General Motors will continue to be subject to corporate pay restrictions until the U.S. Treasury fully unloads of its stock in a matter of 12-15 months. The restrictions, The General has argued, prevent it from attracting and competing for executive talent.
Investors and analysts alike have welcomed the government’s plan to exit its ownership in GM, allowing the automaker’s stock to rally roughly five points, or 20 percent, since the official announcement in mid-December. Part of the reason for the boost is increased confidence in GM’s success in the future, as analysts have stated that the company is positions for a healthy 2013, especially in light of an aggressive product rollout during the year starting with the 2014 Silverado, 2014 Sierra, and 2014 Corvette.
The U.S. government’s divestiture also means that GM is no longer prevented from buying or leasing corporate aircraft, which doesn’t necessarily mean that it will, while eliminating another requirement dictating the percentage of vehicles that must be manufactured in the U.S. For its part, General Motors will exceed those requirements in 2013 and 2014.
And while the United States government is relinquishing its ownership of GM, Canada plans to hang on to its nine percent ownership stake for the foreseeable future.
The GM Authority Take
We’d argue that a period of 12-15 months isn’t really that long of a timeframe for any company to be limited by executive pay restrictions.
As far as new hires are concerned, GM can begin to strategize and plan for the new talent it expects to hire once the restrictions are lifted; meanwhile, current executives should be looking forward 12-15 months for their compensation to increase, as well. Overall, we’re sure everyone is content on GM regaining its full independence.
And we’ll leave the subject of severely overcompensated executives for another time.