Autoblog

US Treasury denies pay hikes for GM, Ally execs

Jonathon Ramsey — Mon, 29 Apr 2013 11:30:00 EST

Filed under: Government/Legal, GM, Earnings/Financials

In December, the US Treasury granted General Motors the rights for the company to once again buy corporate jets and for its executives to fly on them, but neither those execs nor the ones at Ally Financial will get any raises this year. The automaker, worried that top talent might leave for higher-paying pastures, reportedly sought a more "market-based approach to executive compensation" for 12 of its top 25 execs. Because the federal government still has stakes in both GM and Ally, though, the companies need approval for pay raises, and they were declined. Neither company sought raises for their CEOs, and Ally's request didn't involve any additional cash compensation for the executives in question.

While the Treasury says that cash salaries for the 25 top executives at GM and Ally combined are just four percent below the median compared to similar positions, total cash compensation is 56 percent below the median. That would include GM CEO Dan Akerson (shown), who got a little more cash last year because of a compensation rearrangement speculated to potentially involve his retirement, but the overall annual pay package of $9 million hasn't changed for him since 2010 according to the Treasury.

What's more, it's said the overall compensation at both firms dropped by double-digit percentages compared to last year due to an influx of new appointments among the top 25 executives. The Treasury has said it will divest itself of all GM shares it owns by March 2014, but hasn't given a any guidance on divestiture of its Ally stock, the financial firm dealing with a much more complicated situation.

US Treasury denies pay hikes for GM, Ally execs originally appeared on Autoblog on Mon, 29 Apr 2013 11:30:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments

Watchdog says White House needs exit strategy for GM, Ally

Jonathon Ramsey — Thu, 12 Jul 2012 11:30:00 EST

Filed under: Government/Legal, GM, Earnings/Financials

Christy Romero, a special inspector general examining the corporate bailouts that came in the wake of 2008's financial crisis, has some advice for the U.S. government: "Treasury should develop a concrete exit plan for GM and Ally." She is referring, of course, to the 30-percent stake that the government still holds in General Motors and the 74-percent stake it holds in Ally Financial, formerly known as GMAC when the Treasury pumped $17 billion into it.

For its part, the government says it already has an exit plan and Romero doesn't offer any further advice to guide that plan in some other direction. With the calls for Treasury to divest coming even more frequently during the U.S. Presidential race, Treasury has repeatedly stated the same thing: it is waiting for the right time to maximize its return, thereby minimizing the loss to the U.S. taxpayer.

With 500 million GM shares in its portfolio, the government needs those shares at $52-per in order to recoup the remainder of its initial $50 billion investment. Shares are right around $20, which would mean a highly unpalatable Greek haircut if the government gave up its position. Recent GM moves have also led the Treasury to believe that there is unlocked value in the company that the market simply hasn't reacted to yet; however, that sentiment was voiced two months ago and the stock price still hasn't budged.

Ally Financial is a different conundrum, one that the Treasury seems to be much more eager to divest itself of. The financial firm has paid back $5.4 billion of its TARP loan and filed IPO paperwork a year ago, but there's still not even a potential date for an offering, and no one seems to have any idea when it will pay off the rest of the funds. While plans are debated for an offering or a breakup of the company, Treasury has suggested that GM buy back Ally, but GM hasn't indicated any desire to do so.

So in effect, nothing has really changed, but at least now we have more figures in the government suggesting that the government get out of GM.

Watchdog says White House needs exit strategy for GM, Ally originally appeared on Autoblog on Thu, 12 Jul 2012 11:30:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments

Treasury suggests GM buy back troubled Ally Financial

Jonathon Ramsey — Wed, 28 Mar 2012 10:30:00 EST

Filed under: Government/Legal, Earnings/Financials

Back when Ally Financial was known as GMAC Financial, the U.S. Treasury gave it $17.2 billion in TARP funds to weather the global economic crisis. GMAC is now Ally Financial, and although it has repaid $5.4 billion of what it was loaned, there doesn't seem to be a clear path for repaying the outstanding amount. Bloomberg reports that Ally's mortgage unit, Residential Captial (ResCap), is teetering on the ledge of bankrupcty, and its banking operations didn't perform well in the Federal Reserve's stress tests that assess a bank's health.

An IPO for the entire company faces dim prospects (one was rumored back in April of 2011), so in a private equity ploy, the Treasury would like Ally to divvy itself up and sell the pieces to unlock value. Estimates are that the pieces could fetch $23.1 to $28.6 billion. The plan is supported by Elliott Management Corp, a shareholder that holds 2.3 percent of Ally stock. However, Ally's CEO and its board don't want to break the company up, and the Treasury - which holds 74 percent - doesn't want to lean on the leadership too hard for fear of "appearing as a heavy-handed owner."

In addition, the looming bankruptcy of ResCap will have an unknown effect on Ally's ability to do anything. Before the mortgage implosion, GMAC's auto unit was struggling and ResCap was restructured as a separate entity so that it wouldn't be dragged down by the captive finance department. The situation is reversed now, with ResCap in trouble and the captive finance arm supporting itself, but Elliot feels that the restructuring won't be enough to shield Ally from perhaps 18 months of litigation and billions in claims.

Ally execs feel differently, but no one will know until the trigger is pulled and the courts weigh in. With the Treasury reluctant to compel a move, it could be some time before it sees its $11.8 billion again.

Treasury suggests GM buy back troubled Ally Financial originally appeared on Autoblog on Wed, 28 Mar 2012 10:30:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments

Chrysler launches "No Payment for 90 Days" program

Jeff Glucker — Thu, 11 Aug 2011 08:30:00 EST

Filed under: Car Buying, Chrysler, Dodge, Jeep

If you've been sitting on the sidelines waiting to pick up a new Chrysler product, now may be the time to stand up and bring your wallet down to the nearest dealership. Chrysler has fired up a new incentive program that will leave a bit of money in your bank account for the first three months of your new-car ownership period. It's called (imaginatively enough) No Payments for 90 Days, and the program applies to all 2011 and 2012 Chrysler, Dodge, Jeep and Ram Truck vehicles.

Chrysler has a few other incentives up its sleeve, including cash back on certain 2012 models and low financing rates on the 2011 vehicles still on the lots. A 2012 Dodge Avenger or Chrysler 200 will net you $500 cash, while a Jeep Liberty will get you $1,000 and a Ram Truck will put $1,500 back in your wallet. Still prefer a 2011? You might be able to qualify for a three-year loan with zero interest, or receive $2,000 cash back on the 2011 Chrysler 300 and Dodge Charger.

Of course, there's a tiny catch. The No Payments for 90 Days program is only being offered for shoppers that opt to pursue financing through Ally Financial.

Chrysler launches "No Payment for 90 Days" program originally appeared on Autoblog on Thu, 11 Aug 2011 08:30:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments

Report: Ally Financial files IPO paperwork

Chris Shunk — Fri, 01 Apr 2011 09:21:00 EST

Filed under: Government/Legal, GM, Earnings/Financials

Ally Financial, formerly GMAC Financial, has filed the paperwork necessary for an Initial Public Offering. The Detroit News reports that the filing will go to the Securities and Exchange Commission for approval before Ally can go public; a process that could take months. The federal government, which owns 74 percent of the lending arm due to its $17.2 billion 2009 bailout, is the only party listed as a stockholder.

The next step for Ally Financial is to go on a tour to entice investors to buy into the financial firm in advance of the SEC's decision. Ally isn't yet close to announcing a price for the stock, nor has the government disclosed the amount of shares it plans to unload, but the DetNews reports that the fed plans to net $5.5 billion from the transaction. The government also owns $5.9 billion in convertible preferred stock.

General Motors still owns 9.9 percent of Ally Financial, but the automaker reportedly won't participate in the sale. The General did announce previously that it sold its preferred stock, though, for $1 billion.

[Source: The Detroit News]

Report: Ally Financial files IPO paperwork originally appeared on Autoblog on Fri, 01 Apr 2011 09:21:00 EST. Please see our terms for use of feeds.

Read | Read | Permalink | Email this | Comments

Ford's Big Goal in 2011: Get out of junk status, lower loan rates

Chris Shunk — Fri, 31 Dec 2010 10:01:00 EST

Filed under: Ford, Earnings/Financials

2010 was a banner year for Ford Motor Company. Market share and profits were as good as they've been in years, and there is genuine buzz surrounding the Blue Oval's cars and trucks. Heck, even Ford's stock has been a monumental success. But not all that glitters is gold, as Ford is still mired in junk bond status, which in turn makes it more expensive to borrow money. That makes it more pricey for Ford to offer incentives to customers, and lease terms are less attractive than they would otherwise be.

K.R. Kent, Ford's new executive director of investor relations, is charged with getting Ford out of Junk status. Automotive News reports that Ford has been in junk status since 2005 and is currently four grades below junk status after being upgraded by two levels back in August. Ford CFO Lewis Booth admits that the company still has "a lot of steps to go before we get to investment grade." Making the matter more urgent for Ford is the fact that Ally Financial, the finance arm for General Motors and Chrysler, became a bank holding company in the second quarter of 2009. Since that time, AN says that it has been cheaper for Ally to secure loans than Ford Credit.

We're thinking that Ford has a big job in the year ahead, and getting out of junk status will likely take improved auto sales and continued quarterly profits. Booth says Ford will reach its junk-free goal by showing the investment community "authoritative and highly credible insight into our automotive business and Ford Credit."

[Source: Automotive News - sub. req.]

Ford's Big Goal in 2011: Get out of junk status, lower loan rates originally appeared on Autoblog on Fri, 31 Dec 2010 10:01:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments

GMAC changing name to Ally in North America

Jonathon Ramsey — Thu, 15 Jul 2010 10:27:00 EST

Filed under: Marketing/Advertising, Earnings/Financials

Come August 23, GMAC's auto lending business will be brought under the Ally Financial banner. While GMAC had already rebranded its other financial divisions, the auto business still went by GMAC. The move continues GMAC's distancing itself from its General Motors mothership, and if we read more into it, this could make it even clearer that Ally has no interest in returning to majority ownership by the automaker (GM still maintains a small stake in the company post-bankruptcy).

In its announcement, GMAC said it would continue to finance GM, Chrysler, Saab and Thor Industries buses and RVs, and that the name change would allow "the company to invest in a brand it owns while continuing to grow" the business of "serving dealers and their customers." As long as those customers aren't subprime, at least.

[Source: GMAC]

GMAC changing name to Ally in North America originally appeared on Autoblog on Thu, 15 Jul 2010 10:27:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments

GM seeking more subprime buyers?

Chris Shunk — Tue, 18 May 2010 11:01:00 EST

Filed under: Car Buying, Chrysler, GM, Earnings/Financials

In a word, yes. The Detroit News reports that General Motors is looking to find a way to tap into the subprime lending market that accounts for 16 percent of the overall car-buying market. There is, after all, plenty of pressure to sell more vehicles to enhance the company's value leading up to its initial stock sale. But while GM would like to strategically go after subprime borrowers, there is one significant roadblock in the way; Ally Financial. The financing firm, which was GMAC until The General sold off its captive finance arm prior to bankruptcy, apparently isn't willing to endeavor into risky loans. Ally, like The General, is owned in part by the federal government, with government cash in its coffers.

Top GM North America executive Mark Reuss reportedly told the Motor City newspaper that the automaker wants to have more autonomy over whom it lends money to, and it's all about moving more metal. Reuss points out the fact that 20 percent of Honda's new car sales are currently to subprime borrowers, adding "it would sure help my sales, the company's sales in North America, if we were able to get access."

If GM were to wrestle back a controlling interest in Ally, the company that could be most concerned with the result could be Chrysler. The Pentastar also depends upon Ally for vehicle financing, and CEO Sergio Marchionne points out that "if they control the lending practices and the degree of penetration and support that they gave to Chrysler, that would make us very, very concerned."

At this point, Reuss claims that GM hasn't yet asked Ally to expand subprime loans, so there is a chance that the two companies will be able to reach an agreement without GM getting back into the loan business.

[Source: The Detroit News | Image: Mark Ralston/AFP/Getty]

GM seeking more subprime buyers? originally appeared on Autoblog on Tue, 18 May 2010 11:01:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments