Human Capital & Careers

GM’s New Sales Pitch: Buy Our Buyout

After posting a record $38.7-billion 2007 loss, it pitches a huge cost-reduction plan to 74,000 employees.
Stephen TaubFebruary 12, 2008

General Motors plans to offer buyouts to all of its 74,000 union employees.

The pact was announced on the same day that it reported a $38.7-billion loss for 2007, the largest annual loss ever for an automotive company, according to the Associated Press.

The deal hammered out with the United Auto Workers (UAW) union offers a choice of several pension and buyout incentives. They include an offer of $45,000 of retirement pension incentives, or $62,500 of incentives for skilled trades.

Eligible employees also can select from a variety of ways to receive their incentive: one time, lump-sum cash payment; direct rollover into their GM 401(k) or into an Individual Retirement Account (IRA); a monthly annuity; or a combination of partial lump-sum payment and direct rollover into their GM 401(k) or an IRA.

The other retirement and buyout options available are similar to those offered to employees in 2006. These options include what it calls a mutually satisfactory retirement for employees who are at least 50 years old with 10 or more years of service. This option provides a pension payment with full benefits.

Another option is a pre-retirement program, in which employees with from 26 to 29 years of service may grow into a full “30 and out” retirement. Until they reach 30 years of credited service, participating employees would receive a fixed monthly payment with full benefits.

A third choice is a cash buyout for employees who agree to voluntarily quit and sever all ties with GM. Employees with 10 or more years of credited service or seniority will be offered a $140,000 buyout incentive. A $70,000 buyout incentive is being offered to employees with less than 10 years of credited service or seniority.

“We’ve worked with our UAW partners to ensure our employees have a variety of attractive options to consider,” said GM Chairman and CEO Rick Wagoner. “The special attrition program is an important initiative that will help us transform the workforce.”

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