DETROIT —General Motorswill offer voluntary buyoutsto a “majority” of its 58,000 U.S. white-collar employees, as it aims to cut $2 billion in structural costs over the next two years, according to a letter sent to workers Thursday from CEOMary Barra.
The “Voluntary Separation Program,” or VSP, will be offered to all U.S. salaried employees who have spent five or more years at the company as of June 30. Outside of the U.S., the automaker will offer buyouts to executives with at least two years of time at the company.
GM expects to take a pretax charge of up to $1.5 billion related to the buyouts, according to apublic filingThursday. The majority of the charges are expected to be all-cash and occur during the first half of the year, the company said.
Barra, in the letter Thursday, said the program is “designed to accelerate attrition in the U.S.,” assisting the company in potentially avoiding “involuntary actions” in the future. The buyout offer comes after the Detroit automaker said last week it would terminate about500 salaried positionsglobally.
The last time GM offered such a large buyout programwas for roughly 18,000 North American salaried employees in 2018-2019.
“Employees are strongly encouraged to consider the program,” GM said in an emailed statement to CNBC Thursday. “By permanently bringing down structured costs, we can improve vehicle profitability and remain nimble in an increasingly competitive market.”
GM announced the$2 billion cost-cutting programin January, saying between 30% and 50% of the savings were expected during 2023. At the time, executives said they were planning headcount reductions through attrition rather than layoffs.
U.S. employees who are approved for the buyout will be granted one-month pay for every year they worked up to 12 months, as well as COBRA health coverage. They also will receive prorated team performance bonuses and outplacement services. Global employees will receive base salary, incentives, COBRA and outplacement services.
Eligible employees interested in the program must sign up by March 24. Those who elect to take a voluntary package and are approved will depart by June 30.
A company spokeswoman declined to disclose how many employees the company is targeting to accept the buyout packages. At the end of last year, GM employed about 81,000 salaried employees worldwide, according to public filings.
FAQs
General Motors will offer voluntary buyouts to a "majority" of its U.S. white-collar employees, according to a letter sent to workers Thursday from CEO Mary Barra. GM expects to take a pretax charge of up to $1.5 billion related to the buyouts, according to a public filing Thursday by the company.
Did GM offer buyout to majority of US salaried workers? ›
General Motors has offered buyouts to a majority of its salaried workers as part of a plan to cut costs by $2 billion over the next two years.
What is the GM salary buyout offer? ›
Through the buyout program, employees with at least five years of service at GM are eligible to receive one month of pay for every year of service up to 12 months, a pro-rated performance bonus and outplacement services.
How many salaried employees does GM have in the US? ›
General Motors employed some 53,000 salaried workers in the United States in 2023.
How many people took GM buyout? ›
DETROIT (AP) — About 5,000 white-collar workers at General Motors took the company's buyout offers, which the automaker says is enough to avoid layoffs at this time. GM said Tuesday that the offers will save about $1 billion per year in costs, about half of the $2 billion it wants to cut annually by the end of 2024.
Why is GM offering buyouts to salaried employees? ›
As GM spends billions on the shift to electric cars, it's cutting spending in other areas and has offered many US employees cash to leave the company to avoid layoffs in the future. By Richard Lawler, a senior editor following news across tech, culture, policy, and entertainment.
Why GM offering buyouts? ›
"By permanently bringing down structured costs, we can improve vehicle profitability and remain nimble in an increasing competitive market," she said. The buyouts will be offered to salaried employees with at least five years of time at GM, as well as to global executives with at least two years.
Did GM say about 5000 salaried employees took buyouts? ›
April 4 (Reuters) - About 5,000 General Motors Co (GM. N) , opens new tab salaried workers took buyouts to leave the company, putting the company well on the way to hitting a $2 billion cost-cutting target, the automaker's chief financial officer said Tuesday.
What is a buyout of salaried employees? ›
Employee buyouts are used to reduce employee headcount and, thus, salary costs, the cost of benefits, and any contributions by the company to retirement plans. A common formula for severance packages includes a base of four weeks pay plus an additional week for every year of employment at the company.
Will GM offer salaried employee buyouts take up to $1.5 BLN charge? ›
GM offers voluntary buyouts to US salaried workers, expects $1.5B charge. General Motors (GM) is laying out its plan to extract $2 billion in cost savings, and reductions in its labor force will be a big part of it.
Key Executives
- Mary Barra. CEO / President. - Salary. - Total Comp*
- Mark L. Reuss. Executive Vice President of Global Product Development, Purchasing and Supply Chain. $1.20M. Salary. $8.41M. ...
- Daniel L. Ammann. President. $1.45M. Salary. $10.22M. ...
- Alan S. Batey. Executive Vice President and President of North America. $950k. Salary.
The memo outlines these changes for nonunion salaried employees: A merit raise fund averaging 3.5% has been approved. New base compensation for salaried workers will be effective March 1, 2024, "providing you with market competitive compensation."
Do GM salaried employees get profit-sharing? ›
The hourly profit-sharing plan is based on a negotiated formula with the UAW. It is $1,000 per every $1 billion in annual EBIT, or pretax profits for North America.
What is the GM severance package? ›
Severance: “One month of pay for every year of service up to 12 months of pay, paid as a lump sum,” according to the GM memo.
How much debt is GM carrying? ›
Total debt on the balance sheet as of December 2023 : $122.64 B. According to General Motors's latest financial reports the company's total debt is $122.64 B. A company's total debt is the sum of all current and non-current debts.
How many employees is GM laying off? ›
General Motors will lay off a total of 1,314 employees at two factories in Michigan in connection to ending production of vehicles.
Did General Motors avoid layoffs as 5000 workers accept buyout offer? ›
The company has announced that it won't need layoffs to meet its financial goals, as it is reporting that about 5,000 salaried employees took a voluntary buyout. GM CFO Paul Jacobson shared the news during a Bank of America automotive conference, reports Automotive News. The buyouts will save $1 billion in cost.
Did GM workers lose their pensions? ›
During the 2008 global financial crisis, when GM and Chrysler went bankrupt, the union agreed to massive concessions in benefits, which included their pensions. The workers attempted to get their pensions back during the 2019 movement “Unite All Workers for Democracy,” but the negotiations failed after a 40-day strike.
