Yesterday we received news that six GM executives sold off their company holdings sending shares of GM stock to their lowest levels since the Great Depression. GM executives who sold off stock include mostly notable Bob Lutz, the company's former vice chairman and head of product development and vice presidents Ralph J. Szygenda and Carl-Peter Forster, Vice Chairman Thomas G. Stephens, GM North America President Troy A. Clarke, and manufacturing executive Gary L. Cowger. In total, the six executives sold more than 200,000 shares for between $1.45 and $1.61 a share, a fraction of the $20 price the stock commanded a year ago. GM share prices ended the day with a 20% drop closing at $1.15.
The sell off by executives could trigger additional selling by shareholders concerned over the company’s future. The sell off occurred while the Obama administration and GM officials are working on a plan to shrink and strengthen the company by the government imposed June 1st deadline to avoid a bankruptcy filing. However, based on falling stock prices and lessons from the Chrysler bankruptcy proceedings, it appears the company's current shareholders will be left with little to nothing for their shares. While a bankruptcy filing will likely wipe out shareholders’ stock, under a likely proposed restructuring plan, existing shareholders would get just 1 percent of stock in the revived company. Given this fact, business analysts predict the stock value will continue to fall as the June 1st government imposed deadline approaches.
- Richard V. Stokan, Jr.