GM pays Lutz bonus of at least $1.5 million (And Worth Every Penney-BG)

DETROIT, March 12 Reuters reported that General Motors Corp. has given Vice Chairman Bob Lutz, the former Chrysler executive hired last year, a compensation package that includes 80,000 restricted common shares and a bonus of at least $1.5 million for his first year of employment, according to his contract which the automaker released on Tuesday.

Lutz, considered by some as the ultimate 'car guy' within the industry, will earn a base salary matching GM's other vice chairman, John Devine, the former Ford chief financial officer hired over a year ago.

GM, the world's largest automaker, did not disclose Devine's base salary, but indicated it would match that of former Vice Chairman Harry Pearce, who earned $1.4 million in salary in 2000.

Lutz will earn a bonus of at least $1.5 million for his first 12 months of employment and $1 million for the second 12 months.

He will also receive 80,000 restricted common shares. They pay quarterly dividends like ordinary common shares, but only a third of the shares vest each year over the life of his three- year contract.

Based on GM's closing price of $61 on the New York Stock Exchange Tuesday, the restricted shares are worth about $4.9 million.

Lutz is also eligible for an executive bonus if GM hit its undisclosed cost reduction and cash generation targets. At the time Lutz signed the contract, GM had an executive bonus plan based on a net margin target of 5 percent over four quarters before 2003, which has since been replaced by the cost cutting and cash flow targets.

Since joining GM in August last year, the 70-year old Lutz has revamped GM's product development process to try to speed up the design and engineering of new cars and trucks, while cutting costs and trying to to make the lineup more exciting.