Chrysler Ties Executive Bonuses to Worker Profit-Sharing
Chrysler Corp. plans to eliminate bonuses for top executives in years when it earns too little to share profits with workers, the auto maker’s chief negotiator said Monday after opening early national contract talks with the United Auto Workers.
Chrysler Vice President Anthony St. John said the No. 3 auto maker agrees with the union that it isn’t fair for workers to receive no profit-sharing because a company makes too little money while executives’ earnings remain fattened by millions of dollars in cash bonuses or stock grants, as happened in the last two years at General Motors Corp.
UAW spokesman Peter Laarman said St. John announced the plan during the first meeting between union and company bargainers negotiating a contract covering 63,200 hourly and salaried workers in 15 states.
St. John and UAW President Owen Bieber said they intend to reach a new contract in two to three weeks.
Union officials will study St. John’s announcement before commenting, Laarman said, calling it “a free gift, the kind you have to look at real close.”
The no-bonus announcement comes just in time to help blunt union criticism of 1987 executive bonuses to be disclosed Tuesday.
St. John said the company proxy statement also would probably show that Chairman Lee Iacocca again exercised stock options granted in the early 1980s, when Chrysler’s stock was worth a fraction of its present value. In 1986, Iacocca earned more than $20 million in salary, benefits and exercised stock options.
Chrysler workers have no profit-sharing formula under the contract that expires Sept. 14. But union and company officials agree that they will adopt an industry-pattern agreement established last fall at GM and Ford Motor Co.
The pattern contract’s profit-sharing formula generated a record $636 million distributed among 156,000 hourly and salaried Ford workers. Ford profit-sharing checks averaged about $4,000 per worker.
St. John also said Chrysler wants to set up a committee of union and company officials and outside participants to track the new contract’s ability to protect jobs and increase efficiency and quality of work.
