GM (GM) in Catch-22 with Government Imposed Pay Restrictions
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General Motors (NYSE: GM) might still be in for a plethora of recovery trouble, as some top-tier talent might hit the exits on pay restrictions.
According to the Detroit Free Press, GM is losing some top talent, and unable to attract new talent, as the government keeps a close watch over what's going out compared to what's being produced.
Mark Reuss, GM's president of North American operations, said that competitors like Ford (NYSE: F) or Chrysler, and possibly firms outside the auto industry, are making moves to lure employees. GM doesn't even have the capability to make more appealing employment packages due to government restrictions, meaning it would be hard to replace those that leave with equal talent.
Here's another catch-22: the government is holding its stake in GM at a price of about $33 each, and shares are down to the low-$20s. Without being able to generate better product and returns, GMs stock is likely to remain flat, and the government -- though willing to accept some loss -- will be less likely to exit the stake until shares move at least to the mid-to-upper $20s.
According to the Free Press: "GM paid salaried bonuses last year that ranged between 5 percent and 10 percent of salaries, all approved by Geoghegan, the special paymaster. Bloomberg News reported that Ford paid its salaried workers bonuses that averaged about 10 percent of salaries, while about 10,750 white-collar Chrysler workers received average bonuses of $10,000, even though the Auburn Hills automaker lost $652 million in 2010."
Investors might be getting the hint today, as shares of GM are trading 1.7 percent higher.
According to the Detroit Free Press, GM is losing some top talent, and unable to attract new talent, as the government keeps a close watch over what's going out compared to what's being produced.
Mark Reuss, GM's president of North American operations, said that competitors like Ford (NYSE: F) or Chrysler, and possibly firms outside the auto industry, are making moves to lure employees. GM doesn't even have the capability to make more appealing employment packages due to government restrictions, meaning it would be hard to replace those that leave with equal talent.
Here's another catch-22: the government is holding its stake in GM at a price of about $33 each, and shares are down to the low-$20s. Without being able to generate better product and returns, GMs stock is likely to remain flat, and the government -- though willing to accept some loss -- will be less likely to exit the stake until shares move at least to the mid-to-upper $20s.
According to the Free Press: "GM paid salaried bonuses last year that ranged between 5 percent and 10 percent of salaries, all approved by Geoghegan, the special paymaster. Bloomberg News reported that Ford paid its salaried workers bonuses that averaged about 10 percent of salaries, while about 10,750 white-collar Chrysler workers received average bonuses of $10,000, even though the Auburn Hills automaker lost $652 million in 2010."
Investors might be getting the hint today, as shares of GM are trading 1.7 percent higher.
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