FEBRUARY 8, 2011, 2:03 P.M. ET.GM

GM Workers to Get Cut of Profits

By SHARON TERLEP

General Motors Co. is planning to pay its hourly workers in the U.S. at least $3,000 each in profit-sharing payouts, the largest amount ever, after the company's return to profitability in 2010, people familiar with the matter said.

GM in the next week is expected to disclose the size of profit-sharing checks that go to 45,000 workers as part of the auto maker's contract with the United Auto Workers union. The figures are still being finalized, the people familiar with the matter said.

The payouts come amid a reversal of fortune for GM, which produced solid profits in 2010 just a year after a $50 billion U.S. government rescue and bankruptcy. The auto maker is trying to tow the line between fiscal prudence and expectations that it will share recent gains with workers as the company heads into labor negotiations with the United Auto Workers.

Ford's recent quarter was unique, in that it invested in new products and didn't chase market share in Europe, yet the company is focused on its long-term plan and paying down debt, according to CEO Alan Mulally, who also says Ford will make hybrid, plug-in hybrid and all-electric cars on the same assembly line. Stacey Delo reports.
.Ford Motor Co. last month paid its U.S. hourly workers $5,000 in profit sharing, more than the company was required to pay under the profit-sharing formula in its contract with the UAW. Chrysler Group LLC did not make money in 2010 but still paid its hourly workers $750 each in recognition of their contribution's to the company's progress toward recovery last year.

GM's largest payout was $1,775 in 1999.

The auto maker is on track to post its first annual profit since 2004 when it reports financial results for 2010 later this month. GM made $4.2 billion through September and is expected to report around $1 billion in net income for its fourth quarter.

GM shuttered U.S factories and cut more than 20,000 jobs as part of a restructuring that saw the auto maker slash its white-collar payroll, shed hundreds of dealers and off-load billions in debt owed to bondholders of the old GM.

As part of the reorganization, the UAW agreed forgo $20 billion that GM owed to a trust fund for retiree health care in exchange for a 17.5% stake in the company.

GM Chief Executive Dan Akerson wants compensation for hourly workers to more closely mirror that of white-collar employees and executives, whose income is based largely on performance. He has said salaried workers won't receive across-the-board raises.

The company also is asking the Obama administration for more flexibility in how it compensates its top executives. GM faces restrictions in payment for its top officers because it received money under the government's Troubled Asset Relief Program, which requires companies to offer most their compensation in the form of stock rather than cash. Mr. Akerson would like to pay more in cash to a larger number of executives, according to people familiar with GM's requests.

Write to Sharon Terlep at sharon.terlep@wsj.com

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