GM’s first ever AI chief has left the company after only eight months. Barak Turovsky, GM’s former Chief Artificial Intelligence Officer, announced on his LinkedIn over the weekend that he was leaving the newly created position.
“Friends, I just wanted to share that as of today I am no longer with GM. Physical AI is just as exciting as LLMs and it was a genuine pleasure to work again with brilliant folks,” he wrote, listing some of his colleagues. “I will be taking a little sabbatical to work on some exciting new ideas.”
Prior to joining GM in March 2025, Turovsky served as a VP of AI at Cisco for two years and as head of product at Google, focusing on languages AI, for seven. Nvidia defines “physical AI,” which Turovsky referenced in his statement, as that which enables autonomous technology like self-driving cars to reason and perform complicated tasks in the real world.
Turovsky had reported to Dave Richardson, Google’s SVP of software and services engineering, who joined the company in 2023. Richardson left at the close of October, shortly after GM outlined a series of updates meant to reposition the company as a tech-heavy mobility company in which software, AI and autonomy are expected to play a major role. These updates were announced a the GM Forward event in October, at which Richardson, alongside other leaders, teased the launch of GM’s next-generation electrical architecture for so-called “software defined vehicles.” Both Richardson and Turovsky chose to leave the company, the Detroit Free Press reported.CNBC reported on Tuesday that Baris Cetinok, GM’s SVP of software and services product and design, will leave on Dec. 12 as part of a restructuring. A veteran of Apple, Amazon and Microsoft, Cetinok joined GM in September 2023.
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“We are strategically integrating AI capabilities directly into our business and product organizations, enabling faster innovation and more targeted solutions,” a GM spokesperson said in a statement.
PR professional Eric Starkman noted in a post on LinkedIn that Turovsky’s is one in a wave of high-profile departures from GM, and emphasized that it should spark concern. Starkman’s post preceded news of Cetinok’s departure.
“Losing someone with Turovsky’s pedigree should set off alarm bells among investors,” Starkman wrote, noting Turovsky’s focus on physical AI. “China’s EV makers already excel at this discipline, applying Physical AI across both their factories and their vehicles.”
Alongside Richardson, Starkman wrote that JP Clausen, a former Tesla and Google executive who joined in April 2024 to oversee manufacturing, had left of his own accord. Eric Savitz, a former Barron’s editor and the one-time San Francisco bureau chief at Forbes, also left after just a year at GM News, stating on LinkedIn that he had been “Sacked. Canned. Axed. Downsized. Dismissed. Pink-slipped,” among other colorful ways of describing is departure.
GM is ending production of the Chevy Brightdrop electric van, according to portions of a transcript of a recent earnings report published by The Verge. The decision was made due to slowing demand in the EV market, as hundreds of Brightdrop vans have begun piling up in dealer lots.
“This is not a decision we made lightly because of the impact on our employees,” CEO Mary Barra said in the earnings call. “However the commercial electric van market has been developing much slower than expected, and changes to the regulatory framework and fleet incentives has made the business even more challenging.”
Those changes to the regulatory framework she mentions likely refer to the recent disappearance of the federal EV tax credit. The policy offered prospective buyers a $7,500 tax credit and was supposed to wind down in 2032, but the Trump administration killed it back in September as part of the so-called Big, Beautiful Bill. Brightdrop vans were also eligible for a $7,500 rebate for commercial EVs under 18,000 lbs, which went away along with the tax credit.
In other words, Brightdrop electric vans are simply too expensive for most consumers. They started at $74,000. The double discount brought the starting price down to $59,000, but that’s gone now. Additionally, rival Ford’s E-Transit van starts at $51,600.
GM first launched the Brightdrop vans back in 2021, and this seemed to be a serious attempt to capture the commercial EV market. The company made its own fleet management software and inked deals with Walmart, FedEx and others. Money is money, however, and not too many commercial customers have an extra $15,000 laying around to make up for those lapsed credits and rebates.
NEW YORK (AP) — The typical compensation package for chief executives who run companies in the S&P 500 jumped nearly 10% in 2024 as the stock market enjoyed another banner year and corporate profits rose sharply.
Many companies have heeded calls from shareholders to tie CEO compensation more closely to performance. As a result, a large proportion of pay packages consist of stock awards, which the CEO often can’t cash in for years, if at all, unless the company meets certain targets, typically a higher stock price or market value or improved operating profits.
The Associated Press’ CEO compensation survey, which uses data analyzed for The AP by Equilar, included pay data for 344 executives at S&P 500 companies who have served at least two full consecutive fiscal years at their companies, which filed proxy statements between Jan. 1 and April 30.
Here are the key takeaways from the survey:
A good year at the top
The median pay package for CEOs rose to $17.1 million, up 9.7%. Meanwhile, the median employee at companies in the survey earned $85,419, reflecting a 1.7% increase year over year.
CEOs had to navigate sticky inflation and relatively high interest rates last year, as well as declining consumer confidence. But the economy also provided some tail winds: Consumers kept spending despite their misgivings about the economy; inflation did subside somewhat; the Fed lowered interest rates; and the job market stayed strong.
The stock market’s main benchmark, the S&P 500, rose more than 23% last year. Profits for companies in the index rose more than 9%.
“2024 was expected to be a strong year, so the (nearly) 10% increases are commensurate with the timing of the pay decisions,” said Dan Laddin, a partner at Compensation Advisory Partners.
Sarah Anderson, who directs the Global Economy Project at the progressive Institute for Policy Studies, said there have been some recent “long-overdue” increases in worker pay, especially for those at the bottom of the wage scale. But she said too many workers in the world’s richest countries still struggle to pay their bills.
The top earners
Rick Smith, the founder and CEO of Axon Enterprises, topped the survey with a pay package valued at $164.5 million. Axon, which makes Taser stun guns and body cameras, saw revenue grow more than 30% for three straight years and posted record annual net income of $377 million in 2024. Axon’s shares more than doubled last year after rising more than 50% in 2023.
General Electric Co. CEO Lawrence Culp Jr. signs a $52 billion deal by Emirates to purchase Boeing aircraft with GE engines, at the Dubai Air Show, in Dubai, United Arab Emirates, Monday, Nov. 13, 2023. (AP Photo/Lujain Jo)
General Electric Co. CEO Lawrence Culp Jr. signs a $52 billion deal by Emirates to purchase Boeing aircraft with GE engines, at the Dubai Air Show, in Dubai, United Arab Emirates, Monday, Nov. 13, 2023. (AP Photo/Lujain Jo)
Almost all of Smith’s pay package consists of stock awards, which he can only receive if the company meets targets tied to its stock price and operations for the period from 2024 to 2030. Companies are required to assign a value to the stock awards when they are granted.
Other top earners in the survey include Lawrence Culp, CEO of what is now GE Aerospace ($87.4 million), Tim Cook at Apple ($74.6 million), David Gitlin at Carrier Global ($65.6 million) and Ted Sarandos at Netflix ($61.9 million). The bulk of those pay packages consisted of stock or options awards.
The median stock award rose almost 15% last year compared to a 4% increase in base salaries, according to Equilar.
Tim Cook attends the WSJ. Magazine Innovators Awards at the Museum of Modern Art on Tuesday, Oct. 29, 2024, in New York. (Photo by Evan Agostini/Invision/AP, File)
Tim Cook attends the WSJ. Magazine Innovators Awards at the Museum of Modern Art on Tuesday, Oct. 29, 2024, in New York. (Photo by Evan Agostini/Invision/AP, File)
“For CEOs, target long-term incentives consistently increase more each year than salaries or bonuses,” said Melissa Burek, also a partner at Compensation Advisory Partners. “Given the significant role that long-term incentives play in executive pay, this trend makes sense.”
Jackie Cook at Morningstar Sustainalytics said the benefit of tying CEO pay to performance is “that share-based pay appears to provide a clear market signal that most shareholders care about.” But she notes that the greater use of share-based pay has led to a “phenomenal rise” in CEO compensation “tracking recent years’ market performance,” which has “widened the pay gap within workplaces.”
Some well-known billionaire CEOs are low in the AP survey. Warren Buffett’s compensation was valued at $405,000, about five times what a worker at Berkshire Hathaway makes. According to Tesla’s proxy, Elon Musk received no compensation for 2024, but in 2018 he was awarded a multiyear package that has been valued at $56 billion and is the subject of a court battle.
Other notable CEOs didn’t meet the criteria for inclusion the survey. Starbucks’ Brian Niccol received a pay package valued at $95.8 million, but he only took over as CEO on Sept. 9. Nvidia’s Jensen Huang saw his compensation grow to $49.9 million, but the company filed its proxy after April 30.
The pay gap
At half the companies in AP’s annual pay survey, it would take the worker at the middle of the company’s pay scale 192 years to make what the CEO did in one. Companies have been required to disclose this so-called pay ratio since 2018.
The pay ratio tends to be highest at companies in industries where wages are typically low. For instance, at cruise line company Carnival Corp., its CEO earned nearly 1,300 times the median pay of $16,900 for its workers. McDonald’s CEO makes about 1,000 times what a worker making the company’s median pay does. Both companies have operations that span numerous countries.
Overall, wages and benefits netted by private-sector workers in the U.S. rose 3.6% through 2024, according to the Labor Department. The average worker in the U.S. makes $65,460 a year. That figure rises to $92,000 when benefits such as health care and other insurance are included.
“With CEO pay continuing to climb, we still have an enormous problem with excessive pay gaps,” Anderson said. “These huge disparities are not only unfair to lower-level workers who are making significant contributions to company value – they also undercut enterprise effectiveness by lowering employee morale and boosting turnover rates.”
Some gains for female CEOs
This photo provided by Otis Elevator Co. shows CEO Judy Marks. (via AP)
This photo provided by Otis Elevator Co. shows CEO Judy Marks. (via AP)
For the 27 women who made the AP survey — the highest number dating back to 2014 — median pay rose 10.7% to $20 million. That compares to a 9.7% increase to $16.8 million for their male counterparts.
The highest earner among female CEOs was Judith Marks of Otis Worldwide, with a pay package valued at $42.1 million. The company, known for its elevators and escalators, has had operating profit above $2 billion for four straight years. About $35 million of Marks’ compensations was in the form of stock awards.
Other top earners among female CEOs were Jane Fraser of Citigroup ($31.1 million), Lisa Su of Advanced Micro Devices ($31 million), Mary Barra at General Motors ($29.5 million) and Laura Alber at Williams-Sonoma ($27.7 million).
FILEw – Jane Fraser, CEO, Citigroup, speaks during a Senate Banking, Housing, and Urban Affairs Committee oversight hearing to examine Wall Street firms on Capitol Hill, Wednesday, Dec. 6, 2023 in Washington. (AP Photo/Alex Brandon, File)
FILEw – Jane Fraser, CEO, Citigroup, speaks during a Senate Banking, Housing, and Urban Affairs Committee oversight hearing to examine Wall Street firms on Capitol Hill, Wednesday, Dec. 6, 2023 in Washington. (AP Photo/Alex Brandon, File)
Lisa Su, CEO of Advanced Micro Devices, arrives for a dinner at the Elysee Palace, during an event on the sidelines of the Artificial Intelligence Action Summit in Paris, Monday, Feb. 10, 2025. (AP Photo/Thomas Padilla, File)
Lisa Su, CEO of Advanced Micro Devices, arrives for a dinner at the Elysee Palace, during an event on the sidelines of the Artificial Intelligence Action Summit in Paris, Monday, Feb. 10, 2025. (AP Photo/Thomas Padilla, File)
Christy Glass, a professor of sociology at Utah State University who studies equity, inclusion and leadership, said while there may be a few more women on the top paid CEO list, overall equity trends are stagnating, particularly as companies cut back on DEI programs.
“There are maybe a couple more names on the list, but we’re really not moving the needle significantly,” she said.
FILE- Mary Barra, chair and CEO of General Motors, talks to David Rubenstein during an interview hosted by the Economic Club of Washington, Wednesday, Dec. 13, 2023, in Washington. (AP Photo/Stephanie Scarbrough, File)
FILE- Mary Barra, chair and CEO of General Motors, talks to David Rubenstein during an interview hosted by the Economic Club of Washington, Wednesday, Dec. 13, 2023, in Washington. (AP Photo/Stephanie Scarbrough, File)
Prioritizing security
Equilar found that a larger number of companies are offering security perquisites as part of executive compensation packages, possibly in reaction to the December shooting of UnitedHealthCare CEO Brian Thompson.
Equilar said an analysis of 208 companies in the S&P 500 that filed proxy statements by April 2 showed that the median spending on security rose to $94,276 last year from $69,180 in 2023.
Among the companies that increased their security perks were Centene, which provides health care services to Medicare and Medicaid, and the chipmaker Intel.
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Reporters Matt Ott and Chris Rugaber in Washington contributed.
Correspondent Kris Van Cleave talks with Mary Barra, General Motors’ second-longest-serving CEO, about the company’s expanding electric vehicle lineup. He also takes a “high-speed” tour of GM’s Milford Proving Ground in Michigan, which has been a hub for automotive innovation for a century, and gets behind the wheel of GM’s soon-to-be-released electric Cadillac Escalade IQ.
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GM (GM) reported a top and bottom line beat for the fourth quarter, and issued 2024 full-year profit guidance that matched its initial forecast for 2023 on Tuesday.
The upbeat earnings report comes as GM looks to shake off the effects of the UAW strike and recalibrate its electric vehicle rollout, which the company admits has “created some uncertainty.”
Shares in the automaker jumped over 7% in premarket trading after the financial update’s release.
For the quarter, GM reported topline revenue of $42.98 billion, beating the $39.53 billion consensus Bloomberg estimate, although this figure was down compared with the $43.1 billion the company reported in Q4 2022. On the profitability front, GM reported adjusted earnings per share of $1.24 versus $1.16 estimated, on adjusted EBIT (earnings before interest and taxes) of $1.757 billion, though that figure dropped 53.8% versus a year ago.
For the year, GM earned $12.4 billion in adjusted EBIT; in late November GM reinstated its full-year outlook, expecting adjusted EBIT of $11.7 billion to $12.7 billion, compared with its previous outlook of $12 billion to $14 billion.
And it was last year’s initial $12 billion to $14 billion range that GM now sees as its full-year 2024 adjusted EBIT forecast. The company also sees $8.50 to $9.50 in adjusted earnings per share for the year as well.
“Consensus is growing that the US economy, the job market and auto sales will continue to be resilient, and at GM, we expect healthy industry sales of about 16 million units with the mix of EVs continuing to grow,” GM CEO and chair Mary Barra said in her shareholder letter.
EV growth
As for EV sales, GM suffered some hiccups in 2023 with its once-aggressive rollout, and some softness is expected this year. In fact a company spokesperson said GM will have $1.7 billion in reserves for losses relating to existing EV inventory in Q4.
“It’s true the pace of EV growth has slowed, which has created some uncertainty,” Barra said, though she expects GM to become “variable profit positive in the second half of the year” based on our current expectations for EV demand and production growth.
GM CFO Paul Jacobson also reiterated the company’s goal for EV profitability in a roundtable call with reporters. “We won’t get to low to single digit profitability [EBIT EV margin] until 2025,” he said.
A GMC vehicle is seen for sale on the Chuck Nash dealership lot on Jan. 3, 2024, in San Marcos, Texas. (Brandon Bell/Getty Images) (Brandon Bell via Getty Images)
In addition to reinstating its profit outlook last November, GM revealed a $10 billion “accelerated share repurchase” (ASR) program with the intention of boosting its common stock dividend by 33% starting in January. As opposed to a traditional staged share buyback, GM says its program will begin immediately.
“Everyone on the team is focused on strong execution to sustain our momentum and create shareholder value, and we are deeply committed and accountable to do exactly that,” Barra said in her letter.
Impact of strikes
Despite the UAW work stoppage, GM’s sales for Q4 were not dramatically affected, as the company said it had built up sufficient inventory in anticipation of strike. Earlier in January GM reported Q4 US sales increased 0.3% compared to the same period a year ago with roughly 625,176 cars and trucks sold.
Overall, GM said sales jumped 14.1% to 2.6 million vehicles for 2023, making it the company’s best year since 2019. The automaker also grew its market share by 0.3% to 16.3% overall in the US. GM said it was No. 1 in full-size pickup sales in the US (841K units) and No. 1 in full-size SUV sales (245,000 units).
GM also forecast total US auto industry sales to hit 16 million in 2024, which would be a strong improvement post-pandemic; only 13.4 million vehicles were sold in 2022, the lowest in a decade.
Overseas however is a different matter for GM. Jacobson said GM is projecting a loss in China for Q1. “We’re gonna have a tough first quarter there,” he said.
Another hiccup for GM involved issues related to its Cruise AV business unit. In November, Cruise paused all autonomous activities across the country with its robotaxis after an accident where a Cruise robotaxi ran over a woman, stopped on top of her, and then dragged her for about 20 feet before pulling over. The woman suffered severe injuries from the accident. A few weeks later Kyle Vogt, CEO of GM’s Cruise autonomous driving division, announced he was resigning from his role and leaving the company.
Late last week, Cruise revealed it was under investigation by the Department of Justice and SEC, among other regulatory bodies, concerning the incident with the pedestrian who was dragged and Cruise’s actions in the immediate aftermath of the event.
Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.
General Motors Co. blamed poor leadership for mishandling its Cruise robotaxi crisis, an admission the company is hoping will help get its cars back on the roads.
A report by the law firm Quinn Emanuel, which was paid by Cruise, outlines how executives took an adversarial approach with regulators after one of its autonomous cars struck and seriously injured a woman. Federal prosecutors are now investigating the incident, which led Cruise to halt its fleet nationwide and undercut GM Chief Executive Officer Mary Barra’s vision to transform the carmaker from a 20th-century metal bender to a transportation company of the future.
In a Thursday blog post, Cruise said it accepts the conclusions of the report. The company also disclosed that it’s facing probes from the Justice Department and Securities and Exchange Commission. It pledged to work with those investigations, in addition to having more robust processes for working with regulators. Kyle Vogt, former Cruise CEO, did not respond to a text message seeking comment.
“The reasons for Cruise’s failings in this instance are numerous: poor leadership, mistakes in judgment, lack of coordination, an ‘us versus them’ mentality with regulators, and a fundamental misapprehension of Cruise’s obligations of accountability and transparency to the government and the public,” the report said. “Cruise must take decisive steps to address these issues in order to restore trust and credibility.”
The report concludes that Cruise officials didn’t intentionally deceive regulators, but that their initial disclosures were inadequate.
For GM and Cruise, making the report public is a crucial step to getting its robotaxis back on the road. It’s particularly important that the companies repair relations with the state of California, which suspended Cruise’s license to operate driverless vehicles after company officials misrepresented details of the October collision in San Francisco. Within weeks, Vogt resigned, and Cruise fired nine executives and cut almost a quarter of its workforce.
It’s been an embarrassing saga for Barra who has touted its self-driving technology as a key pillar of GM’s plan to double revenue by the end of the decade. She’s pivoted by slashing spending on Cruise to contain losses and announcing plans to return billions to shareholders.
The company faces a hearing on Feb. 6 to determine what it owes in fines to California.
Connectivity Issues
The fateful incident occurred on Oct. 2, when a Cruise vehicle named “Panini” ran over a woman who’d been struck by another car and thrown in front of the self-driving vehicle.
The robotaxi stopped after detecting the person, but incorrectly classified the accident as a side-impact collision and initiated a pullover maneuver with the pedestrian pinned between its wheels. It dragged her 20 feet, causing severe injuries.
Cruise reported the incident to California regulators and the National Highway Traffic Safety Administration, but in early communication with some of the regulators it didn’t disclose that the woman was dragged and only communicated that the car had stopped after hitting her, according to documents reviewed by Bloomberg News.
The report released Thursday found that on Oct. 3 Cruise shared a video of the incident with the San Francisco Mayor’s Office, National Highway Traffic Safety Administration, California DMV and other government officials. In each of those meetings, it intended to play it in full. In some cases, connectivity issues prevented the video from being shown, but the company sent it to regulators in the weeks after those meetings, the report found.
Cruise never verbally pointed out that the woman was being dragged, preferring to let the “video speak for itself,” the report says. Cruise also showed an incomplete video to the media, the report said, because the company was fixated on shifting blame to the human driver that first hit the pedestrian.
“Cruise’s passive, nontransparent approach to its disclosure obligations to its regulators reflects a basic misunderstanding of what regulatory authorities need to know and when they need to know it,” Quinn Emanuel concluded.
Mortifying Move
California’s Department of Motor Vehicles suspended Cruise’s license on the same day GM reported its third-quarter earnings. On a call with Wall Street analysts hours earlier, Barra had touted the business’s potential.
“We do believe that Cruise has tremendous opportunity to grow and expand,” she said. “Safety will be our gating factor.”
California’s move was a huge blow for Cruise, which Vogt had said was on a path to $1 billion in revenue by the end of this year.
Up to that point, Cruise was pushing hard to roll out its robotaxi service outside of the San Francisco market. Vogt was determined to establish operations, customer bases and name recognition across the country before its biggest competitor Waymo did, according to people present at management meetings.
The people, who asked not to be identified describing private deliberations, likened the race to how Uber Technologies Inc. and Lyft Inc. competed in the early days of ride-hailing.
There were signs the technology wasn’t working smoothly before the California authorities took action. One of its cars collided with a Toyota Prius in June of that year. That same month, a bug caused about a dozen Cruise vehicles to all stop in one intersection, blocking traffic for hours.
GM executives, including general counsel Craig Glidden, pressed the startup on whether its processes were robust enough, people familiar with the matter said at the time. There was debate within Cruise about reducing the number of vehicles driving in parts of San Francisco to lower the odds of more incidents.
Vogt dismissed the concerns and pressed on, the people said.
Cruise then tussled this past summer with San Francisco’s city attorney and fire department over more incidents. Vogt told his staff that Cruise had to stand up to regulators the way Tesla Inc. CEO Elon Musk does, two of the people said.
Big Aspirations
Barra had big aspirations for Cruise when she acquired the business for $1.1 billion in early 2016. GM envisioned lowering the cost of rides in driverless vehicles below what Uber and Lyft charged and seizing a share of what former Cruise CEO Dan Ammann said was a $1.6 trillion market.
In a 2017 presentation, Ammann said Cruise would marry Silicon Valley software with Detroit manufacturing chops that Waymo lacked. The company later unveiled an electric shuttle called Origin that was purpose-built to be a robotaxi, and Cruise hoped to run a service by the end of 2019.
“We think it will change the world,” Ammann said at the time.
Cruise managed to land multibillion-dollar investments from the SoftBank Vision Fund, Microsoft Corp., Honda Motor Co. and T. Rowe Price As of early 2021, the business was valued at around $30 billion.
Those ambitions have since been scaled back. GM bought the Vision Fund out of its investment two years ago and has halted production of the Origin. Honda’s CEO suggested this month that it’s unlikely to launch a service with Cruise in central Tokyo by early 2026 as planned.
Barra’s team still believes Cruise has good technology and plans to re-establish the business — with tighter control. Before October, GM wanted to give the company independence to maintain a startup culture, said people familiar with the matter.
That’s no longer the case. Glidden, the general counsel, has been named the self-driving company’s co-president, Barra is non-executive chair and GM board member Jon McNeil is vice chairman of Cruise.
DETROIT – General Motors secured a new $6 billion line of credit as the automaker braces for additional strikes by the United Auto Workers union.
“The facility that we announced today is a $6 billion line of credit that I think is prudent in light of some of the messages that we’ve seen from some of the UAW leadership that they intend to drag this on for months,” CFO Paul Jacobson told CNBC’s Phil LeBeau in an interview on “Halftime Report.”
The targeted strikes already cost the automaker $200 million during the third quarter, GM said Wednesday.
A GM spokesman said the $200 million strike cost is due to lost production on wholesale volume, largely due to the UAW’s initial Sept. 15 strike at GM’s midsize truck and full-size van plant in Wentzville, Missouri. The strike has since expanded to GM’s parts and distribution facilities nationwide and, as of last Friday, a crossover plant in mid-Michigan.
As a result of the strike in Missouri, GM also idled its Fairfax Assembly Plant in Kansas, where it builds the Cadillac XT4 SUV and the Chevrolet Malibu sedan, and laid off nearly 2,000 workers.
Both GM CEO Mary Barra as well as Ford Motor CEO Jim Farley have publicly criticized UAW President Shawn Fain and the union’s strike strategy, claiming Fain is not actually interested in reaching deals for 146,000 workers with GM, Ford and Chrysler parent Stellantis.
Members of the United Auto Workers (UAW) Local 230 and their supporters walk the picket line in front of the Chrysler Corporate Parts Division in Ontario, California, on September 26, 2023, to show solidarity for the “Big Three” autoworkers currently on strike.
Patrick T. Fallon | AFP | Getty Images
“It’s clear that there is no real intent to get to an agreement,” Barra said in an emailed statement Friday night. “It is clear Shawn Fain wants to make history for himself, but it can’t be to the detriment of our represented team members and the industry.”
Fain has consistently said the union is available to negotiate 24/7 and has in turn accused the automakers of slow-walking negotiations.
GM’s newly announced line of credit will require the automaker to maintain at least $4 billion in global liquidity and $2 billion in U.S. liquidity. The terms of the credit agreement also restrict GM from mergers or sales of assets and limits on other, new debt. As of June 30, GM’s total automotive liquidity was $38.9 billion.
The credit line comes more than a month after Ford obtained a $4 billion line of credit to help it manage through “uncertainties” in the market.
The United Auto Workers strike has entered Day 6 as union representatives and Detroit’s Big Three remain at odds over wage increases.
UAW President Shawn Fain and other union leaders have argued that Ford, General Motors and Stellantis — parent company of Chrysler, Dodge, Jeep and Ram — can afford to pay workers more money because the companies have sharply boosted CEO pay in recent years. Those pay increases have helped create an unreasonably high pay gap between CEOs and average workers, the UAW says.
“The reason we ask for 40% pay increases is because, in the last four years alone, the CEO pay went up 40%,” Fain said on CBS News’”Face the Nation” Sunday. “They’re already millionaires.”
A Ford representative told CBS MoneyWatch that the UAW’s claims are misleading, noting that since 2019 CEO Jim Farley’s total compensation has risen 21%, not 40%, while his annual salary over that period is down 6%.
Farley earned $21 million in total compensation last year, the Detroit News reported, which is 281 times more than typical workers at the company, according to Ford filings with the Securities and Exchange Commission. Stellantis CEO Carlos Tavares made $24.8 million in 2022, according to the Detroit Free Press, roughly 365 times more than the average worker at Stellantis, SEC filings show. GM CEO Mary Barra earned nearly $29 million in 2022 pay, Automotive News reported, which is 362 times more than the typical GM worker.
While those ratios may seem staggering, they’re not uncommon, according to Michael Dambra, an accounting and law professor at University at Buffalo.
“It’s right in line with what’s been happening in the past three or four years,” Dambra told CBS News.
Triple-digit pay gaps between a CEOs and workers are also not unique to the auto industry, Dambra and other experts say.
Back in the ’60s and ’70s, company executives earned “somewhere between 20 and 30 times” regular employees, but “that’s massively increased, particularly in the 2000s,” said Dambra.
Factoring in the nation’s 350 largest companies, the CEO-to-worker pay ratio was 20-to-1 in 1965, according to the Economic Policy Institute. That figure jumped to 59-to-1 in 1989 and 399-to-1 in 2021, EPI researchers said. The CEO-to-worker pay ratio for S&P 500 firms was 186-to-1 in 2022, according to executive compensation research firm Equilar.
That pay ratio continues to grow because CEOs are increasingly paid in stock awards. Companies often justify paying CEOs in stock by saying it aligns a corporate leader’s financial incentives with the company’s — ostensibly, the executive earn more if the company does well or hits certain targets.
But companies often boost CEO pay even when executives miss their targets, the left-leaning Institute for Policy Studies said in a 2021 report that identified 50 large companies that changed their executive compensation rules during the pandemic.
Barra told CBS News last week that 92% of her pay is based on GM’s financial performance in a given year. She noted that employees’ total pay is also tied to performance through profit-sharing bonuses.
“The way that General Motors is set up, if the company does well, everyone does well,” she said.
Although that may be broadly correct, employees’ profit-sharing pay stops at a certain dollar amount, Dambra said, noting the $12,000 cap the UAW and automakers had in their now-expired contract. Barra’s pay structure doesn’t have a cap, “so essentially compensation for Mary Barra is unlimited,” he said.
“As stock performance improves and stock returns go up, the share-based compensation she gets is uncapped — it’s exponential, unlimited growth,” Barra said.
Khristopher J. Brooks is a reporter for CBS MoneyWatch covering business, consumer and financial stories that range from economic inequality and housing issues to bankruptcies and the business of sports.
Mary Barra, CEO, GM at the NYSE, November 17, 2022.
Source: NYSE
DETROIT — General Motors is raising its 2023 guidance for a second time this year after the automaker reported second-quarter results Tuesday that were up sharply year over year.
The Detroit automaker also said it is increasing cost-cutting measures through next year and now plans to reduce $3 billion in expenditures compared with previous guidance of $2 billion.
GM CFO Paul Jacobson said the reductions will include sales and marketing spending, salary employment, and other costs.
GM shares were initially up in premarket trading following the results but were down nearly 3% just after the market opening.
Adjusted earnings per share: $1.91. (This is not comparable to $1.85 analysts expected due to one-time items.)
Revenue: $44.75 billion vs. $42.64 billion expected, according to Refinitiv consensus estimates
GM’s earnings included an unexpected $792 million charge for new commercial agreements between GM and LG Electronics and LG Energy Solution. The cost is a result of the automaker sharing expenses with the companies for a recall of its Chevrolet Bolt EV models in recent years, which were previously expected to be paid by the LG companies.
Taking that charge into account, the company reported adjusted earnings before interest and taxes of $3.23 billion.
On an unadjusted basis, the company reported net income attributable to stockholders of $2.57 billion, or $1.83 per share, up nearly 52% from a year earlier when it earned $1.69 billion, or $1.14 per share.
Revenue during the quarter jumped 25% compared with $35.76 billion a year earlier.
For the full year, GM is raising its adjusted earnings expectations to a range of $12 billion to $14 billion, up from a previous range of $11 billion to $13 billion. GM also increased expectations for adjusted automotive free cash flow to a range of $7 billion to $9 billion, up from $5.5 billion to $7.5 billion, and for net income attributable to stockholders of $9.3 billion to $10.7 billion, compared with the previous outlook of $8.4 billion to $9.9 billion.
Jacobson said the raise is a result of stronger-than-expected pricing, demand and capital discipline.
However, the guidance increase is contingent on GM successfully negotiating new labor agreements with the United Auto Workers and the Canadian Unifor unions this year without a work stoppage or strike. The UAW has new leadership that has publicly been far more confrontational than prior union officers. The current contracts covering roughly 150,000 union workers for the Detroit automakers are set to expire Sept. 14.
“We have a long history of negotiating fair contracts with both unions that reward our employees and support the long-term success of our business. Our goal this time will be no different,” GM CEO Mary Barra said Tuesday in a shareholder letter. “That’s the best possible outcome for all our key stakeholders, including our team, plant communities, dealers, suppliers and investors.”
A work stoppage would add to the auto industry’s yearslong production problems resulting from the coronavirus pandemic and significant supply chain constraints such as semiconductor chips.
During the last round of bargaining in 2019, a breakdown in negotiations between the Detroit automakers and the UAW led to a national 40-day strike against GM. The automaker has said the strike cost it about $3.6 billion that year.
For GM specifically, a work stoppage could cost it hundreds of millions of dollars a week and delay the production ramp-up of its new electric vehicles, which the automaker has already been slow to produce. Jacobson said GM achieved North American production of 50,000 EVs during the first half of the year, however acknowledged “it’s been a little bit challenging.”
Before reporting results Tuesday, GM’s earnings beat expectations 86% of the time, according to Bespoke. However, the stock only averages a 0.17% gain on earnings day.
Shares of GM are up roughly 16% this year. They closed Monday at $39.30 per share — off from a 52-week high of $43.63 per share, notched in February.
Mary Barra, CEO, GM at the NYSE, November 17, 2022.
Source: NYSE
DETROIT — General Motors handily beat Wall Street’s top- and bottom-line expectations for the fourth quarter, while forecasting another solid year of results in 2023.
The strong report suggests GM is hanging onto record, or near-record, results even as the U.S. automotive industry begins to normalize after several years of record-low inventories and resilient consumer demand.
Shares of GM were up roughly 5% in premarket trading Tuesday.
Here’s how GM performed to close out last year, compared with analysts’ estimates as compiled by Refinitiv:
Adjusted earnings per share: $2.12 vs. $1.69 expected
Revenue: $43.11 billion vs. $40.65 billion expected
The fourth-quarter results easily topped a year earlier, when the automaker reported an adjusted EPS of $1.35 and revenue of $33.58 billion for the final three months of 2021.
GM’s full-year 2022 revenue came in at $156.7 billion, with net income attributable to stockholders of $9.9 billion and adjusted earnings before interest and tax at a record $14.5 billion. Those results marked the high-end of the company’s previously revised guidance.
Still, the automaker is showing signs of a margin squeeze. GM’s net income slipped last year, down by less than 1% from full-year 2021 to $9.9 billion, with a profit margin that was off 1.6 percentage points to 6.3%. Its adjusted profit margin was 9.2%, down 2.1 percentage points compared with the previous year.
GM said it incurred special charges in the fourth quarter of $511 million related to a buyout program for its Buick dealers and $657 million related to shuttering its limited operation in Russia.
For 2023, GM expects net income attributable to stockholders of between $8.7 billion and $10.1 billion. It expects adjusted earnings before interest and taxes of $10.5 billion to $12.5 billion and adjusted earnings per share of between $6 and $7.
Those results would be below 2022 earnings, but above average analyst forecasts compiled by Refinitv that called for EPS of $5.73 this year.
A five-day performance of GM’s stock.
GM forecast 2023 net automotive cash from operating activities to come in between $16 billion and $20 billion and sees automotive free cash flow of $5 billion to $7 billion.
Wall Street has been bracing for a “demand destruction” scenario for the last several quarters, with some analysts suggesting automakers may need to execute cost-cutting measures to offset recessionary spending shifts.
Demand and pricing for GM’s vehicles “remain strong,” CFO Paul Jacobson told reporters Tuesday morning. He said GM is being “appropriately cautious” but vehicle inventories remain constrained amid strong demand.
“We think the underlying business is going to be pretty consistent with what we saw last year, and I think that’s a slightly more bullish statement than where most of the market is,” he said.
GM will execute a $2 billion cost-cutting plan through the next two years, according to Jacobson. Up to half of those savings are expected this year, he said. GM expects some head count reduction due to attrition but the company is “not planning layoffs,” Jacobson said.
Barra confirmed GM’s revised plans to produce 400,000 EVs in North America between 2022 and the first half of next year.
GM also announced Tuesday an equity investment of $650 million in Lithium Americas Corp. to develop a lithium mine in Nevada known as Thacker Pass. GM is to receive exclusive access to phase one of production, the automaker announced.
Shares of Lithium Americas were up roughly 8% in premarket trading Tuesday.
GM said Monday it launched production of the GMC Hummer SUV EV at a plant in Detroit. That vehicle is expected to be followed by an electric Chevrolet Silverado work truck by midyear and electric versions of the Chevrolet Blazer and Equinox during the second half of 2023.
GM CEO and Chairman Mary Barra and LG Chem Vice Chairman and CEO Hak-Cheol Shin at the automaker’s battery lab in Warren, Mich., where the companies announced a new $2.6-billion joint venture on Dec. 5, 2019.
GM
DETROIT – General Motors and LG Energy Solution have indefinitely shelved plans to build a fourth battery cell plant in the U.S., as talks between the two sides recently ended without an agreement, a person familiar with the plans confirmed to CNBC.
The Detroit automaker is expected to continue with its plans to build the plant but is searching for another partner, according to the person who asked not to be named because the talks are private.
“We’ve been very clear that our plan includes investing in a fourth U.S. cell plant, but we’re not going to comment on speculation,” GM said Friday in an emailed statement.
The Wall Street Journal first reported Friday afternoon that talks had stalled between GM and LG in part because LG Energy executives in Korea were hesitant to commit to the project given the rapid pace of its recent investments with other automakers as well as the uncertain macroeconomic outlook.
The paper, citing unnamed sources familiar with the plans, said GM is in discussions with at least one other battery supplier to proceed with the fourth U.S. battery-cell factory.
The breakdown in talks comes after GM CEO Mary Barra and other executives have said they’ve been close to announcing details of the fourth plant, which was expected to be built in Indiana, for some time.
GM and LG initially announced the joint-venture for a $2.3 billion plant in Ohio in December 2019, followed by other plants near GM operations in Michigan and Tennessee. Only the Ohio plant is currently operating, while the others are under construction. The joint venture is called Ultium Cells LLC.
A spokeswoman for Ultium referred questions to GM and LG Energy. In an emailed statement, LG Energy said discussions on a fourth Ultium Cells plant “remain ongoing between LG Energy Solution and GM, but no decision has been made.”
The relationship between GM and LG Energy is crucial to the automaker’s future plans for EVs, including topping Tesla and others to become the U.S. leader in all-electric vehicle sales. The Detroit automaker is expected to release a handful of new EVs this year, including mass-market vehicles such as the Equinox, Blazer and Silverado.
GM, in its Friday statement, said its second and third plants with LG are on track to open as scheduled in 2023 and 2024, respectively. The company also confirmed it is on track to hit 1 million EV production capacity annually in North America in 2025.
