GM bosses dump their shares
NEW YORK: Six top executives at General Motors have sold their entire shareholdings in the stricken carmaker for a knockdown price of $315,000 as the Detroit-based company teeters on the brink of bankruptcy.
Among those cashing out are GM’s former head of product development, Bob Lutz, a veteran Detroiter who stepped aside to become senior adviser to the company last month and who offloaded his 81,360 shares for $130,989.
Lutz’s successor, Thomas Stephens, sold his stock, as did North America president Troy Clarke, manufacturing chief Gary Cowger, head of European operations Carl-Peter Forster and chief information officer Ralph Szygenda.
The sales, disclosed in a regulatory filing to the Securities and Exchange Commission, the Wall Street watchdog, come as GM stockholders face a bleak outlook. The company is trying to persuade its lenders to convert $27 billion of debt into equity under a deal that would involve the issuing of billions of new shares, handing majority control of the company to the US government and the United Auto Workers union.
This arrangement would vastly dilute the value of existing shares, which has already plunged from $20 to below $1.15 in 12 months. The alternative is bankruptcy, under which shareholders would rank as unsecured creditors — paid after banks, unions and the government. “Shareholders are facing some pretty stark choices,” said a GM spokeswoman.
For many of GM’s white-collar staff, the company’s troubles have meant the evaporation of a career’s worth of savings in company stock. If the six executives had sold their shares in October 2007, before the economic crisis began, they would have made $8.6m among them.
GM’s chief executive, Fritz Henderson, caused a stir on Monday by refusing to rule out moving GM’s headquarters from the company’s landmark downtown skyscraper. GM has been offered tax breaks if it shifts its head office to its technical centre in the Detroit suburb of Warren.
“We can save General Motors if they come here and be a friendly partner,” Warren’s mayor, Jim Fouts, told the Detroit News. “General Motors made Warren. We would like to return the favour.”
Detroit’s public figures are rallying round. Rap musician Eminem, a Detroit native, has announced
that he will fly 200 out-of-work car workers from Michigan to Los Angeles for the taping of a live performance and television show on Friday.
Detroit’s newly elected mayor, Dave Bing — a former hometown basketball star and the owner of a car-parts manufacturing group — has sought to underline his status as a man of the people by refusing to move into an official riverside residence, Manoogian Mansion. The luxury residence costs the down-at-heel city about $150,000 a year in maintenance.