GM ends Wagoner’s pay cut

Salary of CEO restored to $2.2M, the level it was before 2006, when company lost $10B.

Sharon Terlep / The Detroit News

General Motors Corp. is ending the self-imposed pay cut Chief Executive Rick Wagoner took in 2006 just after the company posted a $10 billion annual loss.

Wagoner’s annual salary will be restored to $2.2 million this year, the same as he earned in 2003 through 2005, GM said Thursday in a regulatory filing with the U.S. Securities and Exchange Commission. His base salary was $1.3 million in 2006. The company hasn’t announced Wagoner’s 2007 total compensation.

In addition to his salary, Wagoner, 54, also will get shares of GM stocks and bonuses if he meets certain targets.

Wagoner accepted the pay cut to aid a turnaround plan that called for shuttering U.S. factories and laying off tens of thousands of workers.

"This says they’re getting back to business as usual," said David Cole, chairman of the Center for Automotive Research in Ann Arbor. "He has met key objectives. And, when you meet the objectives of a corporation, you’re rewarded."

GM ended 2007 with a record-breaking $38.7 billion loss, but the red ink was largely due to a mandatory write down of unused tax credits.

Since laying out a turnaround plan for the automaker, Wagoner has managed $9 billion in annual cost reductions, negotiated a landmark, money-saving labor deal with the United Auto Workers union and overseen a product renaissance at the automaker.

GM’s recovery still has a ways to go. Even without the tax hit last year, GM would have posted a $23 million loss, its third consecutive money-losing year. GM’s U.S. sales fell 6 percent in 2007 in a sluggish U.S. auto market, and the company only narrowly edged out rival Toyota Motor Co. to remain the world’s largest automaker for a 77th straight year.

Under terms put in place by GM’s board of directors, Wagoner could get $3.5 million in incentive payments and shares of GM stock if he meets internal targets. He’ll also receive stock options, including 500,000 that will vest over three years.

Wagoner said the labor deal struck last fall with the UAW will save the automaker up to $5 billion a year once it fully kicks in around 2010. The deal allows GM to clear out senior workers and replace them with lower-paid new hires. It also shifts $47 billion in retiree costs to the union at a discounted rate in the form of a company-financed, union-run trust.

The board also voted to set the annual salary of Fritz Henderson, named this week as the company’s chief operating officer, at $1.8 million. Henderson could get up to $2.4 million in incentive payments for meeting the targets, along with GM shares and stock options.

Henderson is moving into the operating post from the chief financial officer job. GM hasn’t had a chief operating officer since Wagoner held the job from 1998-2000.

Ray Young, who is replacing Henderson as executive vice president and chief financial officer, will get a base salary of $900,000 along with stock and stock options and $945,000 in potential incentive pay.