Shareholders square off with GM chief

By Randall Chase
Published June 7th 2005 in Associated Press
WILMINGTON, Del. - The man behind the wheel at General Motors Corp. collided head-on with dissident shareholders Tuesday at the company's annual meeting, but he gave up little ground.

GM chairman and chief executive officer Rick Wagoner managed to maintain control of the meeting despite calls by some frustrated shareholders for his resignation, and he seemed to give as good as he got.

"This is not a cross-examination," Wagoner admonished shareholder John Chevedden, of Redondo Beach, Calif., cutting off a series of critical questions by Chevedden aimed at GM chief financial officer John Devine.

Wagoner even turned salesman at one point, offering to help a shareholder frustrated at not being able to find the particular vehicle he wanted from his local dealership.

"We're not short of inventory," quipped Wagoner, who oversaw a $1.1 billion loss by GM in the first quarter and watched its U.S. market share shrink to 25.4 percent from 27 percent a year ago.

Chevedden, 59, was one of five shareholders who presented proposals aimed at changing GM's corporate policies and procedures, none of which passed. His proposal to adopt cumulative voting in the election of company directors achieved the most success, however, garnering almost 49 percent, according to a preliminary tally, and emerging as perhaps the most popular shareholder proposal in GM history.

Other shareholder proposals, defeated by overwhelming margins, called for: simple majority votes on issues presented to shareholders; shareholder approval of golden parachutes for GM executives and a halt to new stock options; and an assessment of how the company plans to address emissions of carbon dioxide and other "greenhouse gases," which can trap heat in the atmosphere and are believed to play a role in global warming.

Chevedden said his proposal could provide a stronger voice for minority shareholders and result in a more independent board. The company countered that the proposal could lead to the election of a board member more concerned about representing the special interest of one small group, rather than all shareholders.

"I was glad with the 48 percent," said Chevedden, who nevertheless expressed dismay at the lack of specific ideas from GM leadership for turning the company around.

"It's all generalities," he said after the meeting.

Shareholder Milton Gaul, 76, of Hockessin, Del., said he believes GM can overcome its current hardships, but that it must regain the trust of American car buyers and pay particularly close attention to quality as it builds new product lines.

"They've got to gain their reputation back, but it's not going to happen overnight," said Gaul, who confessed to driving vehicles of rival automaker DaimlerChrysler AG.

James Dollinger, an award-winning GM salesman from Flint, Mich., who told Wagoner he should resign, said the company's problem is not its products, but incompetent leadership.

"I think they have their own agenda," said Dollinger, 47, as he handed out copies of his own "Return to Greatness" turnaround plan to Gaul and other shareholders after the meeting.

Dollinger, aka "Buickman," believes GM management eventually wants to abandon the company's expensive, unionized structure in North America and establish new divisions built around cheap labor markets in Asia. In the meantime, he remains vexed at what he sees as the GM board's heavy-handed control of advertising and marketing at the expense of local dealerships.

"You can't advertise $10,000 off a Tahoe and expect to go back to normal pricing the next month," Dollinger said. "There's not a single one of them who have ever sold a car in their life."

Lucy Kessler of Libertytown, Md., who offered the proposal on golden parachutes, said GM's foreign competitors don't have to beg consumers to buy their products.

"They don't have blue light specials, they build good products," said Kessler, who joined Dollinger in criticizing what they and others see as confusing rebate offers and other gimmicks by GM aimed at enticing customers.

"These rebates are the worst thing to come down the pike," she said.

While offering her own views on what is ailing GM, shareholder Evelyn Y. Davis of Washington, D.C., whose barbs at Wagoner sometimes drew laughter from the audience, as well as the CEO himself, suggested that shareholders were united on at least one issue.

"Kerkorian is our common enemy," Davis said, referring to the billionaire investor whose tender offer to acquire 28 million shares of GM for $31 apiece, doubling his stake in the company to 50 million shares, or almost 9 percent, raised concerns among some shareholders about a possible power grab.