Merit pay returning at GM
|December 30, 2009||http://detnews.com/article/20091230/AUTO01/912300421|
Merit pay returning at GM
The Detroit News
General Motors Co. is restoring merit pay for almost all salaried employees now that the automaker has stabilized since emerging from bankruptcy with about $50 billion in federal aid.
The merit pay plan, which will be restored in February, is a modest annual cash raise that was suspended last year as GM teetered on the verge of bankruptcy. It is unclear exactly how much the merit pay plan will boost salaries, but it typically compensates for inflation and keeps workers competitive with peers at GM and rival companies, spokesman Tom Wilkinson said Wednesday.
"The good news is the company is now stable enough and back to normal enough that we can do this," Wilkinson said.
The move does not affect GM’s senior executives, whose compensation is established by Kenneth Feinberg, the U.S. Treasury Department’s special master for compensation.
GM told salaried employees about the merit plan restoration before workers left on holiday break earlier this month. The move comes three months after GM restored in September salaried and executive pay cuts for workers in the U.S., Canada and some foreign countries.
Those pay cuts were implemented in May, and slashed executive base salaries 10 percent while many other workers saw cuts ranging from 3 percent to 7 percent.
Restoring merit pay can help retain talented workers critical to vehicle development in coming months, said auto analyst Joe Phillippi of AutoTrends Consulting Inc. in Short Hills, N.J.
"Given the number of departures they’ve had, particularly senior people taking retirements or buyouts, you run the risk of a lot of brain drain and losing institutional knowledge," Phillippi said. "That’s very important with respect to engineering and vehicle launches."
Feinberg capped pay for most of GM’s top executives at $500,000 in cash and said GM can pay 50 percent of its total compensation for the top 26-100 executives in cash.
Feinberg said he’ll take a "fresh look" when GM proposes a pay package for a new CEO in the coming months. Last week, he approved a higher salary and pay package for GM’s new Chief Financial Officer, Christopher Liddell, who will be paid $750,000 in cash and receive stock awards worth much more if GM recovers.
Liddell stands to get as much as $5.45 million in GM stock starting in 2012.
GM received nearly $50 billion in U.S. government loans. The government swapped about $42 billion for a 61 percent majority stake in GM.
Earlier this month, GM made its first payments on nearly $7.1 billion in outstanding loans from the U.S. and Canadian governments.
GM paid $1 billion to the U.S. Treasury, using unspent taxpayer loan money; $192 million went to the Canadian national and Ontario provincial governments.