Published: Wednesday, 15 Jul 2009 | 6:02 AM ET

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Former General Motors Chairman and Chief Executive Rick Wagoner, ousted in March by the Obama administration, will retire in August with a package worth $8.6 million in the first five years, the company said on Tuesday.

Wagoner's retirement will take effect on Aug. 1 and he will draw sharply reduced benefits after GM's federally financed bankruptcy, the company said on Tuesday.

The value of Wagoner's retirement package is about 60 percent lower than it would have been at the end of last year, before the largest U.S. automaker fell into a government-funded bankruptcy and its assets were sold to a new GM, federal regulatory filings show.

The former top GM executive reached a retirement agreement with the old GM, now renamed Motors Liquidation, on July 8 and will retire officially from the new GM taking benefit cuts consistent with other retirees, the company said in a filing with the U.S. Securities and Exchange Commission.

AP Rick Wagoner

Over the first five years of retirement, Wagoner will be paid almost $8.6 million, down from the nearly $23 million he was entitled to receive at the end of last year.

Based on 32 years service to GM, Wagoner is entitled to an annual $74,030 under the salaried retirement program and five installments of about $1.64 million under the executive retirement plan.

Wagoner had been entitled to five payments of more than $4.5 million each as of the end of 2008 under GM's executive plan and $68,900 per year under the salaried program, according to the last GM annual report.

Wagoner will continue to receive personal liability insurance until Jan. 1. He also will receive an existing life insurance policy or its cash value, currently nearly $2.6 million.

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GM emerged from bankruptcy protection last week as a sharply smaller automaker and with the U.S. Treasury as its majority shareholder after taking in $60 billion in government funding.

Before his ouster by the White House-appointed autos task force, Wagoner had argued that bankruptcy would be a more costly alternative to an expanded version of the bailout that began in the final days of the Bush administration.

Wagoner was forced out as CEO in March, but nominally remained on the automaker's payroll at the $1 a year salary he had agreed to take until retirement terms could be set.

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