$100,000 for Workers; $1-Million Bonus for LaSorda
February 28, 2007

Chrysler announced yesterday that it will offer eligible U.S. hourly employees up to $100,000 to leave as part of the company’s plan to scale back its workforce and turn profitable by next year.

At the same time, Chrysler’s annual report revealed Chrysler President and CEO Tom LaSorda received compensation of $3.175 million, including a $1.1-million bonus. The report, which for the first time since the 1998 merger with DaimlerBenz detailed executive compensation for Chrysler execs, showed LaSorda was the second-highest paid employee after DaimlerChrysler CEO Dieter Zetsche, who had total compensation of $6.7 million, including a bonus of more than $3 million.

At DaimlerChrysler’s annual press briefing on 2006 financial results a couple weeks ago, company executives explained its compensation and award system. In essence, a Chrysler executive like LaSorda is compensated not only based on Chrysler’s performance, which was dismal in 2006 with a $1.4-billion loss, but also on the performance of other parts of the company, including Mercedes-Benz, all of which had good profits in 2006. Similarly, compensation of execs within DaimlerChrysler is tied not only to their group but also to the others, like Chrysler Group, and the company as a whole.

As for hourly employees, workers who agree to leave the company would receive a lump-sum payment of $100,000 plus six months of medical and vision coverage. The early retirement package includes a $70,000 lump-sum payment plus health care, in accordance with the UAW contract.

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