GM hourly workers get $4,000 bonuses

photo In this Jan. 24, 2011 photo, an engine is joined to the chassis on the General Motors Silverado and GMC Sierra heavy-duty pickups assembly line at the Flint Assembly in Flint, Mich. General Motors Co. will pay more than $189 million in profit-sharing to 48,000 U.S. hourly workers and millions more in performance bonuses to salaried employees, according to a person briefed on the matter.(AP Photo/Carlos Osorio, file)

DETROIT - General Motors Co. will pay more than $189 million in profit-sharing to 48,000 U.S. hourly workers and millions more in performance bonuses to salaried employees, according to company documents obtained by The Associated Press.

GM will pay most hourly workers more than $4,000 each as compensation for its strong financial performance last year, said a person briefed on the bonuses. The payments come less than two years after the automaker emerged from bankruptcy protection with the help of a huge government bailout. They're more than double the previous record payment of $1,775 in 1999, at the height of the boom in sales of sport utility vehicles and pickup trucks.

"On the whole, we made tremendous progress last year," CEO and Chairman Dan Akerson said in an e-mail message to employees announcing the payments on Monday. "With our collective teamwork, this can be just the beginning."

GM's 28,000 salaried workers, such as engineers and managers, will get bonuses equal to 4 to 16 percent of their base pay. Fewer than 1 percent will get 50 percent or more; another 3 percent will get from 16 percent to around 50 percent, the person said. GM is not giving annual pay raises.

GM made $4.2 billion in the first nine months of 2010 and is expected to soon announce a fourth-quarter profit. The company needed a $49.5 billion government bailout to survive a mid-2009 bankruptcy filing, and the government still owns 25 percent of GM's stock. Chrysler, which needed a $12.5 billion bailout, plans to pay bonuses as well. The government owns about 9 percent of Chrysler stock.

The payments were condemned by a leading critic of the industry bailout in Congress.

"Since the taxpayers helped these companies out of bankruptcy, the taxpayers should be repaid before bonuses go out," Sen. Charles Grassley, R-Iowa, said in a statement. "It sends a message that those in charge take shareholders, in this case the taxpayers, for a sucker."

Final numbers for the bonuses won't be calculated until after GM announces its fourth-quarter and full-year earnings, said the person briefed on the bonuses, who asked not to be identified because the numbers have not been made public.

The 45,000 hourly workers at GM's factories will get more than $4,000. Another 3,000 workers at four factories that GM took back from Delphi Corp. will get around $3,000, the person said. GM is trying to sell the old Delphi facilities in Kokomo, Ind.; Grand Rapids, Mich.; Rochester, N.Y.; and Lockport, N.Y.

The person briefed on the payments did not know the total cost of the salaried bonuses, but it's likely to top $200 million. Most GM salaried workers make more than $100,000. A bonus of 8 percent, the midpoint of the range, would give them roughly $8,000. That means GM would pay out roughly $224 million.

Bonuses for white-collar workers rise with the level of responsibility and are based on the performance of the worker and the company, the person said.

The size of the white-collar bonuses could become an issue later this year when the Detroit Three begin contract talks with the United Auto Workers union. The master contract with all three companies expires in September.

The payments follow GM's surprising return to profitability last year. The company emerged from bankruptcy cleansed of most of its debt and burdensome contracts. Union concessions cut labor costs and helped the company make money even at historically low sales volumes. Buyers bought only 11.6 million cars and trucks in the U.S. last year, far below the peak of 17 million in the middle of the last decade.

The GM documents say the white-collar bonuses are based on operating cash flow, earnings before interest and taxes, and global market share. This year, the company plans to add vehicle quality to the formula, measured by warranty claims and outside rankings from Consumer Reports magazine and J.D. Power and Associates, the person said.

GM has said its top 100 earners are still covered under government pay restrictions. Cash salaries have been capped at $500,000, but further compensation can be made in stock. Many of the executives still will take home more than $1 million.

Chrysler's roughly 22,000 blue-collar workers were to get $750 in bonuses even though the company lost $652 million last year. It expects to post a net profit this year after revamping its aging model lineup. Chrysler salaried workers also were to get bonuses, despite a $12.5 billion government bailout.

GM's other Detroit-area competitor, Ford Motor Co., plans to pay its 40,600 U.S. factory workers a bonus of $5,000 each, the first such checks since 1999. The Dearborn, Mich., company, which avoided bankruptcy and did not get a government bailout, made $6.6 billion last year. It also plans to pay performance bonuses to white-collar workers, but it would not reveal the amounts.

Last month, Akerson said that GM would not give white-collar raises but would give bonuses tied to company performance. GM, he said, used to give annual raises all the time.

"Three percent times five years in a row is 15 percent added to your cost structure," he said. "All of the sudden you're starting to really narrow the possibilities and flexibility of any reaction to a downturn. It's very difficult to overcome," he said.

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Associated Press Writer Ken Thomas in Washington, D.C., contributed to this report

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