The reworked contract between Chrysler and the United Auto Workers cedes 55% of Pentastar stock to the worker's retiree health care fund. That has lead to speculation that the UAW would have majority representation on the Chrysler board, but labor experts believe that won't be the case. University of California Berkeley labor professor Harley Shaiken insists that "equity stake doesn't translate into voting control." The 55% was given to the VEBA fund in lieu of the previously agreed upon cash payment. Since the only job of the VEBA is to ensure that the retiree health-care fund is properly funded, by rule, it cannot take ownership of the automaker. Though the UAW won't have majority representation, most expect the workers to receive at least one seat at the board.
Assuming that everything falls into place, the remaining owners of the new, leaner Chrysler will be Fiat at 35% and the government and lenders at a combined 10%. The changes made by the Pentastar over the past few months should equate to a healthier, more competitive Chrysler. But if things don't work out as planned (they rarely do) and Chrysler ultimately fails, retiree health car could end up being a thing of the past.
[Source: Detroit News Image Source: Bill Pugliano/Getty]