How Are GM’s Shares Going to be Distributed?

June 1, 2009

This morning, I received this enjoyable e-mail from a friend who would like to be known as Raoul Lufberry (more on that name later).

So, to my complete shock I wake up this morning to find GM has filed for Chapter 11. I wasn’t aware there were enough people left in that organization to type out, copy, and mail an official document, much less one that should probably be spell checked.

Then I find out that both the governments of Canada and Ontario are both involved. I don’t know what the Canadian word for bankruptcy is, but I’m sure they’ve figured it out.  After all, when you head south in Detroit, you end up in Canada.  Now, both literally and figuratively.

But, what I really want to know is, when do I get my proxy materials.  I was just informed that I am now a proud shareholder in a company that I have avoided investing in for the entirety of my life, until this moment.  Somewhere Markowitz is rolling in his grave, but wait, he is only now figuratively dead.  Anyway, how are the shares going to be distributed?  I suggest a system where every individual tax filer receives shares based on their share of total IRS personal income tax receipts.  In this way, 1% of taxpayers would own more than 40% of the outstanding shares.  My guess is that there would be overlap with the 10% stake owned by the now-fleeced bondholders (who until this morning owned 54% of the company), so those in society with a profit motive could potentially have a majority of voting shares. This could be just the type of governance a turn-around situation like this could use.  And for this reason, it will never happen.

Maybe I could just have that headless chicken from South Park vote my shares.

To say the American people own GM is funny.  Owners usually have a say in how their business is run.   Thanks Raoul for making the truth entertaining.

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