General Motors has revealed to its salaried workforce the formula by which their annual bonuses will be based this year and it is a lower calculus than that used in 2021 despite GM’s strong financial performance for the year, the Free Press has learned.
Still, a senior-level manager making $200,000 could get a bonus of more than $75,000, which is down from a possible $96,000 for 2021. A more entry-level salaried GM employee making $80,000 could take home more than $12,600 in a bonus.
Early Tuesday, GM reported earnings that surpassed Wall Street expectations. The automaker reported pretax profit gains of $1 billion in the fourth quarter to $3.79 billion. For the full year, pretax profits rose to $14.5 billion compared with $14.3 billion in 2021. At that time, GM released its profit-sharing for qualified U.S. hourly workers, which could be up to $12,750.
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In an internal memo sent to the salaried workforce Tuesday, which was obtained by the Free Press, the 2022 GM payout formula will be calculated by 158%, that is down compared with last year when it was calculated using 200%, said three GM employees familiar with the plan. They asked to not be named because they are not authorized to speak publicly about the topic.
The reason for the lower 158% figure is because GM derives that figure based on a formula that factors in various GM-set annual performance targets beyond just earnings results, said people familiar with the plan. So, for example, if GM hits all of the targets it set for that particular year, the company calculates the payout to employees by 100%. But if the automaker exceeds its targets, it pays more than 100% based on how much it surpassed its goals. If it only meets half of its targets, the company has the option to calculate it below 100%.
GM’s statement and policy
When asked to comment on GM’s bonus plan for its salaried workforce, GM spokeswoman Maria Raynal said in an email, “We are proud to share our success with our team, both represented and salaried employees. We know that it takes a team effort to achieve these results.”
Raynal declined to comment further. But according to GM’s policy, salaried performance bonuses, which are formally called teamGM, are “determined by a number of variable factors, which can change the payout year over year. The formula is based in part on global business performance, and the goals and targets vary each year based on the current business environment. Company and individual performance figure in each employee’s award.”
Who qualifies and how much they could get
GM had 53,000 salaried employees in the U.S. in 2021, according to GM’s 10-k published in February last year. The 2022 U.S. salaried employee count will publish soon, Raynal said.
All of GM’s salaried workers are eligible for a bonus, but the bonus is still subject to manager discretion. So if the person is underperforming, it could be less than the formula allows, though that is rare. Or, in some cases, it could be a little more if the person is an overachiever, two of the people familiar with the plan said.
GM has set the bonus target for each of its levels of employees. So all level 2-6 employees, which are entry-level jobs, are at 10% of their base salary.
So, according to the internal memo, the formula for a level 6 employee making $80,000 a year is calculated as follows: The base salary of $80,000 is multiplied by 10% and then that figure is multiplied by 158% and then that figure is multiplied by 100% for a potential bonus of $12,640. When calculated using 2021’s 200% figure, the bonus was $16,000.
The document outlined the following payout plan, and using the above formula, the Free Press figured out the difference from 2021’s payout, which was confirmed by a source familiar with the plan:
- Level 7 midlevel employees get 13% of their base salary. Based on the formula: A Level 7 making $100,000 would get a bonus of $20,540, compared with 2021 at $26,000.
- Level 8 lower-level managers get 18% of their base salary. Based on the formula: A Level 8 making $150,000 would get a bonus of $42,660 compared with 2021 at $54,000.
- Level 9 senior-level managers get 24% of their base salary. Based on the formula: A Level 9 making $200,000 would get a bonus of $75,840 compared with 2021 at $96,000.
The payout and possible merit raises
Most salaried workers will find out their individual amounts sometime in February during their annual reviews with managers, said a person familiar with the plan. GM typically pays bonuses at the end of February, which is also when GM employees find out whether they get an annual merit raise.
The profit-sharing with hourly workers
Earlier on Tuesday, the automaker confirmed that many of its 42,300 U.S. hourly workers will receive a profit-sharing check of up to $12,750. The before-taxes payout for its UAW-represented workforce is a record and it is an increase from $10,250 paid out in 2021 and about $9,000 in 2020.
In that case, the GM-negotiated formula with the UAW for profit-sharing checks is $1,000 per every $1 billion in annual earnings before interest and taxes or pretax profits for North America. For 2022, GM’s North America pretax profits were $12.9 billion, up from $10.3 billion a year ago. The checks are paid out in increments of $250, which is why it is $12,750 and not $12,900, GM spokesman David Caldwell said.
This year’s bonuses mark the first time union members will get a bonus above $12,000, a cap for profit-sharing that was eliminated in the renegotiated 2019 contract.
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Contact Jamie L. LaReau: jlareau@freepress.com. Follow her on Twitter @jlareauan. Read more on General Motors and sign up for our autos newsletter.
Story Credit: usatoday.com