GM cuts white-collar salaries, Ford's Bill Ford defers salary for 5 months

DETROIT—General Motors Co. temporarily will reduce paychecks for all salaried employees globally by 20 percent to conserve cash as it weathers the coronavirus outbreak, but the auto maker is promising to make up for the lost income within a year.

In addition, 6,500 salaried workers in the U.S.—mostly people in engineering and manufacturing functions who cannot work remotely—will be placed on leave and receive 75 percent of regular pay during the downtime.

"GM's business and its balance sheet was very strong before the COVID-19 outbreak and the steps we are taking now will help ensure that we can regain our momentum as quickly as possible after this crisis is over," the company said in a statement March 26.

The pay deferments will start April 1 and potentially could last about six months, GM spokesman Jim Cain said.

Employees will receive lost earnings in a lump-sum payment no later than March 15, 2021, GM said.

The move will result in "significant" immediate cash savings, but GM declined to be more specific. The company has about 69,000 salaried employees, or about 42 percent of its global work force.

Executives will see deeper pay cuts on top of the unilateral 20 percent deferment, resulting in a total reduction during the crisis of 30 percent for senior leadership and 25 percent for other executives. Pay for members of GM's board of directors will be cut 20 percent and not repaid.

Employees' health care benefits will not be affected.

Ford
Earlier March 26, Ford Motor Co. said top executives will be subject to 50 percent pay cuts, and Executive Chairman Bill Ford deferred his full salary for at least five months.

CEO Jim Hackett said Ford would defer merit-based salary increases, suspend overtime for salaried workers and freeze hiring for noncritical positions. He said work schedules and pay might be "temporarily reduced" for workers whose jobs cannot be done from home and that others may be offered voluntary sabbaticals.

In a filing with the Securities and Exchange Commission, the company said CEO Jim Hackett, COO Jim Farley and CFO Tim Stone will defer 50 percent of their salaries, effective May 1. Bill Ford's deferment also is effective as of that date. The accumulated deferred salary amounts will be paid after the company has repaid at least $7 billion of the $15.4 billion credit lines it tapped earlier this month.

Hackett, in a letter to Ford employees, said the company's top 300 executives will defer 20 to 50 percent of their pay.

"The character of people and organizations is revealed in difficult times," Hackett wrote. "I'm extremely proud of how Ford is keeping our people safe, doing our part to limit the spread of the virus, taking care of customers and managing through the crisis in ways that safeguard our work force, our business and our partners."

Bill Ford earned a $1.7 million base salary in 2018, according to the auto maker's latest proxy filing. Hackett collected a $1.8 million base salary over that same period.

Farley's base salary recently rose to $1.4 million when he was named COO effective March 1.

Hackett, in the letter, said Ford intended to get through the pandemic without any job losses, although he noted that it may have to "take tougher actions" if the situation lasts longer than anticipated.

Additionally, Hackett said Ford will begin deferring merit-based salary increases, suspending overtime for salaried workers and freezing hiring for "noncritical skill positions."

He said work schedules and pay might be "temporarily reduced" for workers whose jobs can't be done from home and that others may be offered voluntary sabbaticals.

Hackett said the company would continue to provide health insurance and paid time off to cover a 14-day quarantine if workers are exposed to the virus.