GM announces cuts in management salaries, benefits and dividend

08 February 2006

The cuts were announced by Rick Wagoner, chairman and CEO, General Motors, at a press conference at the company's headquarters.

Wagoner will take a 50 per cent pay cut that would bring his $2.2 million salary to half, based on GM's figures for his 2004 compensation. (the details of his last year's compensation will be released later this year) and he will not get a bonus. Other senior management executives will see their salaries drop between 30 per cent and 10 per cent, no annual cash bonuses that are paid to GM's executives globally for their performance during 2005.

The board has also reduced its own compensation by 50 per cent to $100,000 a year, and non-employee directors will forego cash compensation as a part of their annual retainership.

GM has also announced cuts in health care contributions that would save $900 million before taxes and will affect about 26,000 current employees and 100,000 retired employees. The carmaker said it was evaluating ways to restructure its pension plan that affecting 40,000 salaried workers, the details of which would be announced in March. The halving of share holder dividend will reduce GM's yearly cash payment by about $565 million.

GM, which is suffering from declining US market share against its Asian competitors, lost $8.6 billion in 2005.