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Former GM Execs Sue for Retirement Benefits

May 10, 2011
3 min to read


DETROIT — More than 100 former General Motors executives are suing the automaker in federal court to recoup pension benefits slashed during the company's historic bankruptcy.


The retirees, including former vice presidents and high-ranking managers, are trying to recoup benefits plus interest and want a federal judge to order GM to accurately pay future benefits, The Detroit News reported.

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The lawsuit, filed in U.S. District Court in Detroit, threatens to undo a cost-cutting move that helped GM shed billions in debt and emerge from bankruptcy court as a new, leaner company. The complaint was filed hours ahead of GM's expected announcement today that it is investing $2 billion in plants in eight states.


The executives suing include a number of former GM vice presidents, including John G. Middlebrook, who was vice president and general manager of vehicle brand marketing. He also was a general manager of the Chevrolet Division and helped launch GM's now-shuttered Saturn division.


Others suing include Richard C. Nerod, retired president of GM-Latin America, Africa and Middle East; and Donald W. Hudler, a GM vice president and former president of Saturn.


The retirees and surviving spouses are spread across the U.S., from Michigan to Florida; two are in England.


A GM spokesman, Jim Cain, said the claims were without merit.

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"Sacrifices were made by every stakeholder, including former executives, to create a foundation upon which the new GM can thrive," Cain said. "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."


The retirees' lawyers, Kathleen Bogas and Brian Koncius, could not be reached immediately.


In June 2009, General Motors Co. cut its senior executive pensions worth more than $100,000 by two-thirds in bankruptcy reorganization.


For former top executives, GM saved $221 million by ending a portion of its Supplemental Employee Retiree Plan.


Most top executives saw their pensions cut by two-thirds, including former GM CEO Rick Wagoner, whose pension fell from roughly $20 million to about $8.5 million.

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Overall, GM saved $4.6 billion in trimming pension and retiree health care benefits during its bankruptcy reorganization, the company said in a filing last year.


GM said it saved $2.7 billion by eliminating health care benefits for salaried retirees 65 or older and eligible for Medicare and capping the amount it will spend on retiree health care for salaried retirees younger than 65.


The Detroit-based automaker is giving salaried retirees $260 a month until they turn 65 and qualify for Medicare. That money can be used for health expenses.


GM is limiting salaried retiree life insurance to $10,000 for current retirees. But it ended the insurance for its former top executives.


The company also saved $3.3 billion by canceling a monthly payment of $66.70 for its hourly pension plan that was to start on Jan. 1.

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The retirees challenged the new pension benefits in November, arguing GM is providing benefits that "are substantially less than" what should be provided, according to a complaint filed in U.S. District Court in Detroit.


GM failed to respond to the retirees' challenge within 60 days, however, according to the lawsuit. So the retirees filed an appeal with GM's Executive Compensation Committee.


Janice Uhlig, administrator of the company's plan, responded a week later, telling them the claims were denied, according to the lawsuit.




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