General Motors has announced to defer the pay of all its salaried employees — about 69,000 employees by 20 percent amidst Coronavirus crisis. While GM said the business was "very strong" before the outbreak, the decision has been taken to offset any adverse affect on the business, as the production halts in its plants globally.
The cash compensation, that is deferred for the employees can be utilized in case the coronavirus crisis deepens. This cash, however, will be paid back by GM with interest not later than March 15, 2021.
Also, the pay cut is applicable only to the staff that can 'work from home'. About 6,500 employees in the U.S who cannot work from home will go on paid leave, and the company is calling it a “salaried downtime paid absence.” The workers will receive 75% of their pay, and will retain health benefits.
Apart from the 20% salary deferral for employees, GM executives are also taking additional 5% to 10% cuts in their cash compensation, excluding bonuses, stock options or other incentives. The GM board, on the other hand, will take an additional 20% reduction in total compensation.
“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 an emailed statement to CNBC.
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