenue, he said.

"You can't cost-cut your way to prosperity in the business. You've got to grow the business, get the right vehicles on the road," he said.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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