Why I Take No Issue with the Government Firing GM's Wagoner 22 comments
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Call me skeptical that since the Obama administration’s auto task force ousted General Motors (GM) CEO Rick Wagoner it means the government is going to take over and ruin the auto industry. I think Wagoner’s list of accomplishments (or lack thereof) shows that he deserved to be gone long ago. After all, GM stock went from $60 to $2 under his tenure as CEO.
As for whether the government should have the right to force him out, why shouldn’t they have the same power that any other creditor or investor would have when trying to help a company avoid bankruptcy? Private equity invests in distressed companies all the time and as a condition of such investments always has a say in the turnaround plan, including replacing a chief executive. Having such power is the only way they feel comfortable that adequate changes will be made to somewhat protect their investment.
The government is unfortunately in the driver's seat in this case because nobody else will come to GM’s aid in its current form. By doing so, however, they should have the same rights as anybody else. No more, no less. Whether they should have even tried to prevent a GM bankruptcy is another question entirely, and a very valid one at that. I have no problem with someone arguing against that, but that really has nothing to do with the Wagoner situation.
The Obama team has decided to continue the public aid that the Bush team started, probably to try and avoid further destabilizing the financial system and economy. Reasonable minds can (and are) disagree over whether that is the right thing to do or not, but Rick Wagoner had to go regardless. Don’t forget, under his leadership, even when the economy was booming GM North America was in the red.
What about Wagoner’s replacement, Fritz Henderson? Well, I don’t think the government had a hand in choosing him. He openly and proudly announced that he was a lifelong GM’er and that Rick Wagoner was his mentor. Yikes, I guess the jury is still out on whether that is change we should believe in or not.
Full Disclosure: No position in GM at the time of writing, but positions may change at any time (I don’t expect this to change in this case).
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That's right, the industry that has no ability to regulate itself, that is totally corrupt, and is incapable of foreseeing anything. Yes, you are responsible. It's only fortunate for you that the financial services industry has contributed millions to congress, or your leaders would also be losing their jobs.
I doubt very much whether anyone cares what you think.
The Obama administration says it's OK to ask American workers/ voters/ taxpayers to make sacrifices. So how come it's not OK to ask Goldman Sachs (who paid their CEO $68.7 million in one year) or foreign banks to even take a 10% discount?
And why is nobody else asking this question? Where are the journalists?
getting paid to much. It is alright with the above to want a exclusive
wage but when the middle and lower class workers want a fair hourly
wage it is just out rageous. It will get to the point where the middle and lower class won't be able to pay for the products of the above over paid professions. IT'S GETTING REAL CLOSE!!
If we are going to slice....slice EVERYONE...not just a select few.
FC
On Apr 11 10:39 PM think4myself wrote:
> You all miss the most important point. The purchase of equity in
> a private company by the Federal Government as well as the firing
> of Mr. Wagoner by the President or his car group are both unconstitutional.
> It does not matter if he should have been fired.
Barring that Rick Wagner was in a precarious situation to begin with - if ANY company showed a loss of 80 Billion $$, even with the drive & knowledge behind him - he & the board should have recognized that this was not what GM needed at the time, they should have put new focus or fresh eyes in charge to get GM back on a different track and win back public confidence as well as handle the business.
Rick did a GREAT job but failed to pass the baton when he lapped the track.
On Apr 11 10:39 PM think4myself wrote:
> You all miss the most important point. The purchase of equity in
> a private company by the Federal Government as well as the firing
> of Mr. Wagoner by the President or his car group are both unconstitutional.
> It does not matter if he should have been fired.
On Apr 12 09:29 AM John D wrote:
> GM - Ford or Chrysler are NOT the reason for all that is going on
> - BUT - the prior government admin had been using them as a diversion
> to take the eyes from the financial mess that they & Wall St.
> allowed to happen.
> Barring that Rick Wagner was in a precarious situation to begin with
> - if ANY company showed a loss of 80 Billion $$, even with the drive
> & knowledge behind him - he & the board should have recognized
> that this was not what GM needed at the time, they should have put
> new focus or fresh eyes in charge to get GM back on a different track
> and win back public confidence as well as handle the business. <br/>Rick
> did a GREAT job but failed to pass the baton when he lapped the track.
>
I turn off the news when either group comes on. Americans are smart and they know when a priveleged group or management team is getting fed like hogs and they are not included. Remember most of us know about the original colonies and our origins and many of us served in the armed forces and have actually worked hard and loyally and paid mortgages and raised children.
This Easter thank the energy industry and oil services for fuel and warmth. Thank emergency responders and our Armed Forces where our sons and daughters might serve. Thank Coca Cola for soft drinks. Thank Tyson chicken and In and OUT Hamburger and MacDonalds. Thanks for Michelob and Beringer Wine.
Thank the Pharmacist for our drugs and companys like Allergen for eye drops the makers of Q tips and toilet paper and paper towels and auto tires ...and thanks for mechanics and the men who pick up the trash in our cities(Waste Management).
This is where my investment money is headed or there already. And thanks to Canada and CNI -Canadian National Railway for supporting our industry from the North. And thanks to Mexico for what it can do with agriculture that feeds us from the South and some oil in the GULF OF MEXICO and with Shrimp and a tourist industry.
Lets build on what we have today. And thanks to Chase Bank for taking over wa mu when it crumbled from within.
Have a wonderful Easter.
On Apr 12 02:20 PM Diegojames wrote:
> Neither Rick Wagoner or the AUTO Union gets my sympathy as they both
> have more money and benefits to retire with than most of us in America.
>
> I turn off the news when either group comes on. Americans are smart
> and they know when a priveleged group or management team is getting
> fed like hogs and they are not included. Remember most of us know
> about the original colonies and our origins and many of us served
> in the armed forces and have actually worked hard and loyally and
> paid mortgages and raised children.
> This Easter thank the energy industry and oil services for fuel and
> warmth. Thank emergency responders and our Armed Forces where our
> sons and daughters might serve. Thank Coca Cola for soft drinks.
> Thank Tyson chicken and In and OUT Hamburger and MacDonalds. Thanks
> for Michelob and Beringer Wine.
> Thank the Pharmacist for our drugs and companys like Allergen for
> eye drops the makers of Q tips and toilet paper and paper towels
> and auto tires ...and thanks for mechanics and the men who pick up
> the trash in our cities(Waste Management).
> This is where my investment money is headed or there already. And
> thanks to Canada and CNI -Canadian National Railway for supporting
> our industry from the North. And thanks to Mexico for what it can
> do with agriculture that feeds us from the South and some oil in
> the GULF OF MEXICO and with Shrimp and a tourist industry.
> Lets build on what we have today. And thanks to Chase Bank for taking
> over wa mu when it crumbled from within.
> Have a wonderful Easter.
On Apr 11 06:24 PM Larry M. wrote:
> GM did not Create the Economic Disaster that has been Created by
> the Job Exporting and Illegal Immigration Globalist's who have Brought
> the USA to it's Knees. Over 25 years of this Job Exportation has
> finally Reached the Breaking Point and our Economy is Broken ! Anytime
> any Society Seeks our and Sets Up (Slavery) or even Near Slave Labor
> that Society will Collapse. Those Powerful Investment Banks on Wall
> Street have Exported Countless Millions of Jobs to Communist China,
> India, Mexico and many many other 3rd World Economy's. Now we have
> a Crash at hand and in a way that is Poetic Justice. Unfortunately
> the Rich are at least somewhat Insulated from this Disaster and the
> Middle Class and Poor are taking the Brunt of this Collapse.
>
> Globalism is not about World Harmony but rather it is about the Seeking
> out and Utilization of Near Slave Labor.
Get your facts in order before you post.
On Apr 11 10:39 PM think4myself wrote:
> You all miss the most important point. The purchase of equity in
> a private company by the Federal Government as well as the firing
> of Mr. Wagoner by the President or his car group are both unconstitutional.
> It does not matter if he should have been fired.
Why don't Obama's administration provide a tax break instead and increase the traffic to the dealeships?
How General Motors - and Rick Wagoner - did the right thing.
By Allan Sloan, editor at large
April 27, 2009: 10:41 AM ET
Former GM CEO won't benefit from a golden parachute.
(Fortune Magazine) -- You don't hear many nice things these days about General Motors' deposed chief executive, Rick Wagoner, or the board of directors that supported him for so long. But the board did do one thing right: It didn't give him or his colleagues golden parachutes - those huge payments that companies typically lavish on top honchos when they are thrown out of their jobs.
How can I say Wagoner is chuteless, given all the references to his leaving GM (GM, Fortune 500) with a parachute worth more than $20 million? Because people are confusing a golden parachute - something extra that a CEO or other top executive gets to just go away - with the benefits that someone has earned fair and square and gets to take with him when he leaves. And in any event, it's clear from GM's filings that Wagoner is not going to receive most of the package that most people think he will.
Bear with me, and I'll tell you why.
Here's the deal. GM said in a March filing that Wagoner's retirement benefits, presumably triggered when he was ousted in April, are valued at $20.2 million. Hence the $20-million-plus chute numbers. But look deeper. The bulk of Wagoner's retirement benefits - $19.2 million - is for an annuity scheduled to give him $4.5 million a year for five years after he leaves GM. But unlike his regular pension, which we'll get to in a minute, this annuity is an unsecured obligation of GM. There's no fund set aside to pay for it. If - make that when - GM goes into Chapter 11 or does any other sort of financial reorganization, that annuity is almost certain to be wiped out. If Wagoner has somehow managed to draw his first $4.5 million - GM declined comment - he's likely to be forced to return it. (To find out why, consult your local bankruptcy guru.)
The other $943,900 of Wagoner's retirement benefit is his regular pension, which pays $68,900 a year. He has to take the pension annually; he can't cash it out in one big lump. To be sure, $900K sounds like a lot of money - but pensions are very valuable. For example, in late 2006 Vanguard's annuity experts valued my projected Social Security retirement benefit at $738,000. And a Social Security retirement check isn't enough to let you lead anything resembling a megabuck life.
In addition to his pension, Wagoner has deferred compensation that was worth about $360,000, assuming he's already taken it. But that's money he earned in his 31-plus years at GM and left at the company (something I never do), to which he's clearly entitled.
Now, I'm not crying poverty for Wagoner, who knocked down a seven-digit cash salary, including a 33% raise (to $2.2 million) in 2008, when the company was struggling and asking workers for givebacks. But Wagoner didn't ask for a parachute, as far as I can tell, for which he deserves at least some credit.
To be sure (three of the most dangerous words in business writing), the government bailout loan GM got last year bans parachute payments to its top five executives. But GM, like a relative handful of other big companies, didn't have any parachutes to eliminate. So let's give the GM board a small cheer for having done something right.