Not much time passed after Ford chopped compensation for 300 top executives before General Motors decided to free up financial breathing room via payroll costs.
The automaker has enacted a sweeping plan to weather the coronavirus storm by cutting the pay of its salaried workforce by 20 percent, with 6,500 U.S. workers incapable of working from home placed on leave. Employees aren’t expected to swallow the loss out of the goodness of their own hearts, however — GM promises they’ll see the missing money one day.
Per Reuters, the 20-percent payment deferral is a global initiative; white-collar workers can expect the missing pay to appear as a lump sum no later than March 15th, 2021. The pay chop commences April 1st, with The Detroit News citing a company spokesperson claiming it will be in effect for 6 months.
Top brass aren’t spared from the money-saving effort. Executives will see a pay reduction of 25 percent, with the automaker’s senior leadership team receiving a 30-percent pay chop. Board members are on the hook for a 20-percent drop in compensation.
Elsewhere, the 6,500 salaried U.S. workers who can’t work from home (mainly engineering and manufacturing staff) will find themselves part of GM’s paid absence program. While on leave, they’ll receive 75 percent of their pay.
All employees impacted by GM’s latest move will retain their health benefits.
As Ford and Fiat Chrysler toss out dates for a return (or partial) return to production, GM hasn’t followed suit. Past the end of this month, the company plans to assess the state of its facilities — and the pandemic in general — on a weekly basis.
Earlier this week GM made moves to bolster its balance sheet, tapping credit facilities for $16 billion in available cash.
[Image: General Motors]
“GM promises they’ll see the missing money one day.”
I starred in that movie once, around 30 years ago. I never saw the money.
Expect to see the good-hearted gestures by many companies (to sustain salaries) yield to survival cuts in the weeks ahead. This is just the beginning.
As for GM, maybe they will pay it back and all will be well. But it’s the small businesses that will suffer the most, and even the large businesses that are in the service industry.
Yep, my (manufacturing) company just announced that annual raises scheduled to go into effect on April 1 have been canceled.
I’m sure it won’t be the last step.
It is one thing to postpone or to cancel raises, but to cut people’s pay is outrageous. There is one company in texas using the excuse of the Stimulus check to cut $ from employees that they pay. I can’t wait for that employer to be sued out of business.
You are absolutely correct.
“GM promises they’ll see the missing money one day.”
I’ll pull out, really.
Why do board members receive just a 20 percent cut? Those guys probably don’t need any of the money they get for sitting on the board.
They earn that money. Who else isn’t going to hold GM ‘leadership’ accountable?
“Who else isn’t going to hold GM ‘leadership’ accountable?”
Last time it was Government not the board of directors.
People that sit on boards like GM’s are usually also executives at other companies in unrelated industries, or retired execs, retired government officials, or retired military officers. They also usually get compensated for travel to board meetings, and free lodging.
They are paid hundreds of thousands, or even millions, depending. Mary Barra is Chairman. These people get their jobs based on their ability to say yes to the Chairman. Strong suction must be proven during their job interview.
During the 2018 GM job cut announcement, they said 25% of the execs would be gone, and that promise didn’t happen.
GM adjusts its salaried bonus every year to effectively cap the payout. The promise of do better, get more, is a lie.
After the bankruptcy, and the bailout, GM said it could break even in a 10M unit US auto market; that’s a quick lie.
None of this is surprising, of course.
And once again, extra-ordinary items will have a party on the GM income statement, overblown above the virus, to again hide the usual poor company performance for another year.
No wonder they only require an inexperienced CFO; this is a repeat the past cakewalk.
Bloomberg reports that GM is preparing itself for a downturn. Even if sales dropped 25% over a 2-year period the company would still be profitable, although profits could drop as much as 70%. That means the SAAR could drop to 12.7 million and GM would still be profitable.
My company already said no raises this year – and we were just two weeks away from receiving them. I understand why, but technically that money was earned by our performance LAST year. My department actually exceeded our goals despite some massive challenges. So all the hard work got us nothing in the end.
During the 2008 downturn we got a 6% pay cut… and they never made up the difference. Our salaries just returned to normal some 9 to 10 months later. Due to cost of living increases we ended up behind in terms of overall compensation and have never caught up really. However back then several people were let go (trimming the fat) so a job with a pay cut was better then no job at all.
At this point having decent health insurance is likely everyone’s biggest worry.
Fortunately, our raises come in January every year, so we just have to worry about next year.
why don’t you find a new employer that doesn’t treat you so bad
“All employees impacted by GM’s latest move will retain their health benefits”
It is nothing short of criminal that people who are losing their jobs as a result of a health-care crisis are also losing their their health insurance. Maybe not these GM employees who are on (mostly paid) leave, but we can be sure it’s happening across the country
I’m a capitalist from the word “go”, but the lack of universal health insurance in this country simply disgusts me. Now, more than ever.
Employers are not required to pay jack for your health insurance. You are lucky to have it. Try getting it on your own. Universal healthcare insurance means there is no insurance – it becomes a welfare program that everyone can exploit and there will be no limits on demand – so your ability to get that healthcare will be limited by price, by budget, and by ability of the healthcare to be administered. You will experience rationing. That is what happens with unregulated demand for finite resources.
I’m saving at least 200 bucks a month in gas. I love working from home
Despite having everything that I need to do my job at home, I am thankful to be at work where everything is within my grasp and I can manage the operations without a hiccup. I tried working at home for two days and hated my job. I am the only here at the office but I love my job and I am more effective.
GM has over $20 billion of taxpayer dollars that they neither paid taxes or interest to steal – why are they having to go into panic mode by stealing employee income?