General Motors Co Chairman Ed Whitacre urged the Obama administration to give the automaker less restrictive pay caps and said it was too early to discuss the timing for the automaker to become a public company again.
Ed Whitacre, who became chairman of a reconstituted 13-member GM board when the automaker emerged from bankruptcy in July, also defended the decision earlier this month for GM to keep its European Opel and Vauxhall brands.
“It's been a confusing decision, but I don't think it was handled badly,” Whitacre told reporters. “The circumstances changed from the time this started. The financial part of the business got better. Conditions have changed.”
Whitacre said GM Chief Executive Fritz Henderson and his team have the backing of the board and an understanding of the priority of paying down government debt after the company took $50 billion in US government funding.
“Mr. Henderson and his team have the support of the board,” Whitacre told reporters. “They understand -- we all understand -- what we have to do.”
Whitacre said it was too early to set the timing for a public offering of GM stock. “It depends on how quickly we become profitable,” Whitacre said. “I think we can see that on the horizon, but I can't promise a date.”
Whitacre's view represented a more cautious take on the timing of an IPO than Henderson and other GM executives who have floated the prospect of a listing of the restructured automaker as soon as the second half of 2010.
The comments by Whitacre, which came at an appearance at Texas Lutheran University, were the most detailed he has made since becoming GM chairman in July.
Whitacre, who arrived in a red Camaro, said GM would face difficulties in hiring senior executives under pay caps set by the Obama administration.
One of the first tests of that policy has been GM's search for a new chief financial officer. GM's financial management was criticized by the Obama administration's autos task force headed by former investment banker Steve Rattner.
In early September the GM board endorsed plans for Chief Financial Officer Ray Young to step aside, people familiar with the deliberations have said, but search for a replacement and an announcement on Young's next move have stalled since then.
Under the caps set for GM's top 25 executives, GM Chief Executive Fritz Henderson had his cash salary cut 25% to $950,000 from $1.26 million.
Cash salaries for the top executives were cut by 31% percent and only one unnamed executive besides Henderson will be paid more than $500,000 for 2009.
Whitacre said that $500,000 limit made hiring from outside difficult and he urged a reconsideration of the limits set by the Treasury Departments's special master Kenneth Feinberg.
“To find top-level people where you need them, that's a more difficult thing to do at that salary level,” Whitacre said. “I don't think (the caps) will be lifted, but hopefully they'll be modified.”
GM's reversal on Opel at a board meeting earlier this month has angered workers and German politicians who had favored a sale of GM's European unit to a Russian-backed group led by Canadian auto parts maker Magna International.
The GM board had initially endorsed the sale of Opel to the Magna-led group in September.
Whitacre said the board returned to the Opel issue in November after European Union regulators questioned whether Germany had tipped the decision in favor of Magna by offering financing exclusively for that deal in a bid to save jobs.
About half of Opel's 50,000 workers are based in Germany, including the complex at its Russelsheim headquarters that has spearheaded the engineering on key upcoming GM models.
“The catalyst for all this was the EU saying you only made the money available to one investor,” Whitacre said. “The board did what they should have done and revisited the issue.”
He added: “We had to ask ourselves how we could be a global player and not play globally.”
The US Treasury owns nearly 61% of GM. GM owes $6.7 billion to the US government as a term loan. The government holds another $2.1 billion in preferred stock.
The bulk of the remainder of the US government's support for GM was converted into common stock. (Reuters)