General Motors Co. will pay more than $189 million in profit-sharing to 48,000 U.S. hourly workers and millions more in performance bonuses to salaried employees, according to a person briefed on the matter.
The company, less than two years out of bankruptcy protection, will pay most hourly workers more than $4,000 each as compensation for the company's strong financial performance last year, the person said. The payments are more than double the previous record payment of $1,775 in 1999, the height of the boom in sales of sport utility vehicles and pickup trucks.
GM's 28,000 salaried workers, such as engineers and managers, will get 4 percent to 16 percent of their base pay. Less than 1 percent will get 50 percent or more, while another 3 percent will get between 16 percent and 50 percent, the person said. GM is not giving annual pay raises.
The bonuses rise with the worker's level of responsibility and are based on the performance of the worker and the company, said the person, who asked not to be identified because the figures have not been made public. Workers were notified of the numbers this morning, the person said.
The numbers won't be final until GM announces its fourth-quarter and full-year earnings later this month, the person said.
GM made $4.2 billion in the first nine months of 2010 and is expected to post a fourth-quarter profit. The company needed a $49.5 billion government bailout to survive a 2009 bankruptcy, and the government still owns 25 percent of GM's stock.
The 45,000 hourly workers at GM's factories will get more than $4,000, and another 3,000 workers at four factories that GM took back from Delphi Corp. will get around $3,000, the person said. GM is trying to sell the old Delphi facilities in Kokomo, Ind.; Grand Rapids, Mich.; and Rochester, and Lockport, N.Y.
The person did not know the total cost of the salaried bonuses, but they are likely to cost more than $200 million. Most GM salaried workers make more than $100,000, and if most get bonuses of 8 percent, the midpoint of the range, they would get roughly $8,000. That means GM would pay out roughly $224 million.
The payments are compensation for GM's earnings last year, a speedy turnaround that surprised many in the auto industry. The company emerged from bankruptcy cleansed of most of its debt and burdensome contracts. Concessions made by the United Auto Workers union helped the company to make money even at historically low sales volumes. Buyers bought only 11.6 million cars and trucks in the U.S. last year, far below the peak of 17 million in the middle of the last decade.
GM said its top 100 earners are still covered under government pay restrictions imposed on companies that received government aid. Cash salaries have been capped at $500,000, but further compensation can be made in stock. Many of the executives still will take home more than $1 million.
GM's Detroit-area competitors, Chrysler Group LLC and Ford Motor Co., also plan to pay bonuses to their workers.
Chrysler's roughly 21,000 blue-collar workers were to get $750 even though the company lost $652 million last year. It expects to post a net profit this year after revamping its aging model lineup. Chrysler salaried workers also were to get bonuses, even though the company needed a $12.5 billion government bailout to get through its 2009 bankruptcy.
Ford will pay its 40,600 U.S. factory workers $5,000 each, the first such checks since 1999. The Dearborn, Mich., company, which avoided bankruptcy and did not get a government bailout, made $6.6 billion last year. It also plans to pay performance bonuses to white-collar workers, but amounts were not revealed.
General Motors CEO Dan Akerson said last month that GM would not give white-collar raises but would give bonuses tied to company performance. GM, he said, used to give annual raises all the time.
"Three percent times five years in a row is 15 percent added to your cost structure," he said. "All of the sudden you're starting to really narrow the possibilities and flexibility of any reaction to a downturn. It's very difficult to overcome," he said.