GM awards stock bonuses for first time since '03

UPDATED: 3/23/07 1:38 P.M.

DETROIT (Reuters) -- General Motors is giving its chief executive officer and other top officers stock bonuses for the first time since 2003 even as the automaker slashes costs to recover from billions of dollars in losses.

CEO Rick Wagoner received restricted stock valued at $3 million and 500,000 stock options, valued at $1.4 million, according to a filing with the Securities and Exchange Commission.

The world's largest automaker lost $10.4 billion in 2005 and $2 billion in 2006. In 2005, top executives took pay cuts, with Wagoner taking a 50-percent reduction.

Since then, GM has slashed more than 34,000 jobs and announced the closing of 12 plants. The automaker also reduced structural costs by $6.8 billion in 2006.

GM's shares have risen more than 40 percent over the past 12 months, outperforming the S&P 500 index, which rose 10.5 percent in the same period.

Still, the bonuses come just as GM is about to enter labor talks with the United Auto Workers union. The current contract expires in September, and GM is expected to seek further health care and benefit concessions from the union.

"The company has pulled itself out of significant losses ... we do not view the stock and option grants as excessive," Lehman Brothers analyst Brian Johnson said.

"More fundamentally, however, we are concerned that the grants may represent a sense of "mission accomplished" at (the GM headquarters) and the UAW," Johnson added.

GM, like other U.S. automakers, is also expected to seek changes to a "jobs bank" program which guarantees nearly full wages and benefits to workers whose jobs have been cut.

A UAW spokesman declined comment.

Global product chief Bob Lutz, who has spearheaded a product revitalization at GM, was given 60,000 restricted units and 250,000 options.

GM gave 18 executives equity grants and will disclose full compensation details in its annual proxy next month.

Restricted stock units vest in equal installments every year over five years. The options have an exercise price of $29.11 and expire in 2017.

GM said last week it swung to a profit in the fourth quarter but fell short of Wall Street expectations on mounting mortgage losses from its former finance unit.

Analysts have said that of Detroit's struggling Big Three, including Ford Motor Co. and DaimlerChrysler AG's Chrysler Group, GM has made the most progress toward a financial turnaround.

Ford, which lost $12.7 billion last year, in January faced complaints from its union rank and file when it considered paying bonuses to managers. The automaker subsequently said it would pay bonuses to all hourly and salaried workers.

GM said it remains on track to cut structural costs by $9 billion this year compared with 2005.

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