Lean Executive Pay at General Motors Despite Record Profit

Strategic Insights -

Despite reporting its first profit in four years, General Motors Corp.'s executive pay is surprisingly lean, especially when compared to other major auto makers. J. F. Smith, the company's CEO and president, received a base salary of $1.38 million in 1993, which is nearly double his previous year's salary of $748,000. However, he did not receive a bonus, and his total compensation package pales in comparison to his counterpart at Chrysler Corp., who received a bonus of $1.9 million. In fact, most of GM's top-paid executives have not received a bonus in the past three years.

Key Takeaways:

  • J. F. Smith, GM's CEO and president, received a base salary of $1.38 million in 1993, nearly double his previous year's salary of $748,000.
  • Smith did not receive a bonus in 1993, and his total compensation package is below that of his counterpart at Chrysler Corp.
  • Most of GM's top-paid executives have not received a bonus in the past three years.
  • The company's board of directors proposes to double the authorized number of common shares to two billion, citing the need for flexibility with possible future stock dividends and splits, corporate mergers, and acquisitions.
  • GM has 718.7 million shares outstanding, with an additional 17.8 million common shares reserved for conversion of series A preferred stock as of December 31, 1993.
  • The company has no present plans to issue additional common shares, except to meet employee benefit and incentive plans, the dividend reinvestment plan, and the series A conversion.

Statistics:

  • $1.38 million: J. F. Smith's base salary in 1993
  • $748,000: Smith's base salary in 1992
  • $1.9 million: Bonus received by Robert Eaton, Chrysler Corp. CEO and chairman in 1993
  • $33.88: Exercise price of 120,000 common shares granted to Smith
  • $59.62: Closing price of GM stock in New York on December 31, 1993
  • 718.7 million: Number of shares outstanding as of December 31, 1993
  • 17.8 million: Number of common shares reserved for conversion of series A preferred stock as of December 31, 1993

Sources:

  • Dow Jones Service, January 1994
  • General Motors Corp. Preliminary Proxy Statement, 1993