DETROIT - General Motors is likely to spend more than $500 million on employee bonuses and profit-sharing based on the company's performance last year.
GM, which made a record profit in 2011, will pay bonuses of at least $182 million to white-collar workers such as engineers, car designers and managers on Wednesday, according to a formula obtained by The Associated Press. That's on top of $332.5 million in profit-sharing it already agreed to pay factory workers.
In the past, such payments have drawn criticism from those who believe the government shouldn't have bailed out GM and Chrysler. But GM, which made a record $7.6 billion last year, says the payments are needed to hold on to skilled employees. It's also keeping fixed costs down by giving bonuses instead of annual pay raises.
Tribune file photo
GM workers and salaried employees, like those pictured here at the Lordstown Assembly, are expected to share in $500 million in profit-sharing and bonuses.
The bonuses will go to most of the company's 26,000 salaried employees, many of whom make more than $100,000 a year. The bonuses will range from 8 percent of base pay to 14 percent, according to the formula.
The company would not release the percentages, nor would it say how much it will spend on the bonuses. But it's likely the average bonus for salaried employees will be more than the $7,000 that each of GM's 47,500 factory workers will get Friday.
The number includes more than 4,200 hourly workers at GM's Lordstown Complex, which has become a centerpiece of GM's turnaround by building the popular Chevrolet Cruze compact car.
The white-collar bonuses are determined by a worker's pay grade, individual performance and company metrics that measure whether GM met goals including pretax earnings, market share, cash flow and quality. This year's salaried bonuses will be smaller than last year's, when the company met all of its goals. A small number of top performers will get pay raises or larger bonuses, the company has said.
"It's a pay-for-performance type approach that really drives accountability in the organization and helps employees connect their compensation with performance," GM spokeswoman Lynda Messina said.
GM must reward employees because the labor market is starting to become competitive again, especially for computer experts, engineers and other skilled jobs, said James Stoeckmann, senior compensation specialist for World at Work, an organization of human resources executives who specialize in pay issues.