Here a Dollar, There a Dollar ....

Just how much effort does it take for a company to cumulatively lose a staggering 50 billion dollars? That’s how much General Motors racked up in losses for 2005, 2006 and 2007. Is it that GM’s Board of Directors is either unable or unwilling, or both, to effectively address that issue? So far this year GM has lost $18 billion. A withering $15.5 billion of the loss alone was posted in the 2^nd fiscal quarter. A new world class record in corporate performance.

Rick Wagoner, GM's chief executive officer received compensation worth $15.7 million from the board in 2007 - as CEO, he's been at the helm of GM since 2000 and in that time the company has lost more than 85% of its stock value. GM’s second in command, President Frederick “Fritz” Henderson, formerly the company’s CFO was served up $7.6 million in compensation. Vice Chairman and product development chief Robert “ Maximum Bob” Lutz, who likes to fly his own military jet, and famously quoted in 2008 for declaring global warming was “ a total crock of shit!”, got a package worth $6.9 million. Yes sir, let the good times roll and keep on rolling ….

During Wagoner's leadership the company has seen a continual slide in its domestic market share with rising dissatisfaction among both its dealers and consumers. Before taking over the top slot at GM Wagoner ran the company’s North American Division which is precisely the part of operations that continues to drag down GM’s overall performance. At 38.7 billion dollars, General Motors embarrassingly lost more than twice as much in 2007 that Toyota earned in profits ($16 billion) for the same year. In this year the price of GM stock fell to a low that hasn't been seen by investors since 1954; ironically, competitor Toyota sold its first automobile in America in 1958.

At $38.7 billion, GM racked up a loss for a full year at a rate of almost 74 thousand dollars per minute - Wagoner’s 2007 compensation package equated to about 43 thousand dollars each day. Wagoner also serves as GM’s Chairman.

George Fisher, one of 10 independent directors on GM’s board in August interviews said the board “unanimously” supports Wagoner and the management team. Fisher a past CEO of Eastman Kodak, who retired in1999 before his contract expired, presided there over difficult years from which Kodak’s stock has yet to recover to its 1997 levels. According to Fisher the price of General Motor’s stock is not a major concern to either the board or management; yet, as he describes it, the GM board is very involved, ever more so now and has “astute” people among the directors. Wow, really, no kidding, but after the destruction of $35 billion in market cap value, could the board be just a little late in putting “hard questions to the management”?

Mr. Fisher goes on to say with infusions of $15 billion by next year from debt offerings the company has enough liquidity to remain solvent until it revamps its product line – others observe that GM is burning through $1 billion of cash a month and express doubt that with a 2 to 3 year product cycle, there will be sufficient cash to carry through.

Fisher, himself, as of the latest proxy statement enjoys beneficial ownership of only some 4700 shares of company stock worth roughly $50,000 at current prices or based upon the number of outstanding shares, a .000839 % stakeholder – seemingly not much of a financial commitment to the management plan he supports – the one he asserts which will lead GM to its “bright future” – or could it perhaps just be an “astute” financial decision about the prospects of a lousy investment return based upon the trend in share prices for GM stock the last 8 long years?

Arguably, any other prospective investor might pause too – after all has the 85 % drop in share prices shown that Wall Street can see what the GM Board can’t ... the need to extract sufficient performance from management to move both the company and its stock ahead?