GM CEO takes 50% pay cut
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GTR Member
Joined: May 27, 2004
Posts: 4,749
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From: Manchester, England
Sounds fair. The guys at the top need to be seen to be making sacrifices for the good of the company as well as the employees. From CNNMoney.com
GM slashes dividend, officer pay
Moves by embattled No. 1 auto manufacturer follow proposals made by Kerkorian adviser in January to stem losses.
February 7, 2006: 9:20 AM EST
NEW YORK (CNNMoney.com) - Embattled auto manufacturer General Motors Corp. cut its dividend by half and reduced pay for its top officers Tuesday, in addition to unveiling cost-saving changes in its pension and health plans for its nonunion staff.
The moves are pretty much ones outlined in a speech by Jerry York, an adviser to GM (Research)'s largest individual shareholder, Kirk Kerkorian. York, who was added to the GM board of directors Monday evening, had called for the company to get in "crisis mode," and he argued that a sense of shared sacrifice was needed to win additional contract concessions from the United Auto Workers union, which represents more than 100,000 workers at the No. 1 auto manufacturer.
General Motors CEO Rick Wagoner
The dividend was cut to 25 cents a quarter from the 50-cent level, where it had been the last nine years. The move should save the company about $550 million a year. The company reported a 2005 net loss of $8.6 billion, or $15.13 a share. It should also cost Kerkorian, who owns a 9.9 percent stake in GM through his Tracinda investment vehicle, about $56 million a year.
In terms of pay cuts, Chairman and CEO Rick Wagoner will have his pay cut 50 percent, while other top officers will have their pay cut 10 to 30 percent. Outside directors of the company will also have their compensation cut 50 percent.
As to changes in its health care and pension plans for salaried retirees, the company announced it would cap its contributions to salaried retiree health care at the level of its 2006 expenditures, effective Jan. 1, 2007. Assuming that cap does not cover future health-care costs for those retirees and their families, they will face increased monthly contributions, deductibles, coinsurance, out-of-pocket maximums and prescription drug payments.
The company announced the change would save it about $900 million a year in pretax health care costs, and reduce its long-term health care liability by $4.8 billion.
"These are difficult decisions that involve sacrifices by our employees, stockholders, retirees, and the senior leadership team," said a statement from Wagoner. "However, we are confronting a dramatic change in our industry and in the global competitive environment, and that requires us to look for additional ways to reduce financial risk and improve our competitiveness for the long term."
The company also announced it intends to essentially end its pension plan for salaried retirees in the future. It said it will freeze accrued benefits in the current pension plan for salaried employees and retirees. Final details of the move were not final, but the company said it may move toward a defined contribution or cash balance plan.
Retiree health care and pension liabilities are a major competitive problem for the auto manufacturer, especially benefits promised to its union-represented employees, who are not affected by the changes announced Tuesday
GM slashes dividend, officer pay
Moves by embattled No. 1 auto manufacturer follow proposals made by Kerkorian adviser in January to stem losses.
February 7, 2006: 9:20 AM EST
NEW YORK (CNNMoney.com) - Embattled auto manufacturer General Motors Corp. cut its dividend by half and reduced pay for its top officers Tuesday, in addition to unveiling cost-saving changes in its pension and health plans for its nonunion staff.
The moves are pretty much ones outlined in a speech by Jerry York, an adviser to GM (Research)'s largest individual shareholder, Kirk Kerkorian. York, who was added to the GM board of directors Monday evening, had called for the company to get in "crisis mode," and he argued that a sense of shared sacrifice was needed to win additional contract concessions from the United Auto Workers union, which represents more than 100,000 workers at the No. 1 auto manufacturer.
General Motors CEO Rick Wagoner
The dividend was cut to 25 cents a quarter from the 50-cent level, where it had been the last nine years. The move should save the company about $550 million a year. The company reported a 2005 net loss of $8.6 billion, or $15.13 a share. It should also cost Kerkorian, who owns a 9.9 percent stake in GM through his Tracinda investment vehicle, about $56 million a year.
In terms of pay cuts, Chairman and CEO Rick Wagoner will have his pay cut 50 percent, while other top officers will have their pay cut 10 to 30 percent. Outside directors of the company will also have their compensation cut 50 percent.
As to changes in its health care and pension plans for salaried retirees, the company announced it would cap its contributions to salaried retiree health care at the level of its 2006 expenditures, effective Jan. 1, 2007. Assuming that cap does not cover future health-care costs for those retirees and their families, they will face increased monthly contributions, deductibles, coinsurance, out-of-pocket maximums and prescription drug payments.
The company announced the change would save it about $900 million a year in pretax health care costs, and reduce its long-term health care liability by $4.8 billion.
"These are difficult decisions that involve sacrifices by our employees, stockholders, retirees, and the senior leadership team," said a statement from Wagoner. "However, we are confronting a dramatic change in our industry and in the global competitive environment, and that requires us to look for additional ways to reduce financial risk and improve our competitiveness for the long term."
The company also announced it intends to essentially end its pension plan for salaried retirees in the future. It said it will freeze accrued benefits in the current pension plan for salaried employees and retirees. Final details of the move were not final, but the company said it may move toward a defined contribution or cash balance plan.
Retiree health care and pension liabilities are a major competitive problem for the auto manufacturer, especially benefits promised to its union-represented employees, who are not affected by the changes announced Tuesday
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Joined: March 14, 2004
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Kerkorian is a shareholder. Wagoner is the CEO. Kerkorian won't even notice the loss of 56 mil, and Wagoner will still make enough to buy beer and chips on the weekend. But it's about time upper management took a pay cut after bring GM to its financial knees. They're the ones who have been driving this and they've run it off the road several times. I just hope they can avoid a crash.
I agree with you about the UAW. I've voiced my opinion on this many times so there's no need to repeat it again.
I agree with you about the UAW. I've voiced my opinion on this many times so there's no need to repeat it again.
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