GM stock is currently selling at under $23 a share, below the $33 IPO price, bad news for U.S. and Canadian taxpayers.
In an amended proxy filing to the Securities and Exchange Commission made public today, General Motors said that there was a so-called a related party transaction in 2011 not included in the original proxy statement. Pernilla Ammann, the wife of GM’s Chief Financial Officer Dan Ammann, is an officer and partner in an advertising agency that received approximately $600,000 for services provided to a GM subsidiary in 2011.
The unnamed agency in question is Mother New York, which worked on a part of the global Chevy Centennial campaign last year. No actual advertising resulted. Mother, with offices in New York City and London, has had among its clients IKEA, Coca-Cola, Stella Artois, and Beck’s. Ammann, previously a corporate lawyer, was Mother New York’s first hire when it started in December 2003.
GM said that the transaction has been properly ratified under its Related Party Transaction Policy, but “not all the required procedures were followed.” A spokesperson declined to elaborate, saying, “We just discovered this recently, and we’re informing our stockholders.”
Dan Ammann was named GM Senior Vice President & Chief Financial Officer in April 2011 when CFO Chris Liddell abruptly resigned after just over one year on the job he started in January of 2010. Before joining GM, Ammann was managing director and head of Industrial Investment Banking for Morgan Stanley, a position he held since 2004.
Coming just ahead of the GM annual meeting in Detroit on 12 June 2012, the quality gaff is mildly embarrassing. Whether it becomes a political football, like the Chevrolet Volt did after battery fires, remains to be seen. U.S. taxpayers still own ~32% of GM stock, which has been languishing at $22 after an IPO price of $33.
All told of the 1.6 billion shares of GM common stock issued and outstanding, about 55% are held by the U.S. Treasury, Canada GEN Investment Corporation and the UAW Retiree Medical Benefits Trust, and GM’s U.S. hourly and salaried pension plans.
Even though GM common stock traded as high as $39.48 a share – arguably irrational exuberance by small investors, the financial condition of the GM is not strong enough to distribute money to common shareholders, even though GM posted a record $9.1 billion profits in 2011.
The upcoming presidential election looms large. The two ruling class parties have diametrically opposed positions regarding the auto bailout. The current Obama Administration appears to be standing pat after a $50 billion bailout, and holding onto the stock of the world’s largest auto company for the near future. Gm would have to trade above $50 a share for taxpayers to break even.
The Republicans, if you can believe their extreme rhetoric, would have let GM fail and appear to be poised to dump the stock regardless of the losses U.S. taxpayers would incur.
See:
- GM Annual Report Says No Dividend is Planned for Common
- GM Buys 7% of PSA Peugeot Citroën to Share Parts, Vehicles
- GM Makes $1 Billion in Q1. Down from $3.2 Billion in 2011
- Opel Woes Continue as EU Auto Sales Decline In April. Latest Turnaround Plan Faces Fierce Union Fight over Plant Closings
- Another GM Top Management Change as CFO Liddell Resigns
