GM Reduces Bonuses to Its Executives : 5 Highest Officers Still Received Big Pay Hikes in 1985
General Motors cut back on the bonuses paid to its top executives in 1985, but its five highest ranking officers still received significant increases in total compensation thanks to big raises in their base salaries.
Total pay for the executives at the nation’s largest industrial company rose faster than the inflation rate in 1985, despite the fact that the company’s profit tumbled from 1984’s record level, according to GM’s proxy statement released Friday.
The release of GM’s statement also made it possible to determine that, industrywide, Chrysler Chairman Lee A. Iacocca was the highest paid auto executive in 1985, outdistancing both GM’s Chairman Roger B. Smith and Ford Chairman Donald E. Petersen. (Ford and Chrysler released their executive pay scales in their proxies earlier this month.)
Once Earned $1 a Year
Iacocca, who once worked for $1 a year for the then-struggling auto maker, was paid back handsomely in 1985 for his earlier sacrifices--pulling down a base salary of $667,455, plus a bonus (paid retroactively for his 1984 performance) of $950,000. His total pay of $1,617,455 translates into a 35.4% raise over his earnings the year before of $1,194,838.
Although Iacocca runs a company that is only one-fifth the size of GM, he earned over $400,000 more than Smith, who had total compensation of $1.19 million, up 6.5% from 1984. Smith’s earnings were also below those of Ford’s Petersen, who made $1,437,234 in 1985, up 16.1% from 1984.
Chrysler was also more generous than its larger competitors to its second tier of executives. In all, four Chrysler executives were paid more than $1 million each in salary and bonuses, while Ford had three officers in seven figures and GM two.
In fact, GM--which saw its net earnings drop 11.5% in 1985--reduced its cash and stock bonus payments across the board in 1985, according to the proxy statement.
Smith’s bonus was cut by $10,000 to $465,000, while GM President F. James McDonald had his pared by $5,000 to $400,000. Bonus payments for the company’s 61 highest ranking executives averaged $169,967, compared to 1984’s average of $174,293.
GM paid a total of $218,634,200 in bonuses to its 5,749 eligible executives last year, down 1.5% from 1984’s level of $224,148,400, the proxy revealed.