General Motors (GM) expects $1.5B charge after announcing voluntary separation program

General Motors (NYSE: GM) announced in its 8-K filing on Thursday a voluntary separation program in an effort to accelerate the normal attrition process and the resulting cost savings. The program is part of a January announcement where the company said it intends to implement a cost reduction program to reduce fixed costs by $2.0 billion on an annual run rate basis by 2024.

Under the terms of the VSP, eligible employees who choose to leave the Company will be offered a combination of lump sum payments and other compensation based on their years of service. The Company expects to incur up to $1.5 billion of pre-tax employee separation charges, which will be substantially all cash-based, and up to $300 million in pre-tax, non-cash pension curtailment charges.

The automaker anticipates all of the charges will be considered special for EBIT-adjusted, EPS-diluted-adjusted, and adjusted automotive free cash flow purposes. The Company expects to incur the majority of these charges in the first half of 2023, with some additional costs incurred throughout the remainder of the year, and to make substantially all of the cash payments by the end of 2023.

Shares of GM are down 0.10% in early trading on Thursday.

By Michael Elkins | [email protected]

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