The United Auto Workers union will own a 17.5% stake in the new General Motors company through its Voluntary Employee Benefits Trust (VEBR).As part of that ownership stake, the UAW's interests will be represented on the board of directors by former Wall Street Analyst Stephen Girsky.
BusinessWeek reports that "While Girsky has served as an advisor to the union for several years, and clearly has a soft spot for labor, he's all too aware of GM's problems. He was a tough critic of the company when he covered its stock for Morgan Stanley. Girsky also worked at the company as an advisor to former CEO Rick Wagoner, too. Don't look for him to press CEO Fritz Henderson to give the UAW a contract that would erase some of the concessions that were made prior to bankruptcy."
Here's what makes it complicated: Girsky's allegiance will in theory lie with the VEBR, meaning that his responsibility will be to promote policies that increase the value of the stake in the company -- not pursue a narrow union agenda that could harm the company's profitability.
The problem is that the distinction between the interests of the VEBR and the UAW are more of a Japanese shoji screen than a Great Wall of China. We are talking about the same people. If the VEBR representative were going to promote the interests of shareholders as investors, why not just let one of the former unsecured creditors that has a stake in the company pick the director for the UAW? Their interests in GM as an investment are the same.
Luckily Girsky is only one man, but I think it's naive to assume that he'll be motivated solely by a desire to create value for GM's shareholders.
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