GM: We're Giving $400M to Ignition-Switch Victims
General Motors reveals compensation plan in 2nd-quarter earnings report
By Jenn Gidman, Newser Staff
Posted Jul 24, 2014 10:31 AM CDT
In this Aug. 21, 2008, file photo, a Chevy Cobalt moves on the assembly line at the Lordstown Assembly Plant in Lordstown, Ohio.   (AP Photo/Ron Schwane, File)

(Newser) – Just one day after General Motors recalled another 717,950 vehicles, the New York Times reports that the automaker estimates it will pay out $400 million to victims of its faulty ignition switches. The compensation plan was included in GM’s report of its second-quarter earnings, which dropped 84% from last year due to money invested in future safety initiatives and recall costs. GM said it took the $400 million pretax charge, as well as an $874 million pretax charge to account for potential recall expenses over the next decade, the AP reports. The company’s financial officer says the compensation estimate is just an approximation and that there’s no limit on the program.

More From Newser
My Take on This Story
To report an error on this story,
notify our editors.
GM: We're Giving $400M to Ignition-Switch Victims is...
24%
10%
14%
14%
0%
38%
Show results without voting
You Might Like
Comments
Showing 3 of 16 comments
Lefty_Libby
Jul 25, 2014 1:41 AM CDT
The following information is available on multiple financial websites. GM Reports Second Quarter Net Income of $0.2 Billion Thu, Jul 24 2014 EBIT-adjusted of $1.4 billion, after $1.2 billion in recall-related costs and $0.2 billion in restructuring costs. Company records strong core operating performance in the second quarter. Special charge of $0.4 billion for GM ignition switch compensation program DETROIT – General Motors Co. (NYSE: GM) today announced second quarter net income attributable to common stockholders of $0.2 billion, or $0.11 per diluted share. Strong core operating performance during the quarter was offset by a pre-tax net loss from special items of $1.3 billion, or $(0.47) per diluted share, and costs of $1.2 billion pre-tax primarily for recall-related repairs, or $(0.44) per diluted share. "Our underlying business performance in the first half of the year was strong as we grew our revenue on improved pricing and solid new vehicle launches," said GM CEO Mary Barra. "We remain focused on keepingour customers at the center of all we do, and executing our plan to operate profitably in every region of the world." In the second quarter of 2013, GM’s net income attributable to common stockholders was $1.2 billion, or $0.75 per diluted share, which included a net loss from special items that reduced net income by $0.2 billion, or $(0.09) per diluted share. Earnings before interest and tax (EBIT) adjusted was $1.4 billion and included the impact of $1.2 billion in recall-related costs and $0.2 billion in restructuring costs. This compares to the second quarter of 2013, when the company recorded EBIT-adjusted of $2.3 billion, which included a charge of $0.2 billion for recalls and $0.1 billion in restructuring costs. Net revenue in the second quarter of 2014 was $39.6 bill compared to $39.1 billion in the second quarter of 2013. In the first six months of 2014, revenue rose to $77 billion, up from $76 billion in the same period a year ago.
dan6807
Jul 24, 2014 7:45 PM CDT
Gee, a whole weeks worth of profits down the drain, was it really worth the death of all those people? This company needs to lose 100 billion then it will take things seriously.
MayDog
Jul 24, 2014 6:33 PM CDT
So GM is a corporation and corporations are now people/persons, yes? SCOTUS says so. GM has admitted to knowing about their products that can kill yet they did nothing to stop or prevent the deadly consequences. Why aren't they being charged with premeditated something, first degree, manslaughter, malice aforethought? They (corporations) desire the privileges and rights of being a person but they also deny the consequences of being a person in that a person can be charged and imprisoned for committing a crime that killed way too many people. If I, a person, killed people, or made a product that killed people, denied it so more people could die, would I be arrested, charged with a crime, tried for that crime and with the admission and paying out hush money, would a jury find me at fault? I would hope so. And legal team GM should be their accomplices as well as their board of directors and corp officers should be investigated for being persons who committed crimes against humanity. Four mil to GM is nothing but a right off for the cost of doing business.