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No raise for GM salaried workers in '11

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No raise for GM salaried workers in '11

Akerson called on feds to give more leeway in setting executive pay

Christina Rogers and Nathan Hurst / The Detroit News

General Motors Co.'s 26,000 salaried employees won't get raises in 2011, even though the automaker is making money this year, and CEO Daniel Akerson wants "greater flexibility" in compensating top executives.

As part of its massive bailout of the banks, GM and Chrysler Group LLC, the government capped the pay of their executives. But in a speech to the Washington Economic Club on Friday, Akerson said that policy has hindered GM's ability to attract top talent, and driven some employees to companies without pay restrictions.

"We're starting to lose some of those key people to elsewhere," he said.

Hours later, Akerson met with the Treasury Department's Pat Geoghegan, who is overseeing executive compensation at bailed-out companies. Akerson wouldn't elaborate on the visit, but a Treasury spokesman said Geoghegan "routinely meets with executives on these matters."

By holding firm on white-collar pay, Akerson said, GM is trying to "lead by example." The company will negotiate a new contract with the United Auto Workers union next year, and continues to closely watch its bottom line.

GM says its white-collar pay already is on par with other companies, the result of a pay bump this year. The automaker declined to disclose the amount of that increase, but GM spokesman Tom Wilkinson said it brought salaries in line with others in the business.

The "no raise" news for salaried workers came as the GM Foundation announced Friday it was giving $27.1 million — the largest grant in its 34-year history — to the United Way of Southeastern Michigan to help improve graduation rates at Metro Detroit schools.

The foundation, too, has tightened its belt in recent years, but gradually is ramping up charitable spending again with a strong focus on education, said Mark Reuss, GM's North American president and a member of the foundation's board. While it shares the automaker's name, the foundation has its own money and is a separate entity, Reuss said.

GM is on track to end the year in the black, its first yearly profit since 2004.

Akerson, who becomes board chairman Jan. 1, said Friday the automaker was truly humbled by its "near-death experience." As part of its post-bankruptcy restructuring, GM shed plants, brands and workers and embarked on new design, manufacturing and marketing strategies.

Additionally, the company cut pay for salaried workers as it headed into bankruptcy last year; that reduction was restored in late 2009, said Wilkinson.

"Although the new GM has made significant progress, the auto business remains extremely challenging, and it is important that we control costs in every area of our business," he said.

Next year's pay freeze only pertains to a worker's base salary — not any incentive pay tied to the company's performance. GM will decide on incentive pay when it closes its financial books at the year's end, Wilkinson said.

Ford Motor Co. and Chrysler also have scaled back pay increases for salaried workers over the last two years. Chrysler did not grant "broad-based" white collar raises this year, but it didn't cut or freeze pay when the Auburn Hills-based company collapsed into bankruptcy last year, said spokeswoman Shawn Morgan.

Chrysler, too, was sustained with a government bailout and like GM, had cut expenses and its workforce. Morgan declined to comment on the company's pay plans for next year.

Ford gave salaried employees a pay increase this year, but announced previously that it had suspended incentive bonuses that would have been paid out this year and last, said spokeswoman Marcey Evans. Ford was the only one of Detroit's Big Three to forgo a government bailout.

In declining to give out white collar raises, GM could be laying the groundwork for next year's UAW contract talks, where the automaker likely will seek pay concessions from hourly workers, said Harley Shaiken, a professor at the University of California, Berkeley, who closely follows the UAW.

"This is fairly traditional," Shaiken said.

"When GM wants to make a point in the years of negotiation, they often impose that point on salaried workers first."

Even so, the tactic doesn't always work and GM's performance in 2011, along with economic conditions, will carry more weight in next year's negotiations, Shaiken added.

Compensation expert David Lewin, a management professor at the University of California, Los Angeles, said a pay freeze is typically a "stringent measure" but at GM, it should be viewed within the broader context of the industry's struggles.

"They'll probably get some pushback," Lewin said. "But as some folks like to say, this is the new GM, not the old GM, and there are bigger issues on the horizon."

Nor was Lewin surprised at Akerson's urging for more executive pay flexibility. Many other companies have picked off talent from Detroit's Big Three over the years.

"Top executives always like to claim any pay restriction is going to hurt their search for talent," he said. "In the case of GM, there is some truth to that."

Even so, Reuss said Friday GM has recruited some top talent without the lure of a big paycheck. In the past year, it's had some notable hires, including Joel Ewanick, its new vice president for U.S. marketing.

"There are a lot of people here that want to make the company work without money," Reuss added.

"But at some point, there are people that do show up with money, so you have to address that."

From The Detroit News: http://detnews.com/article/20101211/AUTO01/12110380/No-raise-for-GM-salaried-workers-in-’11#ixzz180HizzZL

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GM CEO Akerson wants U.S. to ease execs' pay rules

By TODD SPANGLER

FREE PRESS WASHINGTON STAFF

WASHINGTON -- General Motors CEO Dan Akerson said Friday he wants the U.S. government to relax rules for compensating some executives in the aftermath of a successful initial public offering that significantly reduced Treasury's stake in the company.

Speaking at the Economic Club of Washington, Akerson said he's worried about losing top talent to other companies now that GM has reversed its fortunes after a quick trip through bankruptcy and -- he believes -- is on the road to sustained profitability.

He declined to say who might be leaving and what exactly he'd like to see the Treasury do, but there are strict guidelines for the government to sign off on executive compensation to companies that received funding under the Troubled Asset Relief Program. GM received $50 billion, though the U.S. government's stake in the company was reduced by about $23 billion in last month's initial public offering.

Meanwhile, Akerson said GM salaried employees will not receive pay raises in their base salaries next year. He said he is considering giving managers incentive pay and, as a courtesy, has broached that idea with UAW leaders, whose contract expires next summer.

Treasury spokesman Mark Paustenbach said acting special master for executive compensation Pat Geoghegan gets requests like Akerson's routinely under TARP.

In his speech Friday, Akerson said GM is well positioned for the future with vehicles like the Chevy Volt, but that he still has concerns to address, including how the company would react if oil prices jumped as sales are increasing.

Akerson has been CEO since August. Although he received $9 million in a compensation package approved by the government, he apparently walked away from much more, said David Rubenstein, who worked with Akerson when both were managing directors at the private investment fund the Carlyle Group.

Rubenstein, president of the Economic Club of Washington, introduced Akerson on Friday.

Akerson said he went to GM because he felt it was too big and too important to the American economy to fail.

"There's more to life than money," he said.

He said that while he has been criticized by some for not being a "car guy" before coming to GM, he has tried to bring a more intellectualized process to company decisions, hoping to change the culture and simplify what had become an overly complex supply and product structure.

Labor costs are now competitive with other automakers, foreign and domestic, he said, and the success of the IPO shows people are willing to bet on GM again.

He worries, however, that some in the company -- looking at GM's emergence from bankruptcy in only 39 days, its profits and repayment of a portion of government loans -- view the downturn "as a bad storm that passed," while there remain great challenges. New products are coming online, he said, and the company must continue to shed debt.

But he noted that the company is positioned well globally and could make almost as many vehicles in China next year as it does in the U.S.

Read more: GM CEO Akerson wants U.S. to ease execs' pay rules | freep.com | Detroit Free Press http://www.freep.com/article/20101211/BUSINESS0101/12110308/GM-CEO-Akerson-wants-U.S.-to-ease-execs--pay-rules#ixzz180MbyL1O

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Right, because compensation should be based on cost living instead of value of work.....

Ah ha! So you must oppose the salary caps at the top then?

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Ah ha! So you must oppose the salary caps at the top then?

You think this is some sort of gotcha moment? Of course I oppose salary caps....

However, if you're going to apply cost of living to determine salary, than all of the Executives should be taking MASSIVE pay cut.

BUT, if you want to apply a salary based on the value of work, golden parachutes should all be wiped out, and most executives would again be taking a massive pay cut.

Robert Nardelli should be broke and applying for food stamps today if CEOs were paid based on the value of their work after his performance at both Home Depot and Chrysler.

There are very few CEOs that are worth the salary they are paid.

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Once again the already overpaid execs are trying to justify their million a year existence. Give me a break!!!! I could care less about their whining. Try giving the peons at the bottom that actually DO WORK, mean while everyone higher than a grain of sand takes the credit. Read the comments to this article and you will see how the public views GM while they are still doing business as usual in their dream bubble.

http://www.freep.com/comments/article/20101211/BUSINESS0101/12110308/GM-CEO-Akerson-wants-U-S-to-ease-execs-pay-rules

Edited by RJB

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