Benefits January 16, 2002

GM Drops Profit Sharing, Incentives, Variable Pay

January 16, 2002 (PLANSPONSOR.com) - With its fourth-quarter profits plummeting 58%, General Motors Corp. is dropping its profit-sharing payments to hourly US workers, as well as its annual management incentive awards, according to a CNN/Money Magazine report.

Reported by

Fred Schneyer

The giant carmaker is also axing enhanced variable pay for eligible US and Canadian salaried workers.

And late last year, the troubled company also announced that it would slash its matching contribution to its 401(k) retirement plan for the second time in 2001, in a move that affects over 40,000 participants (See Company Match Hits the Skids at GM ).

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The recession having taken a heavy toll on the auto sector, Ford Motor Co, DaimlerChrysler AG’s Chrysler Group, Delphi Automotive Systems Corp. and Visteon Corp have taken similar cost cutting actions this year.

For the quarter ended December 31, GM said it earned $255 million, or 60 cents a share, down from $609 million, or $1.15 a share, a year earlier. The results include a negative $97 million, or 14 cents a share, related to Argentina’s economic crisis.

Overall, fourth-quarter sales rose to $46 billion from $45 billion. But the company said annual North American vehicle sales sank 11% from a year earlier.