General Motors Corp. will not pay annual cash incentive bonuses to its senior executives for 2006, a company spokeswoman said.
The executives last received the bonuses in 2004.
GM spokeswoman Rene Rashid-Merem would not say why the bonuses wouldn’t be paid, deferring to the company’s annual proxy statement that will be filed with the U.S. Securities and Exchange Commission sometime in late April.
But last year’s proxy statement said no bonuses were given to the executive team “in consideration of the corporation’s financial results in 2005.”
GM lost $10.4 billion in 2005 but underwent a massive restructuring and trimmed its loss to $2 billion in 2006, an $8.4 billion improvement. The company also posted a fourth-quarter profit of $950 million last year.
Auto industry executive bonuses have drawn the ire of the United Auto Workers union, which likely will be asked to make concessions when national contract talks officially start this summer. Many UAW members at the union’s two-day bargaining convention earlier this week, including some from GM plants, questioned why bonuses would be paid to executives while workers were being asked to make sacrifices.
Rashid-Merem wouldn’t comment when asked if the lack of annual bonuses for 2006 had anything to do with the upcoming contract talks.
Last week GM told federal regulators that Chief Executive Rick Wagoner was among 18 senior executives who would get performance-based stock awards as of March 20.
In a filing with the SEC, GM said Wagoner was granted 95,000 restricted shares of company stock to be delivered in annual installments during the next five years. The stock had an estimated value of $2.8 million on the day the shares were granted.
Wagoner also received an option to buy 500,000 shares at $29.11, below the March 20 closing price of $29.35. The option vests and can be exercised annually in equal installments over three years, but Wagoner can wait as long as 10 years to exercise the option, according to the filing.
Executives make money on stock options when the share prices rise beyond the price at which they bought the stock.
Rashid-Merem said stock awards are tied to the future performance of the company, while the cash incentives are granted based on annual performance.
“Clearly the focus is on turning the company around,” she said.
Last year Wagoner took a 50 percent cut in his $2.2 million annual base salary to help slash costs. His last salary increase was on Jan. 1, 2003.
Rashid-Merem also would not say if lower-level executives will get cash bonuses for 2006.
The company’s proxy statement last year said annual executive bonuses are tied to corporate net income and operating cash flow, as well as regional performance that includes market share, quality improvement and warranty costs.