Chrysler Group CEO Sergio Marchionne has announced that the automaker will pay bonuses to its hourly and salaried employees, reports the Detroit Free Press. Via a corporate e-mail sent Jan. 31, Marchionne praised Chrysler employees for contributing to the introduction of 16 new or revamped cars in 2010. Bonuses will be delivered on Feb. 11, according to Chrysler spokesman Mike Palese.
Hourly and salaried Chrysler employees will receive a bonus
Each of Chrysler’s 22,000 U.S. and 7,600 Canadian hourly employees with receive $750 in recognition for their achievements, said Palese. Salaried employees, numbering 10,000 in the U.S. and 750 in Canada, will receive an amount that Palese declined to reveal.
Chrysler plans to pay the bonuses despite having posted a net loss of $652 million in 2010 with a modified operating profit of $198 million for the fourth quarter. The modified operating profit excludes interest Chrysler was required to pay on its government Troubled Asset Relief Program loans, as well as other loans used for corporate restructuring.
Sergio Marchionne is proud of what the industrial side of Chrysler has been able to accomplish.
“It is a performance payment in recognition of what I consider to be extraordinary performance. … The way this house has responded to the introduction of 16 cars has been extraordinary,” Marchionne said in a conference call with analysts.
The focus on rewarding employees for hard work and innovation rather than “bottom line profitability” will surely score Marchionne points in the eyes of his employees, but taxpayers who footed the bill for the auto bailout want to see more from automakers like Chrysler before big bonuses fly.
Profits projected in 2011
Chrysler expects to generate net profits ranging anywhere from $200 million to $500 million on revenues of $55 billion in 2011. That would be quite an improvement over 2010’s $652 million net loss, caused largely by what the automaker believes are unforgiving interest rates on its TARP loans. Lower volume, increased advertising and higher vehicle launch costs were also factors in the net loss for the year.
The practice of portraying fourth quarter profits in “modified” form was a way of decorating a financial pie that may have only been half-baked, experts believe. Yet by reporting the “profit,” Chrysler was able to claim that it was the first quarterly profit since emerging from bankruptcy.
TARP committee warnings to Chrysler about bonuses
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