GM suspends dividend payment and stock buyback to save cash
Detroit — General Motors Co. has suspended the quarterly cash dividend on its common stock and has stopped its share buyback program to conserve cash amid the COVID-19 pandemic, the automaker said Monday.
GM also is extending its three-year revolving credit agreement for $3.6 billion to April 2022, extending it by a year to further strengthen its liquidity. GM and GM Financial earlier this month extended a $2 billion 364-day revolving credit agreement to April 2021.
“We continue to enhance our liquidity to help navigate the uncertainties in the global market created by this pandemic,” GM Chief Financial Officer Dhivya Suryadevara said in a statement. “Fortifying our cash position and strengthening our balance sheet will position the company to create value for all our stakeholders through this cycle.”
GM last paid a quarterly dividend of 38 cents per share in early March. Its share price has fallen 35% in the past three months.
The cash-preserving moves come as GM weighs when and how to reopen North American plants which have been shut down for more than a month, and have likely cost the automaker billions. Last fall, the automaker lost more than $3 billion when the United Auto Worker went on a national 40-day strike.
GM, along with Ford Motor Co. and Fiat Chrysler Automobiles are in discussions with the UAW about reopening U.S. plants. UAW President Rory Gamble said last week he opposed an early-May restart of the plants.
Meanwhile, GM employees at some plants, including Flint Assembly where GM makes its profit-rich heavy-duty trucks, were called back to work this week to prepare plants for a restart.
GM in March cut its salaried workforce's pay by 20% with the promise of paying it back with interest. The automaker has 69,000 salaried employees globally and about 40,000 in the United States.
Instead of laying off salaried manufacturing and engineering employees, GM has said 6,500 will participate in the company's salaried downtime paid absence program and will receive 75% of their pay with benefits.
Executives will have 20% of their salary deferred and a 5% reduction in their cash compensation. Most senior executives will take a 10% reduction. GM's directors also will take a 20% cut in their board compensation.