GM CEO blames Europe, economy for stock slump
General Motors Chairman and CEO Dan Akerson / AP Photo/Paul Sancya, File
(CBS/AP) DETROIT - General Motors (GM) CEO Dan Akerson on Tuesday blamed the automaker's languishing stock price on the company's losses in Europe, huge global pension liability, and overall economic uncertainty.
Addressing shareholders at GM's annual meeting in Detroit, Akerson ranked Europe at the top of the company's problems, while saying it is making progress there. "We see a corner in Europe, but a lot of work to be done," he told about 100 people at the meeting inside GM's headquarters building.
GM lost $256 million in Europe in the first quarter, and some analysts have questioned whether the company is moving fast enough to restructure the unit by cutting factory capacity and with other measures. Akerson said GM has reached agreements with unions in Poland and England and is in talks with powerful German unions. He described the talks as constructive.
The company also is working to cut the risk of running its pension plans, he said. Worldwide, the plans have a global liability of $134 billion and assets of $109 billion. Last week GM shifted $26 billion in U.S. salaried pension liability to an insurance company annuity, but the move will cost the company about $4 billion of its $31.5 billion cash stockpile.
Akerson didn't directly answer questions about when GM might begin paying a dividend. GM last paid a dividend in July 2008. It was cut as the company headed into bankruptcy protection.
He conceded there's little GM can do about the overall economy, but said the car maker is in the process of improving its quality and replacing or refurbishing 70 percent of its North American model lineup in the next two years.
Richard Wills, who traveled to the meeting from York, Pa., said he was a GM preferred shareholder before the company's 2009 bankruptcy. His investment was nearly wiped out, and he got a small amount of common stock in the new GM that equaled about 35 percent of his original investment. But even that has lost more than a third of its value from its $33 price in GM's initial public stock offering in November 2010.
Wills said he's driven GM cars since 1962, but said he won't buy another one until he gets a dividend.
"They really need to take a second look at that," he said after the meeting. "Our preferred stock was completely worthless."
Akerson told shareholders that GM had a good year in 2011 but not a great one. Despite a record $7.6 billion profit, the company's profit margins are too low and must be improved, he said. GM had a 5.8 percent margin in the first quarter, but top automakers like Volkswagen and Hyundai generate closer to 10 percent. Profit margin is the proportion of revenue that's left after costs such as labor or raw materials.
GM, he said, ranks fifth in revenue on the Fortune 500 list of corporations, but 20th in profits.
"To be great, GM must close this gap," he said.
Akerson told reporters before the meeting that his management team is working to make GM leaner and faster, trying to bring an end to its bureaucracy. But he's been frustrated in the past about the slow pace of change.
Akerson also said the company will consider moving blue-collar pensions to an annuity as it did with the salaried pension plan.
And he said he's cautiously optimistic that U.S. political leaders will agree on an economic package to keep the country from tipping into a recession. He expects a compromise on extending the Bush-era tax cuts and on cutting government spending.
Also at the meeting shareholders voted to elect all 12 current GM board members and added two new members. Directors received at least 93.7 percent of the votes cast.
GM stock fell 3 cents to $21.89 in midday trading.
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