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.

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Treasury sold off $489M of GM stock in February

Zach Bowman — Tue, 12 Mar 2013 16:31:00 EST

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

The Detroit News reports that the US Treasury sold off around 17.2 million shares of General Motors stock in February worth $489 million. The move is part of a plan to rid the government of GM stock by March, 2014. All told, the government has regained $29.8 billion of the $49.5 billion it took to bail out GM in 2008 and 2009. The feds sold off nearly half the country's stake in the automaker when the company went public in 2010, and now taxpayers own around 19 percent of the manufacturer. Moving forward, the Treasury will disclose how many shares it has sold each financial quarter.

Earlier this year, the government named Citigroup Inc. and JPMorgan Chase & Co. to manage the sale of GM stock. The duo will receive around $3 million for handling the sale, though the government has opted to keep its trading plan under wraps to keep hedge funds from taking advantage of the situation. The plan does place limits on exactly how much stock can be sold at any given time, however. Six smaller brokerages will handle the sale of the Treasury's GM common stock.

Treasury sold off $489M of GM stock in February originally appeared on Autoblog on Tue, 12 Mar 2013 16:31:00 EST. Please see our terms for use of feeds.

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US Treasury signals it will sell off remaining GM shares

Seyth Miersma — Fri, 18 Jan 2013 16:28:00 EST

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

True to its word, the US Treasury Department has taken steps today to rid itself of its remaining 300-million shares of General Motors stock. The Treasury has engaged both JP Morgan and Citigroup Global Markets to handle the sale of the remaining shares, reports the Detroit Free Press.

After divesting itself of 200 million shares last month, the government agency said that it would shed its remaining investment in the automaker throughout 2013. Today, the Treasury still owns some 19 percent of GM.

When the Treasury sold stock back to GM last month, it was at a price of some $27.50 per share, or above what the issue was then trading at in the open market. More recently, GM stock has been seeing closer to $29 per share in the marketplace, offering some hope that the final "cost" to the taxpayer will be less than expected. With that said, the plan remains to sell off in segments, rather than all at once, as a way of disrupting the market as little as possible.

Obama officials are on record has having said that, even if the US Government ultimately loses money on the investment in GM stock - a virtual certainty according to the reports we've read so far - the jobs saved by the automaker bailout make this a net win for the country.

US Treasury signals it will sell off remaining GM shares originally appeared on Autoblog on Fri, 18 Jan 2013 16:28:00 EST. Please see our terms for use of feeds.

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GM to buy 200 million shares back from US Treasury

Seyth Miersma — Wed, 19 Dec 2012 09:13:00 EST

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

General Motors announced in a press release today that it plans to buy 200 million shares of its own common stock back from the US Department of the Treasury, for $27.50 per share - some $5.5 billion in total. The transaction is expected to close before the end of the year. The move by the Treasury marks a significant first step in a plan to divest itself of GM holding entirely over the course of the next 12 to 15 months, "subject to market conditions."

After this large buyback, the Treasury will still hold some 300 million shares of the automaker's stock - roughly equal to a 19-percent stake. Treasury officials say that sale of the rest of the shares will begin as early as next month, "through various means and in an orderly fashion." The government plans to fully divest itself of GM shares over the next 12 to 15 months.

The $27.50 per share figure represents an eight-percent premium over the current share price, and was agreed upon after negotiations between GM and Treasury officials.

Previously, the government department had seemed reluctant to sell off its post-bailout stake in GM, as to do so at current market prices would mean a large loss of investment for the Treasury. Reports have varied, but it the "break even" point for the government has usually been pegged at roughly $50 per share.

According to the Treasury's own press release, the government invested a total of $49.5 billion in 2008 and 2009 to help secure GM. With this latest buyback added in, the agency has "more than $28.7 billion" of its original investment.

Find press releases from both the Treasury Department and GM, below.

Continue reading GM to buy 200 million shares back from US Treasury

GM to buy 200 million shares back from US Treasury originally appeared on Autoblog on Wed, 19 Dec 2012 09:13:00 EST. Please see our terms for use of feeds.

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Former CEO Whitacre urges Treasury to sell stake in General Motors

Seyth Miersma — Thu, 20 Sep 2012 13:45:00 EST

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

Former General Motors chairman and CEO Ed Whitacre is in the papers today, specifically the Opinion section of The Wall Street Journal, espousing a strong belief that the U.S. Treasury should get out of GM's hair as quickly as possible. Whitacre's sentiments come, no doubt, as a response to the recent news that GM has been pressuring the Treasury to sell off its remaining 500 million shares of the company's stock.

In the op-ed piece, Whitacre is careful to express just how important the U.S. Government's bailout - an initiative known as the Troubled Asset Relief Program, or TARP - was when $50 billion was added to the company coffers in 2009. But he goes on to say that government involvement has long since run its useful course, and its presence is now serving to hold back the automaker, rather than serve to secure the U.S. public's investment.

Writes Whitacre, pointedly, about the continued involvement of TARP regulators at GM, "The company already answers to a lot of constituencies: stockholders, unions, Wall Street and global competitors. Adding TARP to the mix for another few years, or even another few quarters, is not fair to GM or to the one million people it employs, directly and indirectly."

Whichever side of this debate you happen to fall on, it's well worth taking the time to read Whitacre's words in full, over at the WSJ's site.

Former CEO Whitacre urges Treasury to sell stake in General Motors originally appeared on Autoblog on Thu, 20 Sep 2012 13:45:00 EST. Please see our terms for use of feeds.

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Feds expect greater loss on auto bailout

Jonathon Ramsey — Mon, 20 Aug 2012 08:56:00 EST

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

The saga of the U.S. Treasury's involvement with General Motors has become the theater of call and response: the call is Treasury announcing how much it stands to lose on its bailout of GM, the response is a turgid chorus of "Government Motors!" and "They should have died!" peppered with a few defenders trying to make themselves heard. Well, here we go again, since the latest Treasury report filed states that it stands to lose $25.1 billion on the 500 million shares of GM stock it still owns.

There are two qualifiers with this, the first being that the estimate is low; it was made when GM's stock price was $22.20, but at the close of trading on of August 17 the stock price was $22.01. The second and much more important qualifier is that Treasury only loses $26 billion, give or take, if it actually sells the stock. Treasury's report to Congress on the state of its investment doesn't mean a sale is imminent, it's just an update. The only thing we've heard about the date of a sale is that Treasury has no immediate plans on such, preferring to wait until the market catches up to the progress it feels GM has made.

At one time the government expected to lose $44 billion on the auto bailout. Even if it takes a $26 billion bath on GM and adds the $1.3 billion loss on Chrysler, that's still a 33-percent improvement on what could have been. And that's called "looking at the bright side."

Feds expect greater loss on auto bailout originally appeared on Autoblog on Mon, 20 Aug 2012 08:56:00 EST. Please see our terms for use of feeds.

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Romney vows to dump federal stake in GM quickly

Jonathon Ramsey — Tue, 05 Jun 2012 11:32:00 EST

Filed under: Government/Legal

With a multi-volume list of issues that a presidential hopeful could discuss, we aren't sure why Mitt Romney keeps circling back to the auto industry bailouts, but here we are again. He's lately swinging his stick at the U.S. Treasury Department for not having sold its 26.5-percent stake in General Motors, accusing it of holding back on the stock sale to avoid having to report a multi-billion dollar loss before the election.

At GM's current stock price, the government would lose about $16 billion by sellings its 500 million shares, a number that hasn't much changed from several months ago. Romney said the government has "no reason" for not selling, and a report of his interview with The Detroit News says that "he'd sell the stock quickly if he wins the White House." A Treasury spokesman responded with "We have to balance maximizing recovery for the taxpayers with the speed of exit."

On top of that, Romney said that if he becomes POTUS, he would take another look at Corporate Average Fuel Economy standards, believing that "The best approach is to try and build vehicles that people want, rather than having the government telling the companies what they must make." It's a line we've heard (and even uttered) often, but the nexus of government regulations, consumer desires, viable business models and long-term industry concerns is a moving target shifty enough to confuse quantum physicists.

Either way, it's clearly fair to expect more jabs from Romney at President Obama and the auto bailout as the campaign season grinds toward election day.

Romney vows to dump federal stake in GM quickly originally appeared on Autoblog on Tue, 05 Jun 2012 11:32:00 EST. Please see our terms for use of feeds.

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Treasury has no plans to sell remaining GM stock quite yet

Jeff Sabatini — Fri, 11 May 2012 13:29:00 EST

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

General Motors stock has been languishing for months, failing to climb past $30 per share since July of last year. Trading at around $22 per share today, the optimism that surrounded the company's emergence from bankruptcy and initial public offering in November 2010 has all but vanished. So it's no wonder that the United States Treasury has decided to sit on its GM shares, with no plans to sell of its remaining 26 percent stake in the automaker.

According to The Detroit News, the Treasury believes that GM is underpriced given the changes that have happened at the company. Assistant Treasury Secretary Time Massad told the News, "Our perspective is that the company has made real progress, but the market hasn't given them as much credit for that as it might."

The government stands to lose $15 billion on the bailout at today's stock prices, according to the report. Of the $49.5 billion spent on the bailout, the government has already recouped roughly $23 billion in reducing its stake in GM from the 61 percent it once held. GM shares would have to more than double in value to $53 for the Treasury to break even in liquidating the 500 million shares it still owns, according to the report.

Treasury has no plans to sell remaining GM stock quite yet originally appeared on Autoblog on Fri, 11 May 2012 13:29:00 EST. Please see our terms for use of feeds.

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Treasury orders executive pay cuts at GM including CEO Akerson

Zach Bowman — Mon, 09 Apr 2012 09:27:00 EST

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

The Detroit Free Press reports that the United States Treasury has exercised its power to put a cap on executive compensation at General Motors by freezing CEO Dan Akerson's pay at last year's levels. Akerson brought home a total of $9 million last year including salary, stock and restricted stock.

The executive's $1.7 million salary will remain unchanged this year, with the rest of his earnings coming via performance-based stock salary. Meanwhile, some 25 of the company's most highly compensated executives will also see their compensation limited for 2012. All told, the Treasury says executive pay dropped by around 12 percent from 2011 to 2012.

GM has warned meddling with executive pay could result in a talent exodus from the company, but so far, The Detroit Free Press reports only two leaders have walked away from the automaker. GM says the cuts may also make it difficult to hire new talent moving forward.

GM currently owes the U.S. Treasury around $25 billion.

How does Akerson's pay line up with other auto executives? Chrysler CEO Sergio Marchionne takes home a combined $22.2 million for his efforts both at the American automaker and Fiat while Ford CEO Alan Mulally earned an impressive $29.5 million in 2011.

Treasury orders executive pay cuts at GM including CEO Akerson originally appeared on Autoblog on Mon, 09 Apr 2012 09:27:00 EST. Please see our terms for use of feeds.

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GM stock price leads to greater estimate of losses on bailouts

Jeff Sabatini — Wed, 01 Feb 2012 09:59:00 EST

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

The "Government Motors" crowd isn't going to be happy about this: The Detroit News is reporting that the U.S. Treasury now says it has lost an extra $170 million in the auto industry bailout. The culprit? The declining price of General Motors stock.

According to the report, GM's stock crested at $37.23, but is down 35 percent from that level today. The Treasury Department based its calculations on a $21.29 value from November 30, 2011. The government's share of GM was initially 61 percent, but has been reduced to 26.5 percent. The News says that the lower stock price has kept the government from selling its remaining 500 million shares.

While political opponents of the Obama administration will no doubt jump all over this report, the final cost of the bailout is still looking like it will be far less than originally thought. According to the report, the $44 billion estimate was reduced to $30 billion in December 2009, and this most recent estimate puts the total sum at $23.77 billion.

Matthew Anderson, a Treasury spokesman, was quoted as saying: "The auto industry rescue helped save one million jobs and is still projected to cost dramatically less than many had expected during the crisis."

GM stock price leads to greater estimate of losses on bailouts originally appeared on Autoblog on Wed, 01 Feb 2012 09:59:00 EST. Please see our terms for use of feeds.

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Report: 64 axed Chrysler franchisees file suit against U.S. Treasury

Jeff Glucker — Fri, 18 Feb 2011 09:57:00 EST

Filed under: Government/Legal, Chrysler

Back in June of 2009, Chrysler terminated relationships with 789 dealerships in an effort to cut its dealer network down by 25 percent. A few of those dealerships didn't think too highly of the move, which was orchestrated in part by the federal government. As a result, 64 former Chrysler franchisees have reportedly filed a suit against the United States Treasury and are seeking at least $130 million in damages.

Was the move to terminate these dealerships a violation of the U.S. Constitution? According to the lawsuit, the automotive task force violated the Fifth Amendment, which essentially states that property cannot be taken away and used for public purposes without adequate compensation.

[Source: Automotive News - sub. req. | Image: Drew Phillips/AOL]

Report: 64 axed Chrysler franchisees file suit against U.S. Treasury originally appeared on Autoblog on Fri, 18 Feb 2011 09:57:00 EST. Please see our terms for use of feeds.

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Report: U.S. breaks even if GM stock hits $133.78

Zach Bowman — Thu, 23 Sep 2010 14:02:00 EST

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

According to Neil Barofsky, the treasury department's inspector general, in order for the U.S. government to break even on its investment in General Motors, the company's stock will have to hit at least $133.78 a share. Thanks to the massive auto industry bailout, the government currently holds a total of 304 million shares of common stock and $2.1 billion in preferred stock in the automaker. According to The Detroit News, Barofsky has said that he will keep a close eye on the GM IPO in order to get the best return on the tax payer's investment possible.

But will GM stock hit the magic number? Some analysts seem to think so. There's some buzz that when GM goes public, its stock will be worth well over $100 per share. The company has already begun to make noise indicating that soon after the November 2 elections, it will begin a campaign to build interest in its IPO, so anything's possible.

[Source: The Detroit News | Image: AP/Al Goldis/Getty]

Report: U.S. breaks even if GM stock hits $133.78 originally appeared on Autoblog on Thu, 23 Sep 2010 14:02:00 EST. Please see our terms for use of feeds.

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Chrysler pays back $1.9B in gov't loans

Chris Shunk — Tue, 18 May 2010 17:33:00 EST

Filed under: Government/Legal, Chrysler

Since General Motors and Chrysler entered bankruptcy last spring, GM has stolen the lion's share of the headlines. The General has made front page news with new products, a government loan payback and first quarter profits, while Team Pentastar has quietly gone about the business of returning to respectability. Chrysler took another step towards its goal this week as the company paid back another $1.9 billion in government loans to the federal government. In total, Chrysler has paid back $3.9 billion of the $14.3 billion in loans the company received.

The U.S. Treasury Department said in a written statement that the repayment "is significantly more than the Treasury expected to recover on this loan, and is greater than an independent valuation of the loan." In other words, Treasury wasn't exactly expecting a cash return on its investment. Chrysler plans to unload further good news when it officially reports its earnings. The automaker said in April that it expected to earn up to $200 million on revenue of $40-45 billion.

[Source: Market Watch | Image: Bill Pugliano/Getty]

Chrysler pays back $1.9B in gov't loans originally appeared on Autoblog on Tue, 18 May 2010 17:33:00 EST. Please see our terms for use of feeds.

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Report: GM to announce repayment of federal loans in full on Wednesday

Jeremy Korzeniewski — Mon, 19 Apr 2010 18:00:00 EST

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

According to The Detroit News, General Motors will announce that it is fully repaying the federal loans it received last summer from both the United States and Canadian governments. In total, General Motors will have paid back about $6.7 billion ($2 billion of which has already been returned) of the $50 billion it received from the U.S., the majority of which was recovered by acquiring a 61-percent share of the automaker.

For those keeping track of such things and assuming this report is accurate, GM will have paid the entire amount agreed upon with the U.S. Treasury a full two months earlier than anticipated. This accelerated schedule is said to be seen as good news by both the automaker and the federal government. We'd guess that this is also a sign that GM is likely still on track for an initial public offering sometime this year.

GM CEO Ed Whitacre is expected to make the announcement on Wednesday when he makes a speech at a GM plant in Kansas. Later that day, Whitacre will make his first appearance at Capitol Hill since taking over at the head of the company in January. For what it's worth, the automaker has also called a press conference on Wednesday that we'll be attending. Stay tuned.

[Source: Detroit News | Image: Bill Pugliano/Getty]

Report: GM to announce repayment of federal loans in full on Wednesday originally appeared on Autoblog on Mon, 19 Apr 2010 18:00:00 EST. Please see our terms for use of feeds.

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Write-downs lead to GM loss of $4.3 billion

Zach Bowman — Wed, 07 Apr 2010 11:40:00 EST

Filed under: GM, Earnings/Financials

General Motors has just announced it has completed fresh-start accounting as part of its quest to return to public ownership, and the numbers don't exactly look good. GM says that it will announce a $4.3 billion loss for the fourth-quarter of 2009.

Despite relatively strong sales last year, the company had to pay out two large lumps of cash. First, $2.6 billion went to a UAW retiree medical plan. Another $1.6 billion went out the door thanks to "foreign currency re-measurement loss." Despite the daunting figures, GM still says it's confident the company can get back on its feet and start operating at a profit by the end of this year. Given the fact that the company is still aiming to return the large majority of its US Treasury and Export Development Canada loans, getting The General back on its feet may be easier said than done. Official press release after the jump.

[Source: General Motors]

Continue reading Write-downs lead to GM loss of $4.3 billion

Write-downs lead to GM loss of $4.3 billion originally appeared on Autoblog on Wed, 07 Apr 2010 11:40:00 EST. Please see our terms for use of feeds.

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Report: Congressional panel doubts GMAC business case, suggests breakup

Jeremy Korzeniewski — Fri, 12 Mar 2010 13:58:00 EST

Filed under: Government/Legal, Earnings/Financials

"The panel is deeply concerned that Treasury has not required GMAC to lay out a clear path to viability or a strategy for fully repaying taxpayers." This, according to a Congressional Oversight Panel that was created as a watchdog for the U.S. Treasury's Troubled Asset Relief Program (TARP) funds. The fix? Potentially breaking GMAC up into units and merging its auto lending business back into General Motors.

As a refresher, the Treasury invested $17.2 billion in TARP funds into GMAC, after which the financial company lost $8.3 billion on its Residential Capital unit in 2009. For it's part, Treasury has responded to the panel in a statement, saying, "Treasury continues to be a reluctant shareholder and to manage its investment in GMAC in a hands-off commercial manner consistent with the administration's established principles that guide Treasury's management of financial interests in private firms."

And since we've heard from the congressional panel and Treasury, why not from GMAC itself? Again, from a statement as reported to Automotive News: "We appreciate the panel's responsibility to analyze history; however, GMAC's management team is focused on the future. That includes continuing to provide the highest level of service to auto dealers and consumers in support of our auto partners, returning GMAC to a high level of profitability, and repaying the U.S. Treasury."

At this point, there's no clear indication on how Treasury or the congressional panel will proceed. Regardless, this is an issue that we'll be keeping a close eye on in the coming weeks. Stay tuned.

[Source: Automotive News - sub. req'd. | Image: Craig Jones/Getty]

Report: Congressional panel doubts GMAC business case, suggests breakup originally appeared on Autoblog on Fri, 12 Mar 2010 13:58:00 EST. Please see our terms for use of feeds.

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GM future hinges on success of new debt-for-equity swap offers

Chris Paukert — Mon, 27 Apr 2009 10:49:00 EST

Filed under: Trends, Government/Legal, Hirings/Firings/Layoffs, GM

In addition to announcing the shuttering of Pontiac, General Motors has put forth a new offer to its bondholders to exchange $27 billion in claims for equity in the struggling automaker.

As part of the plan, GM is offering its bondholders a 10% equity stake in the company, but worryingly, if 90 percent of GM's stockholders don't make good on the exchange by June 1, the U.S. Treasury will almost assuredly push GM toward bankruptcy. In the language of GM's press release, the company would "expect to seek bankruptcy relief if the exchange offers are not consummated."

And it isn't just the shareholders that are being called to action - the success of the bond-exchange offer also hinges upon the Voluntary Employee Beneficiary Association (VEBA) health-care fund, whose controllers must also agree to swap at least 50% of its equity claims in order to make the plan work.

Finally, the U.S. Treasury must agree to exchange 50% its own loans - thought to be about $10 billion - for stock in the company. Together, the U.S. government and VEBA would then own around 89 percent of GM's stock post- debt-for-equity swap, with the outstanding one percent being held by GM's current common shareholders (10% bondholders + 89% VEBA/US Treasury + 1% = 100%).

Given that a debt-for-equity swap is widely considered to be unattractive to most bondholders (something that GM CEO Fritz Henderson stopped just short of confirming in today's press conference), The General seems to be well along the road to bankruptcy... and picking up steam.

Official press release posted after the jump.

[Source: General Motors | Image: Bill Pugliano/Getty]

Continue reading GM future hinges on success of new debt-for-equity swap offers

GM future hinges on success of new debt-for-equity swap offers originally appeared on Autoblog on Mon, 27 Apr 2009 10:49:00 EST. Please see our terms for use of feeds.

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