GM is restructuring incentive packages for executives

Article by Andrew Christian, on April 28, 2014

General Motors is restructuring its incentive packages for its executives, using earnings, global market share and quality as basis. GM commenced the move after the United States government divested all its remaining holdings in the carmakers, the American company said a proxy filing with the U.S. Securities and Exchange Commission.

GM indicated in February that it was drafting new incentive plan after providing more details on how much chief executive Mary Barra could earn this year under her proposed pay package. GM said that tying pay to the achievement of both short- and long-term goals is an “important cornerstone” of employee engagement.

GM stated in its proxy statement that short-term pay in 2014 will be linked to performance gauges including quality, global market share and adjusted earnings before interest and taxes (EBIT). Long-term compensation through 2016, meanwhile, will be linked to performance measures like global market share and return on invested capital.

Payouts under both gauges will range from zero to 200 percent of targets. GM also disclosed that around 25 percent of long-term incentive pay for 2014 will be granted through restricted stock units due over a three-year period.

According to GM, the changes in the executive incentives packages are meant to better tie individual and business performance to interests of shareholders as well as maintain a critical line of sight between company performance and individual rewards.

GM said the changes are also meant to support good corporate governance objectives as well compensation best practices while mitigating business risk.

The changes are likewise meant to further the carmaker’s bid to attract, retain, and reward critical talent. Once the incentive plan is approve, the carmaker will also implement stock ownership requirements for those holding senior executive posts and higher starting this year.

GM says that executives covered by the rule will have five years to acquire and hold GM securities under the scheme. [source: automotive news - sub. required]

Topics: gm, united states

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