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Tough Stock Market Talking for the GM CEO

2 July 2007 - Features - Editor

They say you do not have to apologize if you are in love, but actually it is just as useless when someone mucks up your precious stock market investments! It is somewhat less painful when a new kid of a company on the stock market block misses a profit or a growth forecast, but an abject mess by a corporation which is even older than the stock market itself, really gets your goat! The worst part can be that the CEO who conveys the disastrous news is so much richer than any of the poor sods with shares in the company, and that he or she continues to fly high with a great pay check at the same time!

General Motors is a clear case in point. The 10-K for the year 2006 makes for sorry reading. It is not as though the present CEO should be blamed for everything, but small stock market investors have every reason to feel aggrieved at the course of events in this once proud symbol of industrial America. The company speaks of a turn-around plan, but most observers will agree that it is less than convincing. The Japanese companies seem to be streets ahead, and offer so many more features in their automobiles, and for less money to boot!

Perhaps some technology issues are not controllable, at least in the short term, but how can any stock market investor justify the run away personnel costs at General Motors? The trade unions seem to have no clue of the serious state in which the company is, and retired employees have done little more than contrive the most generous retirement packages, and health insurance schemes on this planet!

Investments made by General Motors in Delphi, a major supplier of components, and in the GMAC financing business, betray lousy handling of share holder funds. Minority stock market interests seem to have been given the short shrift, going by the cavalier attitude of the management. How long can small investors take this kind of abuse?

General Motors has a history of aggressive deployment of the funds of others, even before the stock market structure came in to being. The large and powerful investor of those pre World War II days stepped in and took executive control of General Motors, to protect his investments: should minority stock market interests now repeat history?

 


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