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With GM’s recent announcement of $7.6 billion in profits for 2011, you would think that the taxpayers would get a nice chunk of those proceeds.
Well, we’re not even half way to that ship yet. UAW shareholders though are a different story. GM recently announced that they will cut nice thick checks in honor of their UAW shareholders. As much as $7,000 in certain cases.
This will indeed be GM’s largest profit sharing payout in history. The prior high? $1775 per UAW employee in the glory days of 1999. In the meantime Ford plans to fork over $6200 as a maximum. Part of that has been paid out already. As for Chrysler? $1500.
65 Comments on “UAW Profit Sharing Bonuses: Enough To Buy Two Tatas!...”
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Not sure about all the rest of ya’ll, but my wages did not grow in 2011. These guys get a bonus?
Ugh.
Mine grew for the first time in 4 years.
Mine did. The auto industry improved in 2011, so what’s wrong with sharing the wealth with the guys who are doing the actual work to make it possible?
The video game industry, certain sectors of computers and IT, real estate in certain markets, and according to some quick googling certain types of mining all grew in 2011.
The economy is beginning to turn around. Bonuses to the working and middle class folks are what the economy needs to really pick up. Giving cash to those who will spend the money and inject it back into the local economy does a lot more good than giving extra cash to the extremely wealthy whose spending habits haven’t been as effected by the downturn.
Satisfying as it may be, the standard “1%” rhetoric breaks down in a couple of ways. Thanks to the bailout, the role of the extremely wealthy investor is being played by regular taxpayers, like you and me. (Or, more accurately, we get whatever’s left over after that other big investor, the UAW, takes what it wants. Conflict of interest, no?)
Now, as an investor, I don’t mind when a struggling company rewards its employees when it turns a profit. But I do mind when those rewards are way, way over market. Ford’s plan should be the gold standard here, yet GM comes in above it? You’ll have to explain to me how that makes any sense.
In the end, it’s a noble idea, but terribly executed — which is the kind of decision-making that got GM into its situation in the first place. (And a sign that we bailed ’em out too early in the process.)
Yes, but if you owe someone a large chunk of taxpayer money, shouldn’t paying off that debt take precedent over bonuses, which are bonuses and not salary? I would still be in the “happy to have a job” mindset right now. Since the UAW has so much invested in GM you’d think they would be of that mindset.
@darkwing- You cite Ford as the gold standard. After further review, it turns out that GM’s $9.19B operating profit handily exceeds Ford’s $8.76B. The difference between the $9.19G figure, and the more often reported, net-net figure of $7.6B is payments associated with preferred stock. Operating profits better reflect actually business results.
China holds about 8% of our national debt. Am I missing something about the “Chinese communist party” comment?
I guess Steve changed his post. No more mention of the Chinese.
I did. When I reread it the last paragraph seemed just a little too political for my comfort.
The best and brightest brought some valid points and I revised this post in light of it. Thanks for keeping me on my toes.
That’s not fair … know I have no idea what you’re talking about.
…and you get paid to write about your jealousy on a website. AMERICA, F**K YEAH!
Would rather have a annual raise or a profit sharing bonus?
While I don’t think anyone at GM should be getting a bonus while $$ is still owed, I’m sure the top execs are getting substantially larger bonuses.
I’d much rather have the workers getting their fair share of the profits than the top execs getting the lion’s share.
For instance, in 2010, Mullaly and Ford, Jr. received a combined total of $53 million in total compensation; each received more than DOUBLE what Winterkorn received as CEO of VW – and VW is raking in the profits at a much greater clip than Ford (more than Ford, GM and Chrysler combined for 2011).
Mullaly and Ford, Jr. couldn’t make do with $10-12 million each? (Even that’s over the top considering how much Ford still owes its creditors.)
That excess compensation should have gone towards paying down Ford’s debt (I’d also like to see the shareholders get a more of a return instead of so much the profits of the company going to 2 individuals).
For Mullaly, at least, only about $5M of that was in cash — most of the rest was in stock options. That seems pretty fair to me: if he turns the company around, he ends up with a big payday, which costs Ford much, much less than simply paying him $50M in cash.
And comparing US and German compensation is very much an apples and oranges comparison. European tax law and accounting practices make it much more attractive for companies over there to give their executives perks, the way companies here did decades ago. Come up with an equivalent figure, on either side of the pond, and then we can talk.
@bd2- There is NO money still owed by GM!! We (taxpayers)own 1/3 of the company and our final return depends on the ultimate sale price of government shares.
@darkwing- You hit on a key factor of difference between American Exec compensation and other regions. I recall, quite a few years ago, the CEO of Nissan (pre Ghosn) was provided a $1,000,000/year membership to an exclusive Tokyo Country Club as part of his compensation. Another example, Honda, provided vacation properties for employee use. The comparison is apples to oranges, as you say.
Does the price of the Tatas include the anesthesiologist?
“With GM’s recent announcement of $7.6 billion in profits for 2011, you would think that the taxpayers would get a nice chunk of those proceeds.”
Steve,
You’ve been at this for how long, and make a statement like that?
I’m no GM fanboy but it has paid back the cash portion and correct me if I’m wrong but the government does own roughly 33% in company stock. If the taxpayers want “a nice chunk of those proceeds” I suggest you write your congressman and have him pressure the powers that be to sell the stock. Oh, the stock price is down? Well, then don’t tell your government to sell it!
The power to monetize the taxpayer’s portion is not at GM’s hands. And being that you sell cars for a living wouldn’t you like to sell a few to GM employees who will receive a profit sharing check?
+1 Actually, salaried workers have had their pay frozen and are getting reduced bonuses. The bonuses to the union employees were part of a contract. What else could GM have done?
@pgcooldad- Well said!
Salaried Enhanced Variable Pay- the equivalent of UAW profit sharing- will likely be much larger than $7,000 each on average. Executive bonuses will be very, very much larger still.
There have been news reports about EVP being adjusted down a bit because the profitability goals were not fully met. That should not be interpreted to mean they are gone or dramatically lower than last year. Almost makes me regret retiring. (NOT REALLY!)
GM is back!
Interesting… I should read a 500+ page contract and detail it for the benefit of a three paragraph news release.
And you’re the one trying to lecture me on logic?
Steve, You said you would have to be a psychic to know information that is readily available, if you chose to inform yourself. I was critical of your lazy journalism, your perpetuating innacurate ideas. If you write about a topic, you ought to know just a little bit about it. You confirm my point that you do not really want to inform yourself. It would, after all be a little work to understand the truth.
You may think avoiding work is logical, but it is still just laziness.
Steve, while a great admirer of yours, I must say that this bit of shallow journalism is not your finest hour. If you were going to discuss this issue, you needed to give some background (including discussion of contractual obligations) and a rational analysis of exactly why the bonuses were being given. Short of that, it’s just more internet blather.
Jeff, it’s a news release. If I had acess to that information, I would either be Camac the Magician or an Inaki Lopez disciple.
Steve, you do have access to that kind of information, but the suggestion is that you did not trouble yourself with finding or considering it.
As for your comment, “…you would think that the taxpayers would get a nice chunk of those proceeds.”
You feed the misguided notion that GM Company will be paying anything to taxpayers.
On the other hand, the taxpayers will benefit from the inevitable growth in GM stock price as this years profits hit new records.
This concept seems difficult for most here to understand, presumably a side effect of the instant nature of our world.
“Steve, you do have access to that kind of information, but the suggestion is that you did not trouble yourself with finding or considering it.”
Tell me where it is and we’ll share it.
“As for your comment, “…you would think that the taxpayers would get a nice chunk of those proceeds.”
You feed the misguided notion that GM Company will be paying anything to taxpayers.”
It’s a notion… one that is worthy of consideration.
“On the other hand, the taxpayers will benefit from the inevitable growth in GM stock price as this years profits hit new records.”
Huh? Since when did the American stock ownership become so Soviet in practice? The majority of the shares are owned by the Federal government. Not the American taxpayer.
“This concept seems difficult for most here to understand, presumably a side effect of the instant nature of our world.”
Don’t see it. Most folks here have a pretty sound fundamental understanding of the bailout. But if you wish to share some new information that hasn’t been introduced in TTAC’s brief press release, please feel free to do so.
@Steve Lang- Complete UAW GM contract is here:http://www.scribd.com/doc/65655466/UAW-GM-Contract-Language
It took me about 2 minutes to find it.
It is, in fact, just your notion about GM repaying something in addition to the stock sale proceeds. It is not required by the arrangements the Obama administration made, and it will not be done. Other than that, you can consider it all you want. May as well consider a date with a super model. Your considering it perpetuates a myth.
Relative to the stock ownership: You can’t have it both ways. You write that the taxpayers should get a chunk, evidently ignorant (by choice?) of the truth that the ONLY return to taxpayers will be through sale of the stock, then say the stock is not owned by the taxpayers, only the government. A little shy on logic here.
btw-No one has seen one penny in tax increases for TARP, let alone the tiny portion for the Auto “bailout”, most of which will ultimately be recovered by the stock sale.
The cold hard fact that most, including you do not seem to get is that the sole remaining payback to government will come from sale of GM stock. There is nothing else involved. New GM is solid, but the markets have been slow to realize the new realities. The levels of profit the company is generating now are likely to grow as the US market continues to recover. The stock price should follow, as we have already seen. We need $53 shares to get well and that will not occur overnight.That is my point about this taking some time.
Don’t shareholders get dividends???
Actually, GM hasn’t paid back the cash portion, either — that was just some accounting trickery.
@darkwing- You are just wrong!
GM did repay everything that was due.
You confuse them using money that was injected to capitalize the new business with “accounting trickery”.
There was no trick, despite what our friends on the right (idiotically!) asserted.
Government took a 2/3 ownership of the new business during the bankruptcy in exchange for the funds used to recapitalize the new entity. There is not a single dime due from GM operations.
Why is this so hard to understand?
doctor olds: Here’s what actually happened — GM repaid the “bailout” with money from another TARP fund at Treasury, not from its own profits. Here’s what that quarter’s report from Neil Barofsky, the guy at Treasury overseeing TARP, said: “The source of funds for these quarterly [debt] payments will be other TARP funds currently held in an escrow account.”
Look, I understand that you want your former employer to succeed, and not just because you don’t want your pension to bust. I’m sympathetic; really, I am. But you have to sit back and take a dispassionate look at what *actually* happened, both the good and the bad. Assuming every piece of unflattering news is part of some kind of politically motivated conspiracy is just going to drive you nuts.
@darkwing- What you write is close, though perhaps a little misleading. The TARP escrow account you refer to was money already committed to re-capitalize GM. All of that money was swapped for equity in new GM, not given without strings. Thus, it was already GM’s money.
The implication has been that the Obama admin gave GM additional TARP funds to repay the Bush loans. That is not true. GM was capitalized with an amount thought necessary to get them through the bankruptcy restructuring with the expectation they would not repay the Bush loans for another 5 years. Business results provided enough free cash flow to allow the company to make the early loan repayment. That is the basis for Whitacre’s AD. Many voices said GM would be back to the well for more in no time. That has not proven to be true. GM has generated over $14B in net profit in the past two years and accrued around $40B in cash along the way. GM Stock surpassing $53 in time is quite reasonable, though politics have skewed so many things in this situation that Obama may decide to sell early.
@DoctorOlds:”Government took a 2/3 ownership of the new business during the bankruptcy in exchange for the funds used to recapitalize the new entity. There is not a single dime due from GM operations.”
I understand GM doesn’t own any money back to the Govt(Taxpayers), and that the Govt will recoup their money back once the stock is sold. However, it looks less and less likely that the stock price will reach $53 in the next 2 to 3 years for the Govt to make whole on the investment. The deal to take equity for debt was a boneheaded one to begin with. IMO GM should take the high road and make the investment whole in return for the bone we taxpayers threw at them in 2009, without which GM wouldn’t be here now. Write a check to the treasury every year for $1B, put 5 grand in discounts for every car sold, send out gift cards, gas cards etc for tax payers at random, send employees to do community service, build roads schools etc. They are so many ways to give back to the tax payers if the stock sale doesn’t net the $25 B or so still invested in GM. Or just give out free Camaro’s to taxpayers at random who enter some contest.
@Alluster- I think GM’s most important obligation is to get the business strong for the long haul. The thought has crossed my mind that they have enough cash to buy out the shares at $53 per so that the political BS and idiocy would end. If the stock is dumped early for political reasons, GM could chip in the $13B or so difference.
Truth be told, I am not particularly sympathetic to the folks ragging on GM as if the bailout is costing them something personally. It is not. There is no TARP surcharge on anyone’s tax rates and the GM share of TARP under the worst case scenario is $13B, or about 1 1/2% of i, if the stock were sold tomorrow. If taxpayers have to eat that bill, it is $42 per American. I ams positive I have paid far more tax than that for government actions I don’t necessarily favor. Hardly the burden some are crying about, and almost all of that is borne by the wealthy, not the self styled experts with the complaints.
I had the turbo version of this car. It was fun – and on occasion, was able give more serious hardware a run for their money. I remember really pissing off a guy in 5.0L Mustang. The key to the turbo’s good-for-1980’s-performance was the car’s lightness. I remember telling people not lean on the car – the sheetmetal was that thin!
we could have let GM and Chrysler fail. we could have let the UAW fall to pieces. instead we blew taxpayer money on companies who, at best, were fiscally irresponsible–incompetent at worst. and now they’re rewarding the employees that made all that happen.
…i buy american, not for a sense of misguided pride, but because i think we can make competitive cars. but the UAW rubbing our faces in it, i’m reconsidering owning an american car again. ever.
The employees being rewarded had nothing to do with the decisions that led to the demise of either company. I’m being hypocritical with this statement but at least I recognize it since they didn’t make any decisions that led to the profits either. But, you want to blame them during the fall but not reward them during the rise in profits.
the UAW partially led to the bankruptcy due to the ridiculously high wages, benefits, retirement. union wages are far too high above market value, and why every intelligent foreign car maker shifts their business out of union states. and based on the money that goes to unions, the actual take home of the UAW workers isn’t that much better.
FJ60: Your statement that the UAW’s cost structure is partially responsible has merit, but the scale of culpability is skewed. GM managed to sell a lot of cars built with that high labor cost, only to have millions of people disappointed with the product. You could argue a good case that for the cost GM paid for assembly it should have been near perfect but clearly it was not. However, most of the reasons those cars disappointed customers was baked in by the beancounters who chose short term profit over product quality.
I see no reason that the line workers should be denied these checks. They took the brunt of the pain for GM’s poor management, they made the concessions, and they are part of the improvement in the assembly quality that is quite obvious in most new GM stuff. Funny how people scream when a line worker gets a bonus, yet the fat cats that engineered the failure of this company (and much of this country) get payouts that stagger the imagination and nobody blinks an eye…
golden2husky: “nobody blinks an eye” — are you sure about that? I see the Occupiers complaining about overpaid execs making fortunes losing other people’s money, and Tea Partiers complaining about bailing out failing companies…where have you been?
Anyway, the outrage here isn’t that line workers are getting bonuses, it’s that they’re getting bonuses that are way out of line with the market. Why, exactly, do GM workers deserve so much? And why is it irresponsible when an executive pockets millions of tax-subsidized dollars for himself, but noble when the UAW does it for its members?
@darkwing- you pose the question: “Why, exactly, do GM workers deserve so much?”
the answer is simple- The company just had the most profitable year ever! Before it is pointed out that this company is only two years old, more than the Old GM ever did, as well.
The workers signed on to take pay reductions in exchange for the opportunity for good profit sharing checks, such as these.
This accomplished two goals- it gave the workers a share in success, but allows the company to reduce costs in leaner times.
It is one of the many win-win provisions of the break through 2007 UAW contract that continue.
No doubt, UAW workers are still well paid, but most of them are able, hard working people who are doing a great job, evidently, based on market success last year.
doctor olds: The point isn’t that the company made a profit; rather, it’s how to responsibly allocate it, given that (a) the company is still on shaky footing financially and (b) they’re still the beneficiaries of substantial public largesse. (Setting aside accounting tricks and spin for the moment, fundamentally, the government’s still into GM for quite a bit of money.)
For comparison, look at TARP-era Goldman Sachs. Once they became profitable again, they paid substantial bonuses, but they also made a point of quickly repaying the government, with interest. And as I recall, they got vilified for paying (also contractually obligated) bonuses as well.
Now, why is this situation any different? I can’t help but feel that the rules are somehow different for the UAW than they would be for any other wealthy investor.
@darkwing- I do not agree with your facts:
“(a) the company is still on shaky footing financially”
This is not at all true. They have plenty of free cash flow, nearly $40Billion in cash or equivalent and very little debt.
Like it or not, the wonders of bankruptcy restructuring and it technically is a completely new company.
The pension funding issue is actually quite minor, more a function of market returns, which currently are likely bring it near a fully funded status. Still, GM will have no problem funding pensions even if markets in which the funds are invested deteriorate.
“…and (b) they’re still the beneficiaries of substantial public largesse.”
What do you mean here? Unlike the financial institutions you cite, the Federal Government owns 1/3 of the shares in the new GM company, which they took in exchange for their investment.
There will not be another check in the mail from GM related to payback of the “bailout”.
It really is very simple. The only remaining return to government will be on sale of those 500 million shares.
GM certainly wants to achieve continued business success so the stock price will rise,in no small part because the management compensation is largely in stock and options!
doctor olds: You have to gloss over significant parts of the global balance sheet to paint such a rosy picture. And if you want to understand my point, think of the bailout from the perspective of the taxpayer.
GM isn’t the root of all evil, nor is it the next shining example of modern capitalism. It’s important to keep it in perspective — especially when there’s a bunch of our money tied up in it. (If you disagree, check out a big-city pension fund sometime.)
@dakrwing- what did i gloss over? the pension issue will be resolved- they are buying-out some right now and converting all salaried employees to 401k alternatives, going forward.
Believe me, from the perspective of a taxpayer. I have always been in the half that pay taxes. I want the stock to go to $53 a share so that government can get out and taxpayers will not bear any cost.
You do understand that GM did not structure the deal. They had no alternative.
If the cars were so bad as a result of bad management and designs, not assembly then why aren’t we rewarding the managers and designers. Seems to me that if the line workers had so little to do with the cars being so poorly built that they in turn have little to do with them being now built so well. This would be akin to giving the janitor a huge bonus because a school turns around their test scores. I am not convinced that bolting cars together is rocket science. How hard is it to torque a bolt down using a robotic wrench that shuts off when correct torque is achieved.
Is a Chinese made tablet really the right prop for THAT ad ?
My response could provide links to articles with more information detailing the profit sharing portion of the contract, and some financials that tell us how much the bonuses represent as a portion of the profits.
But I choose not to.
This might be an interesting topic for discussion, if I had some details to discuss.
So, does this thin, lazy post tell us the truth about anything?
Wow. Someone edited my post, changing it’s meaning.
Is that something TTAC does often? Is that part of the editorial policy? Haven’t run into that on any other comment boards that I can think of. Interesting.
“This article could provide links to articles with more information detailing the profit sharing portion of the contract, and some financials that tell us how much the bonuses represent as a portion of the profits.
But you choose not to.
This might be an interesting topic for discussion, if we had some details to discuss.
So, does this thin, lazy article tell us the truth about anything?”
And the more I think about it, the madder it makes me.
If you don’t like a comment, it’s your site, just delete it, don’t edit the meaning.
I expected more from you guys. But now I’ve learned.
Darkwing I agree, too much bonus and too much executive pay. The only thing I can do is voice my opinion here and vote with my cash. I have never bought a ( foreign ) car, but that is going to change.
Such hypocrites, an advertisement about solidarity with a Chinese made cell phone! The jitterbug is the only cell phone made in the USA, yes the phone for old folks. As a union member (not the UAW) I love calling out hypocrites who preach buying “American” cars.
I know that the anti-union stuff generates traffic and that the customer must be pleased, but this whole thing is just truthiness, not journalism.
For one, the salaried workers are getting bonuses, too. From Bloomberg:
Headline: GM, Chrysler Salaried Workers’ Bonuses Said to Reach 50% of Pay
“GM plans to pay bonuses to most managers equal to 15 percent to 20 percent of their annual salary and as high as 50 percent to less than 1 percent of its 26,000 U.S. salaried employees”
http://www.bloomberg.com/news/2011-02-10/gm-chrysler-salaried-workers-bonuses-said-to-reach-as-much-as-50-of-pay.html
For another, as has been noted above, the GM loans are paid off. To recoup the remaining funds, the government needs to sell its stock. To breakeven on the stock, the shares would have to roughly double in price, so we’re going to have to wait if we want to have a shot at coming out even.
And even if every penny of bonus money could somehow be transferred to the government, it wouldn’t do much to offset what the Treasury would like to recoup — the amount of bonus money is a fraction of what the government would like to recover from the sale of its GM equity. In any case, the bonuses will surely be taxed, so it’s not as if none of the shared profits aren’t going to the federal government.
You’d think someone who spends his free time telling anyone who will listen that “studies” “prove” conservatives are closed-minded and tribal, would at least pretend to not interpret every news story as “my friends vs. my enemies”.
I can appreciate that you have an almost pathological aversion to factual data and that balance offends you, but I have higher expectations for TTAC than I do for you.
A story that leaves out relevant facts isn’t factual. A story that makes assertions that are false is even worse. Unfortunately, this piece does both.
There is no particularly good reason to fixate on labor getting profit sharing checks, while ignoring that management is also going to be paid. And it is bogus to claim that profits can be used to repay the government funding, when the government currently has no outstanding loans to be repaid. That’s a disadvantage of holding equity, instead of debt.
Well, at least you’re consistent. Thanks for proving my point.
For future reference, personal attacks don’t, in fact, make up for an “argument” based on half-remembered factoids and thirty seconds of Googling.
“Thanks for proving my point.”
No problem. Identifying the errors that you make is quite easy, since you are so good at making them.
“personal attacks”
I can’t help it if you take being corrected so personally.
Here’s a thought — if you’d like to avoid being corrected, then stop making so many mistakes. Take some personal responsibility for the comments that you make.
You think I’m actually interested in your “argument”? Aw, that’s cute.
Suggests a certain lack of reading comprehension, though.
“You think I’m actually interested in your “argument”?”
You obviously are, as you keep initiating these little exchanges between us. That whole irony thing doesn’t really register with you, apparently.
At that price, those must be some very “bodacious ta-tas”!
“With GM’s recent announcement of $7.6 billion in profits for 2011…”
Gentleman, a moment of silence now for the bondholders shafted in 2009.
++++++
OTOH – those who stayed behind (rather than take one of the multitude of job offers in front of them) deserve every dollar coming their way. Without their sacrifice the profits wouldn’t have happened.
Assuming the workers are all at the 25% tax rate bracket, the government get’s off the top 25% of the bonuses.
Plus, the workers have more money to buy a GM vehicle. Which theoretically improves the stock price.
Personally, I think the money should have went into improving their products…. But that would have been way too much long term thinking.
The article underscores what many readers have been saying about GM and the bail out all along, which is that the tax payer paid for the UAW to continue to live large at public expense while so many Americans lost their jobs, their cars and even their homes.
GM can’t lose. The UAW can’t lose. The tax payers are the only ones getting hurt here.
And as far as the government collecting the taxes on these bonuses? It’s all government money to begin with. GM has no skin in this game. GM died. The only skin in the game is that of the tax payers.
@highdesertcat- I do agree with your criticism of the UAW favoring details of the Obama actions.
On the other hand, ALL of that money actually came from consumers buying GM products, not from taxpayers.
GM has gotten no government money beyond the funds used to capitalize the new business, and they have generated a huge pile of cash, nearly $40B, on top of that since then.
This will do GM in. If the salaries of those designing the cars are in fact frozen then eventually those designers who are now designing a quality product will leave. Lets not kid ourselves. Assembly can make a well designed car bad but it can’t really make a poorly designed car good. There are only so many ways to bolt them together unless one doesn’t bother to put the bolt in or something.
And as to all the phony buy American patriotism flying around in these sorts of stories and the bashing of those of us tat buy foreign, maybe one of you Patriots will wax my Toyota for me while I am in Afghanistan.
And I love that the Union guys are getting fat bonuses thanks to billions in Government intervention while Washington forms panels to look at gutting my retirement. Hell maybe we can get the UAW to represent the Army.