Bonuses to Officers of Big 3 U.S. Auto Makers Total $407.8 Million
Flush with cash from record profits last year of nearly $10 billion, the Big Three U.S. auto makers paid their top 13,000 executives a total of $407.8 million in bonuses this year, the companies revealed Friday.
Payments of big bonuses last year to top General Motors and Ford Motor executives sparked sharp criticism from unions and Reagan Administration trade officials. They complained that the auto companies should not have paid bonuses after the government placed strict limits on imports of Japanese cars and the United Auto Workers made concessions to help the U.S. industry recover from the recession.
Eventually, the companies reduced the size of maximum bonuses paid last year.
But with Japanese imports due to rise substantially in 1985 and no labor negotiations scheduled, GM and Ford will pay even bigger bonuses this year. Chrysler, which faces union negotiations this summer, will pay its first bonuses since its brush with bankruptcy.
In a statement, UAW President Owen Bieber criticized the industry for “incredible shortsightedness.”
“The compensation deals made public today are way out of line with the messages being sent to the workers and the public on the need for the U.S. industry to be more competitive,” Bieber declared.
Biggest Bonuses to Top Officers
The latest bonuses were spelled out in proxy statements issued by the three auto makers in advance of their annual shareholders meetings to be held later this spring.
The largest bonuses went to those at the very top. General Motors Chairman Roger B. Smith was the highest-paid U.S. auto executive, with a total compensation package (not including stock options) of $1.84 million in salary, bonus and “performance achievement” awards.
On top of his annual salary of $642,000 and an extra “performance” award of $250,000, Smith received a bonus of $949,966 for 1984, which was up 9.8% from the year before, according to GM’s proxy statement.
Former Ford Chairman Philip Caldwell, who retired earlier this year, was paid a total of $1.58 million, including a bonus of $950,000, up 5.6% from 1983, Ford said.
Chrysler Chairman Lee Iacocca received a bonus of $625,000 from Chrysler’s 1983 earnings, while his salary for 1984 was $569,838. It was Iacocca’s first bonus since he came to Chrysler in 1978 after being fired as president of Ford.
Chrysler, which had suspended bonus payments during its financial crisis, is now awarding bonuses out of 1983 earnings under a plan approved by shareholders last year that allows the company to award one year of retroactive bonuses.
Bonuses for 1984 will be distributed later, the company said.
Union Reacts
Although GM and Chrysler reached contract agreements with the UAW last year and are not scheduled to negotiate again until 1987, Chrysler will open contract talks with the union this summer.
In a statement issued Friday, UAW Vice President Marc Stepp, director of the union’s Chrysler department, said the Chrysler bonuses “support conclusively the union’s position that it is time to bring the Chrysler workers fully in line with the (higher wage) pattern” in place at GM and Ford.
“Chrysler clearly feels its return to profitability justifies salaries and bonuses commensurate with the rest of the auto industry,” Stepp said. “That same logic applies to the workers, and it’s time for Chrysler to meet the full auto pattern on job security, wages and benefits when we go to the bargaining table later this year.”
Compared to GM’s and Ford’s, Chrysler’s bonuses appear quite modest. Out of the industry’s total bonus pool of $407.8 million, GM is paying a total of $224.1 million to its top 5,804 executives, up 23.4% from 1983 (not including an additional $3.9 million in performance awards). Ford is distributing a total of $142 million to 5,773 executives, up 76% from 1983.
Chrysler is paying out a total of $41.7 million to about 1,500 executives, the company said.
F. James McDonald, GM’s president, received a salary of $563,000 and a bonus of $810,000.
Ford said its former president, Donald Petersen, who replaced Caldwell as chairman, earned a salary of $487,000 and a bonus of $750,000 for 1984. The executive promoted to replace Petersen as president, Harold Poling, made $390,000 in salary and a bonus of $700,000.
Second to Iacocca at Chrysler, Vice Chairman Gerald Greenwald, was paid $402,000 in salary and a bonus of $475,000.
American Motors released its proxy statement last month, and it contained no executive bonuses. The document said the company won’t turn “significant profits” until it expands its car line into larger, more profitable vehicles. AMC made a $15.5-million profit in 1984, its first profit in five years.
