(Updates with closing share price in the second paragraph after the subheadline First Meeting.)
June 10 (Bloomberg) -- General Motors Co. said compensation costs for victims of a faulty ignition switch will be estimated soon and indicated that no further firings are likely related to delays in recalling the defective parts.
Kenneth Feinberg is still crafting the detailed rules under which the victim-compensation program will operate, Chief Executive Officer Mary Barra told reporters today before the company’s annual shareholder meeting at its Detroit headquarters. “We won’t know” the final cost “until the actual compensation program has been run but at that point we will make an estimate at the end of the quarter,” Barra said.
Last week, GM revealed the results of a three-month long internal investigation into why it took the largest U.S. automaker more than a decade to recall 2.59 million cars linked to 13 fatalities. The 325-page report found a pattern of incompetence and neglect, though it didn’t reveal a conspiracy to cover up facts. Led by outside lawyer Anton Valukas, the probe detailed how GM’s engineering and legal departments failed to grasp what was going on or move quickly to address it.
Barra, who was held blameless in the investigation, ousted 15 employees over the findings and said that Feinberg, who ran similar funds for victims of the Sept. 11 terrorist attacks and the 2010 BP Plc oil spill, would oversee the creation of a compensation fund for survivors and families of victims of the flawed part. The fund will begin accepting claims Aug. 1. Once Feinberg has completed his compensation proposal, GM should be able to have an idea of what the cost will be, Barra told reporters.
She also indicated that the automaker doesn’t plan further dismissals related to the slow handling of the ignition switch recalls following the release of last week’s internal investigation.
“We feel we’ve taken the appropriate actions as it relates to the ignition switch recall,” she said.
Congressional leaders have signaled that Barra, who already faced House and Senate panels in April, will be called to testify again, as the U.S. Justice Department investigates the recall.
The company last month agreed to pay a $35 million fine as part of the Transportation Department’s investigation into how it handled the February recall. GM has also added about 35 investigators as it shows a willingness to take vehicles off the road for a variety of issues.
The company’s total number of vehicles recalled in the U.S. this year has reached almost 14 million, beating its previous record of 10.7 million in 2004, according to U.S. National Highway Traffic Safety Administration figures.
Laura Christian, the birth mother of Amber Marie Rose, who died in 2005, said she planned to join a group of family members of victims today outside of GM headquarters in downtown Detroit to protest against the company and demand tougher regulations.
“We want GM to be held accountable for its actions,” she said yesterday in a telephone interview.
Another group of protesters from Bogota, Colombia, said on its webpage that it planned to join the families today as well.
“They are calling on the shareholders to hold GM executives accountable for at least 13 deaths resulting from defective ignition switches in Chevrolets and Saturns, and the disabling injuries and firings suffered by GM assemblers at a substandard plant in a suburb of Bogota, Colombia,” the website said.
This was Barra’s first shareholder meeting since becoming CEO in January. She succeeded Dan Akerson, who retired early to care for his sick wife.
Beyond the recall crisis, Barra faces challenges in Europe where the company has lost more than $18 billion since 1999, in South America where it faces currency fluctuations, and in Asia where it’s trying to restructure operations outside of China. GM shares, which have declined 11 percent this year, fell 0.3 percent to $36.40 at the close in New York.
While stockholders today approved incentive plans for senior executives and the election of Joe Ashton, a retired vice president of the United Auto Workers union, as a new board member along with Barra, they were also be asked by victims’ families to keep more in mind than the bottom line.
“It’s hard to change a corporate culture,” Ken Rimer, who lost his 18-year-old stepdaughter in a Chevrolet Cobalt crash in 2006, said yesterday. “You can’t change business overnight, but we just want to make sure that the shareholders are in on this too, in regards, to hey, ‘Let’s keep the pressure on and see what we can do to make sure nobody else dies.’”
Barra, who is trying to use the Valukas findings to change the company’s attitudes and behaviors, said GM held a 24-hour web chat with employees on the issue and that she’s already heard from workers. “I’ve had a couple of e-mails” from employees raising concerns, Barra told reporters.
During the annual meeting, Chairman Tim Solso gave Barra the board’s endorsement. “All of us on the board believe that Mary has done an outstanding job since becoming CEO in January,” Solso said at the shareholders meeting. “We could not envision the extremely difficult situation that she was faced with almost immediately. We could not be prouder of the way she has represented General Motors.”
He added, “The board has complete confidence that Mary and her team will lead General Motors to make the necessary changes.”