General Motors Co on Wednesday outlined an incentive plan for the head of its self-driving car unit that points the way toward a possible initial public offering for the business.
The No. 1 U.S. automaker disclosed a long-term compensation plan that incentivizes Dan Ammann, chief executive of the Cruise unit, to develop the technology and commercial plans that could lead to the stock offering within 10 years, according GM’s annual 10K filing with the U.S. Securities and Exchange Commission.
Ammann, who stepped down as GM’s president and assumed the Cruise position at the start of the year, was awarded 16,914 restricted stock units for common shares of Cruise and stock options for 101,485 common shares of Cruise by the unit’s board on Monday.
The incentives are based on meeting certain targets, including “a change of control or initial public offering” that occurs prior to the 10-year anniversary of the stock grant, according to the SEC filing.
Ammann stands to make at least about $25 million based on the stock units, which have a value of $1,515 a share, according to the filing. However, his compensation could be much more lucrative if an eventual IPO drives the value of the stock options far above their strike price of $1,515 a share.
“Mr. Ammann’s compensation plan is consistent with CEO benchmarks from tech companies with similar market cap to Cruise and is heavily weighted toward the attainment of specific technology and commercial targets,” GM spokesman Tom Henderson said in a telephone interview.
Analysts have speculated that GM eventually will sell shares in Cruise or spin it off. Cruise, with more than 1,100 employees, is aiming to launch a robo-taxi service by the end of 2019.
GM Chief Executive Mary Barra told analysts on a conference call on Wednesday after the company reported stronger-than-expected earnings that the Detroit automaker was making “rapid progress” with the technology, and the company’s self-driving vehicle plans were “not squishy at all.”
“I think it’s in a strong position from funding,” she said. “I think it’s in a strong position as we continue to do the development.”
Cruise has a value of about $14.6 billion despite no significant revenue and a product not ready for commercial launch. Japanese technology investment fund SoftBank Group Corp and Japanese automaker Honda Motor Co invested a total of $5 billion for separate minority stakes in Cruise.
GM spent $700 million on Cruise last year and expects to spend another $1 billion on the unit this year, GM Chief Financial Officer Dhivya Suryadevara said on the earnings call.
Ammann joined GM in 2010 from Morgan Stanley, where he was an adviser to GM’s government-led bankruptcy restructuring in 2009. He became GM’s president in 2014.