All Cars, All the Time

GM Cuts Come to Life

As speculated over the weekend, Jerry York got his seat on the GM board, GM's dividend was cut 50 percent to $1 a share annually and executives got a haircut. CEO Rick Wagoner's salary will be cut in half. Remember those Eddie Murphy skits? "I want half Eddie. Half." Vice chairmen John Devine, Bob Lutz and Fritz Henderson will have their salaries cut by 30 percent, and Executive Vice President and General Counsel Thomas Gottschalk will see a 10 percent cut in salary. Additionally, there were no annual or long-term cash incentive awards paid to GM's global executives for the 2005. GM changed its health-care plan for salaried retirees and restructure its salaried pension benefit plan. The board also reduced its own compensation by 50 percent. Each member receives about $200,000 a year in cash, and other compensation worth about $140,000 annually. Non-employee directors will forgo cash compensation and will retain some of the stock portion of their annual retainer.

The change in its health-care plan would reduce GM's liability by about $4.8 billion and its annual health-care expense by almost $900 million before tax. The change in the dividend rate would reduce GM's cash outlay by about $565 million on an annualized basis. Now all of that starts to add up to something.

No matter what the savings are, the message sent is equally as important. As Rick Wagoner said, "I think you can say the whole family is participating in the effort to turn GM around."

There was no word from GM on any developments involving GMAC and no updates concerning Delphi and the UAW.

I applaud the announcements from GM. Certainly getting a handle on the Delphi situation would be a relief, but we'll take what we can get. January sales of the first SUVs on the GMT900 architecture are selling at or near sticker price. The Solstice is selling even better than Pontiac had hoped. Saturn will soon get a boost from the Sky and Aura. The Buick Enclave is a sharp design. The H3 has given a hummer to Hummer sales. Everyone who has seen the 2008 Malibu is raving about it. These are a few of the positive things going for GM. It's not all wine and roses, but I'm feeling optimistic* today.

*optimism may have been increased by the giant cup of java i just drank. offer may not be valid after coffee wears off.