Michigan to Oppose Pension Boosts at GM
A controversial plan by General Motors Corp. to boost the pensions of retiring chairman Roger B. Smith and other executives is provoking criticism from an unlikely source--the state of Michigan, the auto maker’s birthplace.
Michigan treasurer Robert Bowman said Monday that he plans to vote the state’s 8.8-million GM shares--1.5% of the world’s largest auto maker--against the proposed pension increases.
“We don’t think it’s the best use of $42 million,” said Bowman, who oversees the Michigan State Retirement System, one of GM’s largest institutional shareholders. That is how much GM would spend to increase the pensions of 3,350 of its senior executives.
“Research and development and plant investments, among other things, are a better use of their money,” he added.
Michigan’s decision is significant because it is usually a loyal supporter of GM.
“Historically, we’ve been supportive of management, but on this one we’ve had to part ways,” Bowman said.
The proposal, which will nearly double Smith’s pension--to $1.2 million--has been lambasted as both excessive and ill-timed.
Shareholders will vote on the plan Friday at GM’s annual meeting in Detroit.
The United Auto Workers union said Smith’s compensation is lavish and unwarranted given GM’s poor performance in the United States the past decade. Smith will retire Aug. 1.
Critics said the timing of the proposal is poor because it comes just months before auto makers and the UAW begin talks on a new national labor agreement.
GM said the increases are necessary to continue to attract top talent. It says GM pensions have lagged those of other companies.
Some influential voices are throwing their support behind GM. Institutional Shareholder Services Inc., a Washington, D.C.-based consulting firm that advises many institutional investors, is telling clients to vote for the pension increases.