Human Capital & Careers

No Bonuses for Big Wheels, Says Carmaker

In the past two years, auto giant General Motors has lost more than $12 billion.
Stephen TaubMarch 30, 2007

General Motors has confirmed published reports that it will not pay bonuses to top executives for 2006, according to the Associated Press.

GM spokeswoman Rene Rashid-Merem told Bloomberg that the decision affects about 20 executives. She reportedly added that more details will be provided in the company’s proxy statement, to be filed in late April with the Securities and Exchange Commission.

“It’s a modest positive symbol that they won’t get a cash bonus,” Harley Shaiken, a labor-relations professor at the University of California at Berkeley, told Bloomberg. “Giving any bonuses at all might raise some questions. The most important signal in bad times is a sense of shared sacrifice.”

In the past two years, the auto giant has lost more than $12 billion.

A year ago, GM explained that it did not award bonuses to the executive team “in consideration of the corporation’s financial results in 2005.” Even so, last week the company awarded chief executive officer Rick Wagoner 95,000 restricted stock units, valued at about $2.8 million, to be delivered in five annual installments. Wagoner also received options to buy 500,000 shares at $29.11; the stock closed Thursday at $30.89.

Despite not receiving a bonus, Wagoner earned $5.5 million in 2005. A year earlier, he earned more than $10 million, including a $2.5 million bonus, after earning nearly $13 million the year before that. Those figures reflect the hefty values assigned to stock-option grants.