In a show of confidence for the future despite the coronavirus pandemic, General Motors said it will restore full pay to its 69,000 salaried employees around the world sooner than the company had expected.
But CEO Mary Barra and other senior leaders will continue to take pay deferrals: For Barra and the others, that means a 10% reduction and a 5% reduction for lower-ranking senior officers.
In a document obtained by the Free Press, GM told its white collar workforce late Tuesday that the 20% salary deferral they took in early April will end on Aug. 1, about a month sooner than planned.
“We are restoring pay earlier than planned because of the hard work that has been done around the world in protecting our cash position during very challenging times,” wrote Kim Brycz, GM’s chief of global human resources, in an email to workers. “We will repay the deferred amount in a lump sum in October with 6% interest.”
GM confirmed the news. “We are ending salary deferrals earlier than expected. We thank our employees for their shared sacrifice to get us through an extremely uncertain time,” GM spokesman Jim Cain told the Free Press in an email.
He said additional pay deferrals for the highest-paid leaders will continue for now. GM will address the additional deferrals in full in its next proxy filing, Cain said.
More: GM loses $800 million in 2nd quarter, but beats Wall Street projections
“It’s a little bit of good economic news in the midst of a lot of bad news,” said a GM salaried worker, who asked to not be named because there is no authorization to speak to the media.
In late March, GM announced that CEO Mary Barra will take home nearly one-third less in compensation for at least six months and that its 69,000 other salaried workers will defer 20% of their cash compensation for six months. Also, GM said at the time:
- GM’s senior executives had to take an additional 5% pay cut on top of the 20% cash compensation deferral for a total of 25% deferral and pay cut.
- GM’s highest paid officers took an added 10% pay cut on top of the 20% deferral for a total of a 30% deferral and pay cut.
- GM’s board of directors took a 20% reduction in compensation.
The pay cuts started April 1 and were intended to help the automaker get through the coronavirus pandemic that has stalled the U.S. economy. The cost savings would be significant, Cain said at the time, but GM never did release a dollar amount as to the savings.
At the time, GM said its white-collar workers would get their pay back, with interest, in a lump paycheck in the fourth quarter and no later than March 15, 2021. GM’s salaried employees make up 42% of its global workforce.
GM’s decision to restore pay ahead of schedule comes as GM announced it lost $800 million in the second quarter as it struggles to recover amid the pandemic. The automaker spent $8 billion in automotive cash in the quarter and its net revenue was down 53% to $16.8 billion in the quarter.
But during a morning call Wednesday with the media, GM CFO Dhivya Suryadevara said the second half of the year will be better and it should allow GM to pay off the $16 billion revolving line of credit it took earlier this year to get through the pandemic.
“We expect $7 billion to $9 billion of cash generation for the second half of the year. In the first half of the year we had a burn and in the second half, cash generation, so as we build the cash back up, we do expect to pay the revolver off,” Suryadevara said. “But that is contingent on a continued market recovery.”
GM ended the quarter with $30.6 billion in automotive cash.
Barra took home more than $20 million in total compensation for 2019, the third year in a row to top that figure. In SEC filings, GM said Barra’s pay was 203 times more than the median pay of $106,715 last year for GM’s global employees.
In the email to employees, Brycz said that while GM employees can “welcome the good news” the company will remain diligent in cost-saving measures as the market recovers.
“I want to once again thank you for your shared sacrifice and recognize your continued commitment to the business,” Brycz wrote.
(This story has clarified the executive compensation numbers from earlier, which were incorrectly reported by GM.)
Contact Jamie L. LaReau: 313-222-2149 or jlareau@freepress.com. Follow her on Twitter @jlareauan. Read more on General Motors and sign up for our autos newsletter.
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