GM Bosses Split $184 Million in Stock Bonuses : Workers Bitter at Being Denied a Share of Profits
General Motors is defending its stock bonuses for 5,000 executives, in a year when hourly workers are going without profit sharing, as part of a risk and reward philosophy.
The top executives will divide about $184.6 million in stock under a new bonus program, “so that both the managers of the business and the shareholders are ready to share in the business over the long term,” GM spokeswoman Patricia Molloy said.
GM’s board determines the amount of stock available for bonuses, and senior management allocates the awards based on criteria such as quality, profitability and meeting budget, Molloy said.
$169 Million Last Year
Until last year, executives got half their bonus in stock and half in cash. It was decided to make the award all in stock, she said, to “more closely align incentive compensation with stockholder interests.”
The stock for this year’s bonuses was worth $157 million when the program was approved in December and appreciated to $184.6 million by Wednesday. GM gave out $169.1 million in cash and stock last year.
On Tuesday, however, as it had in 1987, GM said its $3.6-billion profit in the past year was too little to trigger profit-sharing payments for hourly workers under a formula negotiated with the United Auto Workers union in 1984.
UAW Vice President Donald Ephlin, head of the union’s GM department, said executives should not receive bonuses if profits were insufficient to warrant profit sharing for the workers.
Different Formula
“People should be paid a wage, no matter whether you’re profitable or not . . . and, above that, we all ought to share together in the successes and failure. That’s a concept that maybe one day we’ll get to,” Ephlin said.
Ford Motor Co., which uses a different formula to calculate profit sharing, is expected to announce next week that hourly workers will receive cash bonuses based on Ford’s 1987 performance.
GM workers last year switched to the sales-based formula used at Ford and are expected to receive profit-sharing checks in 1989 based on 1988 results. Molloy said the formula wouldn’t have provided profit sharing based on 1987 results.
