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GM Execs to Get $24.5 Million in Shares

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On: Wed, Jun 9, 2010 at 9:32AM | By: Michael Jon Lazar


GM Execs to Get $24.5 Million in Shares

According a recent report published on Auto News, “GM issued 184,255 salary stock units and 71,155 restricted stock units executives can exercise if they hit certain performance targets, the automaker said Monday in U.S. regulatory filings. Each unit represents one share of stock, and if GM stock hasn’t been trading for six months, the executives will receive cash.”

This distribution of shares is related to their next planned IPO launch (initial public offering), according to Joe Phillippi, the president of AutoTrends Consulting. In an interview with Auto News he stated, “This is probably 100 percent related to their run up to an IPO.” Phillippi further added, “It’s probably one more step in preparation to go public.”

The CFO for GM, Chris Liddell, emphasized that the IPO probably will not take place until sometime during the next fiscal year. Even more interesting is the fact that GM’s stock value is rapidly increasing. This means that we could potentially see them actually paying back the taxpayers and the loans they borrowed a lot faster than experts first had predicted.  

The Auto News report demonstrates just how much the company is currently worth, citing statistics from Eric Selle, a Chase & Co. debt analyst. “The company's equity should be worth $70 billion, according to a report Selle issued on May 20. A JPMorgan Chase & Co. debt analyst projects a return of 47 cents on the dollar for holders of bonds issued by GM's predecessor, General Motors Corp. Those bodns will be converted to stock and warrants in new GM. At current bond prices. GM's implied equity value is about $48 billion; assuming 500 million shares, the value would be about $96 a share.”

If you ask me, a company that was once bust and was projected to not make it another few months—during their initial hearings with the US Congress, when they pleaded their case for bankruptcy protection—the outlook for this company is grand, indeed. For the taxpayers it means we get our money back. For the US government it means that they can sell some of their shares (they currently own around 61% of GM). For owners of GM vehicles it means peace of mind in knowing that the carmaker is back, and not going anywhere anytime soon.

So what will top execs at GM be getting when the IPO occurs? I am sure that you are as curious as I am. Thankfully, the same Auto News reports answers these questions. The CEO of GM, Ed Whitacre, currently owns 24,547 stock units that are related to salary, ones that he can cash out when the IPO occurs for GM. Experts estimate that those salary shares could currently be worth in the realm of $2.36 million. And some other execs will make out rather nicely too, such as GM’s Vice Chairman, Steve Girsky. According to the same report, Girsky “gets a salary of $500,000 a year. The 18,063 salary stock shares he will be issued would be worth $1.73 million at Monday's estimated value.”

Things, indeed, are looking up for GM. And if you ask me, their execs deserve these stocks. Why? Because they did the impossible! They made the automaker profitable once again, and they came through wholeheartedly on all of the promises they have made. So such rewards, which are not uncommon in the executive world, are, in my humble opinion, well deserved!




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