Claiming it was only following the terms of previously negotiated pay packages, General Motors, which is still 61%-owned by the government, revealed this week that it has paid out stock shares worth millions of dollars to 15 current and former top executives as third quarter bonuses.
In filings with the Securities and Exchange Commission (SEC), GM revealed that former CEO Edward Whitacre received more than 16,300 shares worth over $883,000 on September 30 while current CEO Daniel Akerson received nearly 8,200 shares worth over $441,000.
Keep in mind that Akerson has only been CEO for a little over one month. Not bad for a company that filed for Chapter 11 bankruptcy a little over a year ago and then received $50 billion from the federal government in exchange for shares in the company.
Thirteen other GM executives also received bonuses, including Tom Stephens, vice chairman for product development, who received more than 15,600 shares worth over $840,000, while Chief Financial Officer Chris Liddell got nearly 16,000 shares worth over $862,000. Stephen Girsky, another vice chairman received nearly 13,900 shares worth $750,000.
Another 10 executives received smaller stock grants, but the total quarterly payout was worth something over $4 million.
Are Investors Ready to Buy GM Stock Again?
So far, GM, which has come to be known by some as "Government Motors" has repaid $6.7 billion of that $50 billion, and plans to repay the remaining $43.3 billion over the next few years, beginning possibly as early as next month when it hopes to bring out an initial public offering or IPO.
One would guess they're hoping investors who were burned when the company filed for bankruptcy last year have short-term memory issues. Either that, or new investors will bet on GM continuing the historical trend that, according to the Wall Street Journal's Deal Journal blog, "companies that emerge from bankruptcy can significantly outperform the stock market."
Meanwhile, according to The New York Times and Bloomberg, GM plans to sell fewer shares in the planned IPO than it initially expected, which means American taxpayers, in other words, us, will continue to own a sizable portion of General Motors for a couple more years.
Another question that begs to be asked is that if we, the American taxpayer own 61% of GM, shouldn't we get a discount to buy shares in our own company? Other firms do that. They'll even let employees, for example, purchase shares at a 15% discount.
Then there's the question over how much the General Motors IPO will be priced. At least one valuation company hired by GM put the price at around $58 a share which is less than half of what an official for the Troubled Asset Relief Program or TARP estimated an average share needs to be worth for the treasury to get back its remaining investment. All in all, a November IPO of General Motors stock may not be an easy sell, especially in this economy.
Bonuses Not First Time GM Spent Taxpayer Money
Getting back to the 3rd quarter bonuses, this isn't the first time General Motors has handed out our money without asking. According to an editorial in The Wall Street Journal, GM has also been spending our money on lobbying and political campaigns.
For example, the Journal reports GM has given Midwestern Democratic incumbents $90,500 in campaign donations so far in the current election cycle. As for lobbying, The Hill newspaper in D.C. reports that GM has spent $7 million in the past four quarters.
Maybe they'll revise that old ad line of "See the USA in a Chevrolet," with "Payback the USA, buy a Chevrolet."