DETROIT — To cope with the gravest safety crisis in its history, General Motors has spent freely — almost $3 billion — to compensate accident victims and recall nearly 30 million vehicles.þþBut when the company closed the books this week on last year’s recall-plagued financial results, Mary T. Barra, its chief executive, had one more costly decision to make: Should the decade-long failure of executives, engineers and lawyers to address deadly defects in millions of cars result in a smaller annual bonus for G.M.’s blue-collar workers?þþOn Wednesday, G.M. chose to once again open its checkbook. For the first time since emerging from bankruptcy in 2009, when it received a $49 billion bailout from taxpayers, G.M. gave its 48,000 union workers a bonus greater than their contract called for.þþ“I hate excuses,” Mary T. Barra, G.M.’s chief executive, said. “We have to be quick and have to respond, and I’m committed to driving G.M. to be the company we know we can be.”General Motors Chief Pledges to Move Beyond RecallsJAN. 8, 2015þMark Hood analyzed ignition switches in Chevrolet Cobalts and discovered that in 2006 or early 2007 they had been changed. interactive Fatal Flaws: Crisis in Auto SafetySEPT. 19, 2014þEach worker will receive up to a record $9,000 in profit-sharing, even though the company’s actual profits were diminished by the cost of more than 80 recalls and warranted a payment that would be about $2,400 smaller.þþGeorge McGregor, president of the union local at G.M.’s Detroit-Hamtramck plant, said he had “thought the recalls were going to kill us.” Credit Fabrizio Costantini for The New York Timesþ“I thought the recalls were going to kill us,” said George McGregor, president of the United Automobile Workers local at G.M.’s Detroit-Hamtramck plant. “We had the big check coming. We shouldn’t have to pay for their defects.”þþMs. Barra was unavailable for interviews on Wednesday. A company spokesman, Tony Cervone, said that the decision to bolster profit-sharing came after executives concluded that excluding its avalanche of recalls, G.M. had reached its financial targets and needed to reward factory workers who punch the clock in its plants.þþ“If the targets were not met, then obviously no consideration would have been given,” Mr. Cervone said. “The decision was ultimately Mary’s, and it’s fair to say she led it.”þþThe higher payout also helps G.M. negotiate a new union contract this summer without being accused of shortchanging workers for problems they did not cause.þþThe U.A.W.’s new president, Dennis Williams, said the profit-sharing checks were important to the long-term relationship between the nation’s largest auto company and its plant workers.þþþ“General Motors’ announcement today leaves no doubt about the strong, stable environment the G.M.-U.A.W. collective bargaining agreement created,” Mr. Williams said in a statement.þþThe bonuses are another example of G.M.’s willingness to spend money over the last year as it grappled with a safety crisis.þþThe automaker, for example, reserved $400 million to compensate victims of faulty ignition switches that could cut off engine power and disable airbags in millions of its small cars. So far, the lawyer hired to administer the compensation program, Kenneth Feinberg, has made settlement offers to the families of 51 people killed in switch-related accidents.þþG.M. also offered financial incentives to consumers to bring recalled cars in for repairs, and spent heavily on outside lawyers to investigate how engineers, executives and others failed for years to fix an ignition switch they knew was defective.þþStephanie Carpenter, an employee, said her family jumped with excitement at the amount of the bonus. þG.M. said that its ultimate decision was not based on a formula in the contract. Instead, the company said that the $9,000 figure was a combination of regular profit-sharing in addition to a $2,000 performance bonus.þþThe additional bonus was highly unusual, said Art Schwartz, a labor consultant who worked for G.M. for more than 20 years. But it represented something of an admission that G.M. management had caused the company’s safety woes, he said, and not the workers on the line.þþ“It’s an acknowledgment of that,” he said. “If nothing else, it is a good-will gesture that takes the whole recall issue out of the equation.”þþOutside the cost of the recalls, G.M. had a strong year financially, particularly in North America, where it said it earned a pretax profit of $6.6 billion. But without the recalls, the pretax earnings were $9 billion. One reason for the company’s health was the bankruptcy itself, which allowed G.M. to shed money-losing assets and restore its balance sheet, thanks to the bailout.þþThe company’s contract with the United Auto Workers union calls for it to pay about $1,000 in profit-sharing for each $1 billion in pretax earnings in North AmericaþA Record Year for Auto RecallsþMore vehicles, including old models, have been recalled in the United States in 2014 than ever before. Explore the size and scope of the recalls, and find out if your car has been affected.þþþ OPEN INTERACTIVE FEATUREþWhen confronted with the final tally of earnings for the year, Ms. Barra and other executives decided union workers should be paid for how the company’s operations performed — and not be penalized for safety problems dating back years. The decision came after discussions between G.M. and the U.A.W.þþContinue reading the main storyþRECENT COMMENTSþþJohn 26 minutes agoþWhen you bail out a company you arguably keep a company in the market that would not survive based on the quality of its own decisions. In...þAlocksley 27 minutes agoþIt's unclear from my read of the article whether GM has paid back the taxpayers for their bailout. If not, this spending binge is insulting...þGreg Gola 30 minutes agoþDefective parts design was the reason for the recalls and I am glad to see that workers were not blamed for something that engineers lawyers...þSEE ALL COMMENTS WRITE A COMMENTþThe company also took another, unrelated step on Wednesday to appease another group affected by the mounting recalls — its investors. G.M.’s shares languished last year as the industry surged, and some of the underperformance could be attributed to spiraling recall costs.þþG.M. said that its board planned to approve a 20 percent increase in the company’s quarterly dividend in the second quarter of this year. In trading on Wednesday on the New York Stock Exchange, G.M.’s shares climbed more than 5 percent to close at $35.83.þþAn open question is whether bonuses will be cut for G.M.’s legions of white-collar workers because of an overall drop in the company’s net income in 2014.þþFor the year, G.M. reported net income of $2.8 billion, a 31 percent decrease from $3.99 billion in 2013.þþPhotoþþMary T. Barra, chief of General Motors. Credit Fabrizio Costantini for The New York TimesþAlso unclear is how the recalls will affect the compensation of Ms. Barra and other senior executives. Their pay packages — which consider factors like financial performance, market share and vehicle quality — will not be revealed until late spring, when G.M. publishes its annual proxy statement.þþYet while the financial toll has gone well into the billions of dollars, the men and women on the plant floor expressed relief that G.M. management spared their pocketbooks.þþStephanie Carpenter, 39, from New Baltimore, Mich., has worked at G.M.’s Detroit-Hamtramck plant for 18 years, and worried that the company might give workers the minimum profit-sharing required under contract.þþCONTINUE READING THE MAIN STORYþ21þCOMMENTSþ“My first reaction was tears,” Ms. Carpenter said, adding how her entire family “jumped up and down” with excitement at the announcement on Wednesday.þþ“For Ms. Barra to come out and say that we deserve this makes it seem like everything we did was worthwhile,” she said. “They could have just given us what they wanted and said, ‘Have a nice day.’ ”þþHer husband also works at the plant, she said. Together, they will put their checks into a fund for their daughter’s college tuition, and possibly spring for a new roof for their home. “It’s kind of a feather in our cap,” she said.þ
Source: NY Times
