Fiat Chrysler cuts pay of salaried workers by 20% for up to three months
Salaried Fiat Chrysler Automobiles NV employees around the globe will take temporary 20% pay cuts as the automaker looks to save money and avoid layoffs amid disruption from the COVID-19 outbreak.
The compensation reduction starting April 1 could last up to three months, but Fiat Chrysler would repay its employees those lost funds no later than March 15, 2021, according to a letter from CEO Mike Manley obtained by The Detroit News. Repayments do not include interest.
Additionally, Manley is taking a 50% cut in his salary for the same period. The automaker's 20-member Group Executive Council is forfeiting 30% of their pay. And FCA Chairman John Elkann and the board of directors have agreed to forgo their remaining 2020 compensation.
"As the pandemic has spread, we have prioritized creating a safe and healthy workplace but also worked to safeguard the jobs of permanent FCA employees," Manley wrote. "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.
"Protecting the financial health of the company is everyone’s responsibility and naturally starts with myself and the leadership of FCA."
Fiat Chrysler has shut down plants around the globe amid the virus outbreak. North American plants began closing March 18, and manufacturing facilities in the U.S. and Canada will remain idled through April 13.
A majority of Fiat Chrysler's 53,800 global salaried workforce who are not in plants affected by the manufacturing downtime will be impacted. That includes 4,200 U.S. workers of the 15,000 total salaried employees here.
The action is similar to one made by General Motors Co. last week. The Detroit automaker is deferring 20% of salaried employees' pay for up to six months. GM says it will repay the reductions with interest later this year or early 2021. GM and Ford Motor Co. also have announced executive compensation cuts.
Fiat Chrysler last week also said it was halting some development programs because of the virus outbreak, resulting in almost 2,000 supplemental contract workers being put out of a job. The automaker also said it was borrowing $3.8 billion to help during the downtime.