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Sometime during the "managerial revolution" the executives
of a company assumed the idea that they were the owners, and arrogated to themselves the matter of pay, performance and persistence
of the company. Prior to that, companies were (in legend, anyway) created by "strong capitalists" with
guts and a vision for making money, the holy grail. This takeover had immense consequences for company policy;
the interests of the shareholders -- what might be called the "stuckholders" -- potentially
diverged from the best interest of the managers who had been hired to run the company. The help ran away with the
estate!.
At about the same time, starting in 1952, the idea of "mutual funds" arose with Mr. Dreyfus. Now, the
unwashed, unschooled public could entrust their money to the mutual fund, which, using wise counsel, invests only
in good companies, monitoring performance in a way that individual small investors who work in the day could not
do. It's a way of leveling the playing field between "odd lots" -- small stuckholdings of less than 100
shares -- and those who buy in 100,000 share lots, who control company policy, and can devise deals that water
the value of smallholders' stuck.
Now, half a century later, funds control companies
and the execs look out for themselves.
Fund managers control almost all companies; try to find a company with share price above $12 which is not majority
owned by funds. Today, you probably can go down to $2 or even less.
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From the fund manager point of view, their relatively small holding
of General Motors stock (no one could own more than $10 billion in GM stock, even when it was $20 per share) pale
before the gigantic pools of money locked into stock in large integrated oil companies, oil-service and ancillary
companies such as Halliburton and many others.
From the Fund Manager's point of view, they will support Board policy that does not endanger oil company stock
value. Hence, if a real threat to Big Oil arises, such as the EV1, the alarm bells must have rung way up to the
tops of Wall Street, to the halls of the fund managers, like the slow progression of nerve impulses from the tail
to the head of a dinosaur. This may explain why GM Board policy seems to have determined to kill the EV1, which
the late Roger B. Smith so foolishly promised without their authorization; and why they would continue to support
policies dependent on gas-guzzling large cars. You'd do the same, if the wealth you were holding were threatened
by a new technology.
Thus, while pretending to "try to build" the EV1, GM argued against it; this two-faced approach is otherwise
baffling. In 1994, when a better battery was invented, GM bought control and claimed it could not work (the EV1
was released with lead-acid batteries from Delco, designed to fail). After Toyota and Honda demonstrated that the
NiMH battery worked, GM built only 465 NiMH EV1, and then tore up the line, eliminating the possibility of making
more. On Oct. 10, 2000, GM sold control of NiMH to Chevron, which then sued Toyota; in Dec., 2002 Toyota surrendered
to Chevron and was allowed to use NiMH only on hybrids that could not plug in. This open collusion between General
Motors and Standard Oil was allowed to stand, unprosecuted and even unnoticed. But it shows that GM actively worked
to kill the EV1, while pretending to "try to build" it.
General Motors small stuckholders were carried along for the ride -- over the precipice. While the big funds had
relatively tiny investments in GM, protected by huge investments in Big Oil, the small stuckholder would ride GM
down to zero, continuing to wonder why no one seemed to care if GM went from the largest industrial corporation
in the world (in 1958) to the biggest beggar on the government dole (2008).
Now, in conclusion, who should take the blame for the policies that were forced on Rick Wagoner, the disgraced
CEO, by the Board?
Clearly, Rick did well by himself (by being fired prior to the bankruptcy filing, Rick gets $20 million severence
package -- when a monkey would have done as good a job, and only needed a few bananas from time to time). Rick
should not be rewarded for his "performance" at GM; if you look at the results, he should be fined, charged
for each day he came to work.
As we see, the interests of the execs diverge from the best interests of the company and the stuckholders.
Yes, Rick Wagoner "deserved it", deserved being removed and fired for his malfeasance: but if the Board
of Directors had not been controlled by funds more concerned about Big Oil than GM, that firing would have been
done by the Board.
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The DISGRACE is that Mr. Obama had to do what was necessary,
fire Rick Wagoner and change GM's oil-soaked policy: it should have been done by the:
==>Board (which chose not to, because he was implementing their own toxic
policies) or by the
==>Stuckholders (who could not, because the funds stood between their shares and
control of their shares).
The criminal act applies to the malfeasance of the Fund Managers, who denied GM shareholder their due, and, for
their own purposes, ran GM into the rocks
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Notice, when there is blame to hand out, none of it appertains
to the UAW: in fact, blaming the line workers for making the wrong cars, for the "jobs bank", for unfunded
early retirement packages, for forced overtime instead of hiring new workers, is like blaming the engine room for
the grounding of the Exxon Valdez. After all, says the drunken, insouciante Captain, if those guys hadn't been
actually working so hard, we wouldn't have landed on the rocks.
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