General Motors Co., the largest U.S. automaker, said it expects to give unionized U.S. hourly employees profit-sharing checks averaging at least $4,000 as it prepares to negotiate a labor contract this year.
The payout is more than double the previous record for bonuses paid to GM’s hourly workers, the Detroit-based company said today in an e-mailed statement. GM said the previous record for its hourly workers’ checks was an average $1,775 in 1999.
GM, Ford Motor Co. and Chrysler Group LLC are preparing for contract talks this year with the United Auto Workers as the union seeks a share of the industry’s prosperity. GM, which earned $4.77 billion in the first three quarters of last year, wants to avoid “lockstep” annual raises to all employees and instead pay bonuses tied to profitability, said Logan Robinson, a law professor at the University of Detroit Mercy.
“A nice fat check will make the workers sympathetic to a plan like that,” Robinson, a former general counsel at auto-parts maker Delphi Corp., a GM spinoff, said in an interview.
The exact payout for GM’s 45,000 eligible employees will be disclosed during the company’s earnings release in late February, the automaker said.
The payouts to union workers are “a good example of how we are sharing in the success” of GM, the company and the UAW said in a joint letter distributed to the automaker’s plants.
“We are beginning to see that the hard work and dedication of this team is helping to create a healthier GM, which benefits employees, our customers and the many others who depend on our success,” Joe Ashton, UAW vice president, and Cathy Clegg, vice president of labor relations for GM, said in the letter.
About 96 percent of the company’s 28,000 salaried workers have a target bonus range equal to 4 percent to 16 percent of their annual salary, GM said today. Less than 1 percent of the company’s managers had target bonuses of at least 50 percent of their salary, the company said.
Because GM exceeded its targets for operating cash flow, earnings before interest and taxes, and global market share, the actual bonuses may be 1.45 times the employees’ targeted ranges, GM said. That means bonuses for top performers may exceed 72 percent of their salary, according to the statement.
Chief Executive Officer Dan Akerson said in December at the Economic Club of Washington that salaried workers would forego raises for 2010.
“GM is trying to lead by example and create a plan where salaried workers don’t get lockstep increases either,” Robinson said. “They want to push that onto the UAW and say they’re getting the same deal management is getting.”
Compensation for GM’s 100 highest-paid workers is based on limits approved by the special master for executive compensation, GM said.
Akerson, 62, said in December that some key executives have left the company because of government-imposed pay restraints.
“We have to be competitive,” he said. “We’ve been able to attract great people. We’re starting to lose them now.”
Ford will pay its 40,600 U.S. hourly employees profit sharing checks averaging $5,000, the Dearborn, Michigan-based automaker said after announcing 2010 net income of $6.56 billion, the most since 1999. Auburn Hills, Michigan-based Chrysler, which had a $652 million loss last year, said unionized worker bonuses will average $750.
The hourly worker profit-sharing checks are based on GM’s national contract with the UAW, Kimberly Carpenter, a GM spokeswoman, said in an e-mail. The amounts paid won’t exceed what the agreement calls for, she said.
UAW President Bob King has said he aims to recover some of the $7,000 to $30,000 in concessions each worker gave up since 2005 to help the U.S. automakers survive. The union surrendered raises, bonuses and cost-of-living adjustments. The UAW also agreed to a two-tier wage system in which new hires earn about $14 an hour, half the amount paid to senior production workers.
GM reorganized in bankruptcy in 2009 with $49.5 billion in government aid. The U.S. Treasury, which holds 33 percent of GM, needs to sell its remaining 500 million shares for an average of $53.07 to break even, according to a GM regulatory filing and data compiled by Bloomberg.
GM fell 16 cents to $36.29 at 4:01 p.m. in New York Stock Exchange composite trading. The shares have risen 10 percent from their initial public offering price in November.