GM CEO concerned about economy, deficit
DETROIT – General Motors CEO Dan Akerson said Tuesday that he is concerned about the U.S. government's high deficit and what he called a jobless economic recovery.
A 10-year government plan to handle the roughly $14 trillion deficit would bring some stability to the economy, Akerson told reporters before the company's annual shareholder meeting in Detroit.
He also said he's concerned about a lack of jobs. If more are created, more people will buy cars and other durable goods, he said.
It will take a long time, Akerson said, for the economy to work through the consequences of easy credit from the mid-90s to 2007 period. "I think it's going to take a while to shake out and wring out the excesses," he said.
Akerson said he wasn't worried about the company's slumping stock price, which fell 13 percent from an initial public offering price of $33 per share in November to close Monday at $28.56, its lowest closing price since the IPO.
The company, he said, has performed in line with its competitors, all of which have seen stock declines in recent months.
But investors are worried. They're concerned that the U.S. government will depress GM's stock price when it starts selling its remaining 500 million shares in the company. They're worried about signs that the economy is slowing down and that high gasoline prices could hurt sales of SUVs and pickups, GM's most profitable vehicles. Another problem is higher costs for steel and other materials, which could squeeze GM's profits.
The company is trying to convince investors of the value of the shares. Akerson used $940,000 of his own money to buy 30,000 GM shares recently and calls himself a long-term investor. He says the company has less debt and makes decisions faster than in the past.
GM pulled off a remarkable turnaround in 2010 after emerging from bankruptcy protection the year before. It went from losing more than $80 billion in the five years before bankruptcy and needing a government bailout to earning $4.7 billion in 2010. U.S. sales are up almost 19 percent this year.
Akerson also said that if the government wants to move people toward more fuel-efficient vehicles, it should consider raising the gasoline tax to keep gas prices high rather than requiring automakers to increase mileage.
"It helps with our deficits, at the same time may change consumer behavior, and the automotive companies will try to meet that demand," he said.
GM's annual meeting, its first since 2008 and its first in Detroit since 1990, ended in just over an hour. Only about 100 people attended.
Shareholders elected all 11 current board members and voted to approve the company's executive compensation, including Akerson's 2010 pay package. The package was valued at just over $2.5 million for his four months of work as CEO.
John Lauve, a longtime shareholder from Holly, Mich., who ran unsuccessfully for the board, urged shareholders to oust the four directors still on the board who served before GM entered bankruptcy protection.
"The Titanic did hit the iceberg," he said. "The problem was with the directors of General Motors failing to alter the course of the Titanic."
Other shareholders said they were satisfied with GM's performance despite the slumping stock price.
Suzanne Gavel, a retired GM worker from Livonia, Mich., said Akerson's vision for the company is promising.
"We have an opportunity for a second chance," she said.
GM's stock price rose 35 cents, or 1.2 percent, to $28.91 in early afternoon trading.