With nearly 30 million cars worldwide covered under recalls, General Motors hasn't exactly had the best year. While sales haven't suffered too badly in the US, the cost of all of the safety campaigns has been a big drain financially for the last two quarters. As investors' representatives within the company, you might have expected GM's board of directors to have seen these problems coming. However, according to a new report from The New York Times, the board was just as in the dark about it all as the rest of us until the February ignition switch recall that first brought the fiasco into the public light.
According to the report, safety was very low on the board's priorities before February. Until then, the last time that vehicle safety was discussed even briefly was in October 2013. With so little information, the board was in confusion once the recalls started cascading out. "We didn't understand the enormity of the situation at the beginning, because I don't think management did," said board chairman Theodore Solso to the NYT. Solso claims he was "'shocked' and 'stunned'" when he learned how the ignition switch situation had been handled from Anton Valukas' findings. Investors weren't happy either, and they have responded with lawsuits alleging that the whole debacle allegedly harmed the value of the company.
Internally, the board also had some concern about how things were progressing. Unnamed company officials told the NYT that there was distrust of new CEO Mary Barra and general counsel Michael Millikin. They thought that two of them had too much power in deciding the automaker's response. "It was a little bit of Mary and a whole lot of Millikin," one said to the paper.
The result of the chaos might be a better business, though. "The ignition switch recall basically raised the bar in terms of increased involvement," Solso said. Safety is a much bigger topic in meetings now, and board members are taking a more active role in the topic.
"We didn't understand the enormity of the situation at the beginning, because I don't think management did," said board chairman Theodore Solso to the NYT.
According to the report, safety was very low on the board's priorities before February. Until then, the last time that vehicle safety was discussed even briefly was in October 2013. With so little information, the board was in confusion once the recalls started cascading out. "We didn't understand the enormity of the situation at the beginning, because I don't think management did," said board chairman Theodore Solso to the NYT. Solso claims he was "'shocked' and 'stunned'" when he learned how the ignition switch situation had been handled from Anton Valukas' findings. Investors weren't happy either, and they have responded with lawsuits alleging that the whole debacle allegedly harmed the value of the company.
Internally, the board also had some concern about how things were progressing. Unnamed company officials told the NYT that there was distrust of new CEO Mary Barra and general counsel Michael Millikin. They thought that two of them had too much power in deciding the automaker's response. "It was a little bit of Mary and a whole lot of Millikin," one said to the paper.
The result of the chaos might be a better business, though. "The ignition switch recall basically raised the bar in terms of increased involvement," Solso said. Safety is a much bigger topic in meetings now, and board members are taking a more active role in the topic.
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