GM says about 5,000 salaried employees took buyouts, layoffs avoided

DETROIT — General Motors on Tuesday said about 5,000 of its salaried employees have elected to leave the company through voluntary buyouts.

CFO Paul Jacobson shared the number during a Bank of America automotive conference and said the program came in line with the automaker’s expectations as part of an effort to cut $2 billion in costs over the next two years. The number represents about 6 percent of the 81,000 salaried employees GM had globally at the end of 2022.

GM said no layoffs or terminations are on the table for now.

“Given the results of the program, company-wide involuntary separations are not a consideration at this point,” GM spokesman David Barnas said in a statement to Automotive News. “The steps we are taking will allow us to maintain momentum, remain agile and create a more competitive GM.”

Jacobson said the company will achieve about $1 billion in cost savings on an annualized basis as the employees exit this year. Employees had until March 24 to consider the Voluntary Separation Program offer, and those who accepted will leave by June 30.

He added that GM believes it will reach the higher end of its goal to achieve 30 to 50 percent of its $2 billion cost-reduction target this year. More details will be shared on GM’s first-quarter earnings call later in the month, he said.

“We’ve gotten a really, really good head start on the $2 billion cost program,” Jacobson said at the Bank of America conference.

“We were willing to pay for the voluntary program to incent people to go who maybe were closer to retirement or had just decided they wanted a change in career or lifestyle,” he added. “At the same time, [we wanted] to do everything we can to try to avoid involuntary layoffs. And I think we’re in a position where we’re going to be able to do that.”

Voluntary severance packages were offered to U.S. employees who have been with the company for at least five years and executives anywhere in the world with at least two years of service.

Nonexecutives who take the deal will receive one month of pay for each year with the company, up to 12 months, along with COBRA health insurance coverage, a prorated performance bonus and outplacement services. Executives are eligible to receive base salary, incentives, COBRA insurance and outplacement services.

GM said in a regulatory filing last month that the buyouts were expected to cost up to $1.5 billion in pretax employee separation charges, “substantially all” of that cash-based, and as much as $300 million in pretax, noncash pension curtailment charges. The final cost will depend on how many employees accept the buyout offer, GM has said, adding that most of the expenses would be incurred in the first half of this year.

In addition to employee attrition, the automaker plans to lower its costs by reducing vehicle complexity, increasing the sharing of subsystems between internal combustion engine and electric vehicle programs, investing in growth initiatives and cutting discretionary spending.

GM shares slipped 2.5 percent to $35.35 in midday trading.