General Motors’ bankruptcy disrupted the lives and benefits of many retirees, but one group of former executives is looking to reclaim what was formerly theirs. A group of 100 retirees, all formerly senior executives within the automaker, are suing the new General Motors in hopes of restoring their original pensions and retirement benefits.
GM’s bankruptcy forced the automaker to reevaluate and amend the benefits paid to its retirees. As a result, GM saved some $4.6 billion by cutting pensioned retiree health payments, and another $2.7 billion by eliminating health insurance for salaried retirees over the age of 65 and eligible for Medicare. Undoubtedly, executives saw the biggest cuts — but then again, they may have received the biggest payouts to begin with. In 2009, retired GM execs who had annual pensions in excess of $100,000 saw their benefits slashed by two-thirds, allowing GM to save $221 million.
A group of plaintiffs, including John Middlebrook, a former vice president of brand marketing, and Don Hudler, once a head of Saturn, originally challenged these cuts last November, alleging that GM was providing “substantially less” than what they were owed. GM reportedly failed to respond to the challenge within 60 days, leading the group to file an appeal with GM’s Executive Compensation Committee, which rebuffed the request. As a result, the group filed suit against the automaker in U.S. District Court in Detroit.
“Sacrifices were made by every stakeholder, including former executives,” reads a statement from GM, “to create a foundation upon which the new GM can thrive. “We have not been served with the complaint, but these former executives previously requested that the administrator of the executive retirement plan review their entitlement to certain benefits. The administrator denied their claim after thoroughly reviewing the matter. “We are confident that the plan administrator properly considered and denied their claim,” GM said in the statement.
A similar lawsuit was filed by former Chrysler executives last September. More than 450 former managers and executives — famously including former chairman Lee Iacocca — alleged Chrysler’s former stewards (Daimler AG and Cerberus Capital Management) failed to protect their pensions.
Source: Automotive News (Subscription required)