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GM To 'Reward' Workers With Record $9,000 Profit-Sharing Checks

DETROIT (WWJ) - General Motors employees will get larger than expected profit-sharing checks this year, averaging around $9,000.

"That really is recognizing the hard work that the entire team did in 2014 to support our core underlying performance," said GM Chief Financial Officer Chuck Stevens. "That's what we want to to, to make sure we recognize the hard work of the entire team."

This is significantly more than called for in the formula negotiated with the United Auto Workers union.

"General Motors announcement today leaves no doubt about the strong, stable environment the GM/UAW collective bargaining agreement created," said UAW President Dennis Williams. GM has demonstrated that the company can profit, shareholders can have value and our members can be rewarded for their hard work."

This year's contract talks will have to balance the company's desire to tie workers pay to GM's success, and the workers desire to get an increase in their wages. UAW Vice President Cindy Estrada, who will lead the talks with General Motors says profit sharing remains a very important part of a workers total compensation.

"Profit-sharing does more than put a few dollars into a member's pocket. It means more to spend in the community and each little bit makes a big difference for everyone."

General Motors 2014 earnings were impacted by recalls and restructuring costs, coming in at $2.8 billion. That's down from $3.8 billion last year.

Stevens says the results were definitely impacted by the ongoing recall costs.

"From an overall financial perspective, as we've disclosed before, roughly 2.8 billion dollars, from a corporate perspective in 2014," he said. "Plus the compensation program, which we estimated will cost 400 million. So, overall, just over a 3 billion dollar impact at a corporate level."

However, GM ended the year on a strong note, with a $1.1 billion fourth quarter profit.

"A strong fourth quarter help;ed us deliver very good core operating results in 2014 despite significant challenges we and the industry faced," said GM CEO Mary Barra. "By keeping our customers at the center of all our decisions, we addressed those challenges head-on and outlined a customer-focused strategic plan that will guide our company well into the future."

GM earned $6.6 billion here in its home market of North America. That would have ordinarily meant profit-sharing checks in the $6600 range.

Europe losses were cut to $869 million. GM is making money again in Latin America, $327 million. International operations, which include China, earned $898 million.

GM is also increasing its second quarter dividend by 20 percent to 36 cents per share.

"Our intention to increases the dividend is consistent with our balanced capital allocation strategy and reflects the confidence we have in the growing strength of our business," said Barra. "Our goal is to maximize long-term shareholder value through both stock price appreciation and return of capital."

CFO Chuck Stevens expects 2015 to be helped by lower gas prices, stronger sales and a richer mix of models. He says currency issues could be a significant headwind. But, overall, 2015 should be a much better year.

"We expect improved margins and improved profitability, on a consolidated basis, really driven by improvement in all of the automotive regions."

Connect with Jeff Gilbert
Email: jdgilbert@cbs.com
 Facebook: facebook.com/carchronicles
 Twitter: @jefferygilbert

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