Temporary pay cuts are planned for Fiat Chrysler Automobiles executives, and the company’s salaried employees will have part of their pay deferred as FCA tries to navigate the effects of the coronavirus pandemic.
In an email sent to employees Monday, CEO Mike Manley laid out a vision of “shared sacrifice” as the company’s production plants in North America remain shut down. Manley said the moves related to pay are necessary to avoid laying off any permanent employees in the next quarter, which starts Wednesday.
The email, a copy of which was obtained by the Free Press, says salaried workers not affected by the downtime will take a 20% pay deferment.
That covers a little over 15,000 employees in the United States. The money is to be paid back to employees by March 15, 2021.
Manley said he will take a 50% cut in his salary over the next three months, and temporary cuts would also apply to members of the Group Executive Council, which is made up of top company leaders. In addition, FCA Chairman John Elkann and members of the board of directors have agreed to forgo any remaining compensation for the year.
“Protecting the financial health of the company is everyone’s responsibility and naturally starts with myself and the leadership of FCA,” Manley said in the email. “So, to help achieve this and to avoid the layoff of any permanent employees for the coming quarter, starting April 1 for the next three months I will take a 50% cut in my salary and the Group Executive Council (GEC) will all take a 30% cut. We will also ask most global salaried employees not impacted by local downtime plans to take a temporary 20% salary deferment as part of this shared sacrifice.”
It was not clear how much money the moves are likely to save the company, which also last week announced it had secured almost $3.9 billion in additional credit as it deals with the fallout from COVID-19. As a point of reference, Manley’s 2019 compensation — $14.4 million (13.3 million euros) — included a base salary of $1.6 million (1.4 million euros), a bonus of $1.3 million (1.2 million euros), long-term incentive of $9.6 million (8.8 million euros) and other non-monetary, or fringe, benefits such as tax preparation and retirement-related charges.
The moves by FCA follow similar announcements at Ford and General Motors. Last week the Free Press reported that Ford CEO Jim Hackett told employees 300 Ford senior executives, including himself, would defer 20% to 50% of their salaries for at least five months beginning May 1, and that Executive Chairman Bill Ford would defer his whole salary for the period.
At GM, CEO Mary Barra will take home one-third less in compensation for at least six months, and GM’s other salaried employees will defer 20% of their cash compensation for six months. The deferred pay is supposed to be paid back with interest no later than March 15, 2021.
Although the pandemic has hit FCA and other automakers in the wallet with vehicle sales dropping, the company has also been struck by numerous deaths connected to the virus, seven of which have been confirmed. Manley addressed some of that impact in his letter:
“As a global family, we have not been spared from the very personal impact of this pandemic as a number of our colleagues who are unwell are going through convalescence or are in quarantine. It is also with deep sadness that we are remembering those we have lost to this pandemic. Our thoughts are with them and their families in their grief. Coronavirus is not something that is affecting someone else, it is right here amongst us.”
Manley noted that the company prioritized creating a “safe and healthy workplace” and is working to safeguard the jobs of permanent employees.
“As we go through this period, we continue to plan for the time we emerge from this crisis and in order to do so, we are taking numerous steps to protect our company during this time. We are both reinforcing our access to capital and being laser focused on every project, program and expense — removing and postponing non-critical activities,” according to the letter.
Follow Detroit Free Press reporter Eric D. Lawrence on Twitter: @_ericdlawrence. Phoebe Wall Howard and Jamie L. LaReau contributed to this report.