DETROIT – General Motors Co. boosted Chairman and CEO Dan Akerson’s pay package by 44 per cent last year, as the value of his stock awards significantly increased due to a change in the way the automaker paid out the shares.
Akerson, 64, earned $11.1 million in salary and stock awards last year, compared with $7.7 million in 2011. His annual salary remained steady at $1.7 million but his stock awards rose to $9.3 million from $5.9 million in 2011. The numbers were revealed in GM’s annual proxy statement filed Thursday with regulators.
The compensation increase came even though GM’s 2012 earnings fell $2.7 billion from 2011. The company made $4.86 billion last year, hurt by a $1.7 billion loss in Europe and weaker profits in North America. However, GM’s stock price jumped 38 per cent during the year to finish 2012 at $28.83.
GM linked the substantial increase in Akerson’s pay package to a change in the mix of how he is paid. The automaker decided to grant him more salary stock than restricted stock, in case Akerson chooses to retire before the three-year vesting period for restricted shares is complete. In January, Akerson told reporters that he expects to still be in the job next year, but he wouldn’t comment beyond that. His stock awards also include about $2 million worth that he received in 2012 for 2011 performance.
GM said in its filing that Akerson’s total compensation remains in the bottom 10 per cent of executives in comparable positions because of government pay restrictions, “despite his significant contributions to operating performance and outstanding leadership.”
Akerson, a former telecommunications and private equity executive, replaced Ed Whitacre as GM CEO in September 2010 and became board chairman in January 2011. GM has complained that pay for Akerson and other executives isn’t competitive with personnel at similar companies because of government restrictions.
The Treasury Department limits GM executive pay because the company took $49.5 billion in government bailout funds in 2008 and 2009. The government got GM stock in exchange for the bailout money, and it has pledged to sell the remaining shares by early next year. When the government stake is fully sold, the pay restrictions will go away. So far the government has recovered about $30.4 billion of the aid, meaning taxpayers are $19.1 billion in the hole.
GM also disclosed in the filing that the government still owns 241.7 million shares of GM stock, or 16.4 per cent of the company. The shares would have to sell for around $79 each for the government to break even, more than double the current trading price. The government remains the company’s largest stockholder, followed by the fiduciary for a union trust fund that pays retiree health care bills.
Akerson also received $70,149 in other compensation including a retirement plan contribution, the cost of vehicles and drivers, use of charter aircraft, and entertainment and security expenses.
The Associated Press formula calculates an executive’s total compensation during the last fiscal year by adding salary, bonuses, perks, above-market interest that the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year. The AP formula does not count changes in the present value of pension benefits. That makes the AP total slightly different in most cases from the total reported by companies to the Securities and Exchange Commission.
The value that a company assigned to an executive’s stock and option awards for 2012 was the present value of what the company expected the awards to be worth to the executive over time. Companies use one of several formulas to calculate that value. However, the number is just an estimate, and what an executive ultimately receives will depend on the performance of the company’s stock in the years after the awards are granted. Most stock compensation programs require an executive to wait a specified amount of time to receive shares or exercise options.
GM also said Thursday that it will hold its annual meeting on June 6 in Detroit. At the meeting, shareholders will elect directors, with all 14 current board members on the ballot. They’ll also hold an advisory vote on GM’s executive compensation, and vote on two shareholder proposals. One asks that the board make its chairman an independent director and not an officer of the company. The other asks the board to require senior executives to keep at least 25 per cent of their company stock until they are at least 60 years old.
GM shares rose 22 cents to $30.67 in afternoon trading. The stock hit its one-year high of $30.80 on Wednesday.