GM Confirms Big Profit Sharing Checks
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by Jeff Gilbert
WWJ AutoBeat Reporter
DETROIT (WWJ) General Motors is confirming that its 45,000 manufacturing employees will get profit sharing payouts of “upwards of $4000 per employee.” For the 3,000 workers in GM Holdings, that payout will be around $3000.
The final number will be released later this month when GM reveals its full year 2010 earnings. GM earned $4.2 billion in the first three quarters of the year.
“On the whole, we made tremendous progress last year,” CEO and Chairman Dan Akerson said in an e-mail message to employees announcing the payments on Monday. “With our collective teamwork, this can be just the beginning.”
GM’s previous high was a $1775 profit sharing payout in 1999. Workers have not received profit sharing checks since 2008.
“It’s a reward for things that have been foregone, raises and things of this type,” says Dave Cole, founder of the Center for Auto Research.
This is also the week that General Motors begins informing individual salaried employees about their bonuses, what GM calls Enhanced Variable Pay. The company saying for 96 per cent of workers, that bonus will average between four and six per cent of their base pay. GM has 28 thousand salaried employees.
Some salaried workers, less than one per cent, will get up to fifty per cent of their base pay.
The payments were condemned by a leading critic of the industry bailout in Congress.
“Since the taxpayers helped these companies out of bankruptcy, the taxpayers should be repaid before bonuses go out,” Sen. Charles Grassley, R-Iowa, said in a statement. “It sends a message that those in charge take shareholders, in this case the taxpayers, for a sucker.”
Analysts, however, say companies need to reward key employees, or they could lose them to other industries, or to competitors.
“They have to compete,” says Cole. “We’re seeing people move within the industry. They are looking for people wherever they can get them in critical skill jobs.”
GM says pay for its 100 most highly paid workers is governed by a special government master for executive compensation.
Ford workers are receiving profit sharing checks averaging $5000. Chrysler didn’t post any profits for 2010, but presented workers with a $750 performance bonus.
Profit sharing is expected to become a major subject of contract talks this summer between the domestic auto companies and the UAW. The companies want to tie pay to performance. Dave Cole, from the Center for Auto Research, says that’s important.
“Rewarding your current work force is a very important thing to do. Whether it’s an hourly worker on the line, or a salaried worker. “
The Associated Press contributed to this report.
Follow Jeff Gilbert on Twitter @jefferygilbert