Merry Christmas! Feds give GM corporate jets
Most of us won’t be getting the pony we put on our Christmas list. American taxpayers will have to decide if that makes them any less happy General Motors will soon be able to fly their executives around in corporate jets again and remove federal limitations on their pay. The perks are corporate Scooby Doo treats the federal government agreed to throw GM for reaching a milestone towards repaying their bailout funding.
"This is good for business and good for selling more cars," GM's finance chief, Dan Ammann, said Wednesday. (1)
The news comes on the heels of GM’s announcement they plan to spend $5.5 billion to buy back 200 million shares of stock held by the U.S. Treasury Department. The purchase represents the first step of the government’s exit strategy from the auto maker which is planned to reach completion in the next 12 to 15 months.
Ammann explained during a conference call that as a thank you for repaying a portion of their $49.5 billion IOU GM will be given certain allowances that were taken from them as conditions of their federal bailout.
“There is a handful of things that have been waived,” Mr. Ammann said, “including the corporate jet aspect.” (2)
For those who have forgotten or never heard in the first place, the Obama administration told automakers who took bailout money their executives could no longer fly on corporate jets until they began to wean themselves off the federal teat. The stipulation came in reaction to a highly publicized incident in 2008 when then-CEO of GM, Rick Wagoner and his big three counterparts flew to Washington D.C.in company jets to make a case for whether they needed the money or not.
“It’s almost like seeing a guy show up at the soup kitchen in a high hat and tuxedo,” Rep. Gary Ackerman (D., N.Y.) told the executives. “Couldn’t you have downgraded to first class or something, or jet-pooled or something to get here?” (3)
In total the U.S. Treasury gave just under $50 billion to GM. The $5.5 billion stock purchase GM plans to execute will reduce the Treasury’s holding from 500.1 million shares to 300.1 million and lower its stake in GM from 26.5% to 19%.
Merry Christmas, GM. Keep up the good work.
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