General Motors 2010 Annual Report Download - page 43

GENERAL MOTORS COMPANY AND SUBSIDIARIES
U.S. Salaried Benefit Changes
U.S. salaried benefit changes reduced the salaried life benefits and a negative amendment to the U.S. salaried retiree healthcare
program reduced coverage and increased cost sharing.
2009 UAW Retiree Settlement Agreement
In 2009 Old GM and the UAW agreed to a 2009 UAW Retiree Settlement Agreement which permanently shifted responsibility for
providing retiree healthcare to the new plan funded by the New VEBA. Under the terms of the settlement agreement, we are released
from UAW retiree healthcare claims incurred after December 31, 2009. All obligations of ours and any other entity or benefit plan of
ours for retiree medical benefits for the class and the covered group arising from any agreement between us and the UAW terminated
at December 31, 2009. Our obligations to the new healthcare plan and the New VEBA are limited to the terms of the settlement
agreement.
At December 31, 2009 we accounted for the termination of our UAW hourly retiree medical plan and Mitigation Plan as a
settlement. The resulting settlement loss of $2.6 billion recorded on December 31, 2009 represented the difference between the sum of
the accrued other postretirement benefits (OPEB) liability of $10.6 billion and the existing internal VEBA assets of $12.6 billion, and
$25.8 billion representing the fair value of the consideration transferred at December 31, 2009, including the contribution of the
existing internal VEBA assets. Upon the settlement of the UAW hourly retiree medical plan at December 31, 2009 the VEBA Notes,
Series A Preferred Stock, common stock, and warrants contributed to the New VEBA were recorded at fair value and classified as
outstanding debt and equity instruments.
Prior to December 31, 2009 the 260 million shares of Series A Preferred Stock issued to the New VEBA were not considered
outstanding for accounting purposes due to the terms of the revised settlement agreement with the UAW. As a result, $105 million of
the $146 million of dividends paid on September 15, 2009 and $147 million of the $203 million of dividends paid on December 15,
2009 were recorded as employer contributions resulting in a reduction of Postretirement benefits other than pensions.
IUE-CWA and USW Settlement Agreement
In September 2009 we entered into a settlement agreement with MLC, The International Union of Electronic, Electrical, Salaried,
Machine and Furniture Workers — Communication Workers of America (IUE-CWA) and United Steel, Paper and Forestry, Rubber,
Manufacturing, Energy, Allied Industrial and Service Workers International Union (USW). The approved settlement agreement
resulted in remeasurements of the U.S. hourly defined benefit pension plan, the non-UAW hourly retiree healthcare plan and the U.S.
hourly life plan to reflect the terms of the agreement. The settlement agreement was expressly conditioned upon and did not become
effective until approved by the Bankruptcy Court in MLC’s Chapter 11 proceedings, which occurred in November 2009. Several
additional unions representing MLC hourly retirees joined the IUE-CWA and USW settlement agreement with respect to healthcare
and life insurance. The remeasurement of these plans resulted in a decrease in a contingent liability accrual and an offsetting increase
in the projected benefit obligation (PBO) or accumulated postretirement benefit obligation (APBO) of the benefit plan.
2009 CAW Agreement
In March 2009 Old GM announced that the members of the Canadian Auto Workers Union (CAW) had ratified an agreement
intended to reduce costs in Canada through introducing co-payments for healthcare benefits, increasing employee healthcare cost
sharing, freezing pension benefits and eliminating cost of living adjustments to pensions for retired hourly workers. The 2009 CAW
Agreement was conditioned on Old GM receiving longer term financial support from the Canadian and Ontario governments and
those governments agreed to the terms of a loan agreement, approved the GMCL viability plan and provided funding to GMCL. The
Canadian hourly defined benefit pension plan was remeasured in June 2009.
The CAW hourly retiree healthcare plan and the CAW retiree life plan were also remeasured in June 2009. Additionally, as a result
of the termination of employees from the former Oshawa, Ontario truck facility, GMCL recorded a curtailment gain associated with
the CAW hourly retiree healthcare plan.
General Motors Company 2010 Annual Report 41