DETROIT (Bloomberg) -- General Motors Co. and Chrysler Group LLC, which each received government-funded bailouts, will award some managers bonuses of as much as 50 percent of their salary.
GM plans to pay bonuses to most managers equal to 4 percent to 16 percent of their annual salary, and as high as 50 percent to less than 1 percent of its 26,000 U.S. salaried employees, the automaker said today.
GM noted the bonuses are based on the company's performance as well as that of the individual employee.
Chrysler on Monday started notifying some of its 10,755 white-collar workers of the amount of their bonus. They will receive the payout today.
The average performance award is $10,000 at Chrysler, with less than 1 percent receiving a bonus equal to half their pay, sources told Bloomberg News.
The payouts come as GM, Chrysler and Ford Motor Co. prepare for contract talks this year with the United Auto Workers, which is seeking a share of the industry's growing prosperity.
Ford, the only U.S. automaker to avoid bankruptcy in 2009, is expected to pay bonuses equal to 10 percent or more of base pay to some salaried staff, said a person familiar with the plan.
“The union is going to be very angry about this,” said Gary Chaison, a professor of industrial relations at Clark University in Worcester, Mass. “If these kinds of bonuses are paid to salaried workers, then the union's demands will increase, knowing management can't claim an inability to pay.”
Gualberto Ranieri, a Chrysler spokesman, said “details regarding salaried performance awards are considered confidential.”
Marcey Evans, a Ford spokeswoman, said the automaker will pay salaried workers' bonuses on March 10 and wouldn't reveal details.
GM reorganized in bankruptcy in 2009 with $49.5 billion in government aid, while Chrysler received $12.5 billion in assistance for its reorganization that year. Each is subject to pay restrictions for top executives after receiving funding from the U.S. government's Troubled Asset Relief Program, which also aided banks.
The U.S. Treasury, which holds 33 percent of GM, would need to sell its remaining 500 million shares for an average of $53.07 to break even, according to a GM regulatory filing and data compiled by Bloomberg.
“The taxpayers should be repaid before bonuses go out,” Senator Chuck Grassley, an Iowa Republican, said today in a statement. “Unfortunately, the Treasury Department never asserted ownership rights. It didn't put the taxpayers first. As a result, the car companies are allowed to do what they want, including giving lots of executive bonuses. It sends a message that those in charge take shareholders, in this case the taxpayers, for a sucker. ”
“Politically, it's a bad thing to do,” Chaison said of the bonuses. “These companies are still not on solid ground yet, and it makes the auto companies look like banks” that distributed large bonuses.
GM, which earned $4.77 billion in the first three quarters of last year, plans to pay its 53,000 unionized hourly U.S. staff profit-sharing checks of more than $3,000 per worker, two people familiar with the plan have said. That is about 5 percent of an hourly worker's annual pay, said Sean McAlinden, chief economist for the Center for Automotive Research.
Chrysler, which lost $652 million in 2010, said Jan. 31 that it would pay each of its union workers a bonus averaging $750. That is about 1.3 percent of an hourly UAW worker's annual pay.
Chrysler Chief Executive Officer Sergio Marchionne said that all eligible employees would receive a performance bonus for 2010, when the automaker worked on introducing 16 new or refreshed models.
Ford, which posted 2010 net income of $6.56 billion, said it will pay an average of $5,000 to each of its 40,600 hourly workers, or about 8.3 percent of their base pay.
“If bonuses are a lot more on average for all of salaried workers, the UAW workers will be cheesed off and want a bigger signing bonus this fall,” McAlinden said. “It's going to be tense down at the plant.”
UAW President Bob King has said he aims to recover some of the $7,000 to $30,000 in concessions each worker gave up since 2005 to help the U.S. automakers survive. The union surrendered raises, bonuses and cost-of-living adjustments. The UAW also agreed to a two-tier wage system in which new hires earn about $14 an hour, half the amount paid to senior production workers.
“All the sacrifices that our members made to turn these companies around were part of the process that's really led to this amazing turnaround,” King said in an interview last month. “We want our membership to share in a very meaningful way in the upside of these companies.”