GM likely to spend $500M on worker bonuses

DETROIT — General Motors is likely to spend more than $500 million on employee bonuses and profit-sharing based on the company's performance last year.

GM, which made a record profit in 2011, will pay bonuses of at least $182 million to white-collar workers such as engineers, car designers and managers on Wednesday, according to a formula obtained by The Associated Press. That's on top of $332.5 million in profit-sharing it already agreed to pay factory workers.

In the past, such payments have drawn criticism from those who believe the government shouldn't have bailed out GM and Chrysler. But GM, which made a record $7.6 billion last year, says the payments are needed to hold on to skilled employees. It's also keeping fixed costs down by giving bonuses instead of annual pay raises.

The bonuses will go to most of the company's 26,000 salaried employees, many of whom make more than $100,000 a year. The bonuses will range from 8 percent of base pay to 14 percent, according to the formula.

The company would not release the percentages, nor would it say how much it will spend on the bonuses. But it's likely the average bonus for salaried employees will be more than the $7,000 that each of GM's 47,500 factory workers will get in March.

The white-collar bonuses are determined by a worker's pay grade, individual performance and company metrics that measure whether GM met goals including pretax earnings, market share, cash flow and quality. This year's salaried bonuses will be smaller than last year's, when the company met all of its goals. A small number of top performers will get pay raises or larger bonuses, the company has said.

"It's a pay-for-performance type approach that really drives accountability in the organization and helps employees connect their compensation with performance," says GM spokeswoman Lynda Messina.

GM must reward employees because the labor market is starting to become competitive again, especially for computer experts, engineers and other skilled jobs, says James Stoeckmann, senior compensation specialist for World at Work, an organization of human resources executives who specialize in pay issues.

"Companies are having a hard time finding all those critical skills they need," he says. At almost every company, white-collar bonuses are higher than those given to blue-collar workers, he says.

The U.S. spent nearly $50 billion to save GM three years ago, and some Republicans think the government should get its money back before bonuses are paid. The company nearly ran out of cash when auto sales dried up in the middle of the financial crisis. With little or no private loans available, GM needed a bailout to make it through bankruptcy protection.

The government agreed to take stock in GM in exchange for most of the debt. So far it has recouped more than $22 billion. Taxpayers still own 500 million shares of GM, or 26.5 percent of the company. If the government sold those shares at the current price of around $26, it would get about $13.2 billion. But it's waiting for the stock price to rise before selling. Shares would have to sell for more than $53 each for the government to get all its money back, which is unlikely.

Sen. Charles Grassley, R-Iowa, a critic of the bailout, said the Obama administration needs to figure out a way to get the money back.

"As the company gives out bonuses, the Treasury Department needs to have an exit strategy for getting GM to repay the taxpayers for helping the company survive," he said in a statement. "Without an exit strategy, GM can expect more questions and scrutiny regarding employee bonuses."

The formula to calculate the bonus percentages was given to the Associated Press by a person familiar with GM's compensation. The person didn't want to be identified because the company did not make the formula public.

The company announced earlier this month that it plans to freeze its U.S. pension plan for white-collar workers and move to a 401 (k)-type plan. GM also gave salaried employees five more vacation days.

White-collar workers fared better at crosstown rival Ford Motor Co. Ford said last month that 20,000 salaried workers will get 2.7 percent pay raises on April 1, plus bonuses based on individual performance.

In addition, Ford will make profit-sharing payments of around $6,200 each to its 41,600 U.S. factory employees in March.

GM CEO Daniel Akerson has been against giving annual raises, saying the added costs limit the company's flexibility in an economic downturn.

But that could hurt GM over time, if Ford workers get pay raises and their salaries grow far larger than those at GM, says David Whiston, auto equity analyst for Morningstar.

Ford, which borrowed billions from banks but avoided a government bailout, said the raises are needed to stay competitive with other big companies. The automaker made a $20 billion profit last year

Salaried workers at Chrysler Group LLC, which made far less money than GM or Ford, also will get profit-sharing checks. The company, which is not publicly traded, would not disclose the amounts. About 26,000 union workers at Chrysler, which also took a government bailout, will get checks of about $1,500. Chrysler made $183 million last year.

GM, Chrysler and Ford agreed to the profit-sharing for factory workers in contract talks last year with the United Auto Workers union. Most of the workers won't get pay raises.

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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GM to pay $400M-plus in worker premiums

DETROIT - less than two years after bankruptcy, General Motors millions of dollars in bonuses to most its 48,000 workers as a reward for fast turnaround of the company extend after it was rescued by the Government.

Monday in company documents, payments, are similar to bonuses, announced last week for employees. Premiums 76,000 American workers will have probably more than $400 million an amount which proposes managers increasing confidence in the comeback car manufacturers.

In the four years until its 2009 bankruptcy, GM stacked up to $80 billion in losses and was burdened by huge debts and costly work contracts.

"Overall we have tremendous progress over the past year" CEO and Chairman Dan Akerson said in an E-mail to employees on Monday, the announcement of payments. "With our collective teamwork, just the beginning of this can be."

The company made $4.2 billion in the first nine months 2010 and is expected to announce fourth quarter soon gain.

Most GM workers get a record payment of more than $4,000 - more than double the previous record in 1999 at the height of the boom in sports utility vehicles and pickup trucks. Almost all 28,000 employees such as engineers and managers receive 4 to 16 percent of numbers your base. A few - less than 1 percent – receive 50 percent or more.

Bill Selesky, an auto industry analyst with Argus Research in New York, the recovery called "dramatic" and said that the payments were required to talent from jumping to other car manufacturers to stop especially crosstown rival Ford.

He added the company trying also, to send a message: "It's the new GM."

But an opponent of car industry rescue in Washington drew criticism from the bonuses, GM to repay its entire 49.5 billion dollar loans should be said, before bonuses offered.

"Because the taxpayers this company out of bankruptcy helped taxpayers are repaid to before bonuses go," said Republican Senator Charles Grassley of Iowa. "It sends a message that meet responsible shareholders, in this case the taxpayers for a sucker."

The Government has $23 billion has been repaid but more needs $26.4 billion to recoup his whole investment. The Government has 500 million ordinary shares GM which again should sell for about $53 per share for the money.

GM documents show that the company plans to workers next month pay at least $189 million in bonuses. Approximately 45,000 employees in GM received more than $4,000 per factories. Another 3,000 workers at the old plants of parts of, which GM tries to sell, will each receive $3,000.

The company wouldn't say how much cost white collar bonus, but the associated press calculations showing the total will probably top $200 million.

Most GM workers earn over $100,000 per year. A bonus of 8 percent, the region's midpoint $8,000 would about each of you. In other words, GM out would pay about $224 million.

Final figures for the bonuses are not to be calculated after the company its results for the fourth quarter and full-year results 2010 later this month announced.

Chrysler, the a 12.5 billion US dollars bailout necessary to pay plans, and bonuses. The Government has about 9 percent of Chrysler stock.

The size of the economic crime bonuses could be a problem this year, when the Detroit three contract talks with the United Auto Workers Union start. The contract with all three companies will run in September.

Joe Ashton, the UAW Vice President, deal with GM, joined a GM labor relations Executive in signing a message to workers who say that the payments are a good example for how Union members are sharing in the success of the company.

"We know that 2011 an important year for both the UAW-GM with contract talks approaches", the message said. "We look forward a contract that is both employees and the company advantage."

The payments follow GM's surprising return to profitability in the past year. The company was founded before the bankruptcy, by most of its debt and onerous contracts cleaned and showed it in a depressed market can earn money. Consumers bought only 11.6 million cars and trucks in the US last year far below the peak of 17 million in the last ten years.

The GM documents say white collar bonuses based on operating cash flow, earnings before interest and taxes, and market share globally. This year the company plans the formula, vehicle quality add measured by warranty claims and ranking of consumer reports magazine and j.d power and associates.

GM said its top 100 earners by the Government figures restrictions are covered. Cash wages would have a ceiling of $500,000, but further compensation in stock can be made. Many Executive takes $1 million more than home yet.

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Chrysler's around 22,000 workers were to receive bonus, although the company lost$ 652 million last year to $750. It anticipates their aging line net income this year after revamping. Chrysler workers received premiums, but the amounts were not disclosed.

Ford Motor Co. announced last month his 40.600 U.S. factory workers per $5,000 the first such trials pay since 1999. The Dearborn, Michigan, company received bankruptcy to avoid, and no salvation by the Government, were $6.6 billion last year.

Ford also plans to pay performance bonuses to employees instead of increases, but it would not reveal the amounts.

GM sit the bonuses not good with former shareholder whose small investing in bankruptcy was wiped out.

"There is nothing more for the shareholders, but people next, I think doing OK," said John Chevedden, 65, Redondo Beach, California, often complaining about GM management at annual meetings of the company. "The shareholders take the brunt really."

© 2011 Associated press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed are.

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