Monday, May 14, 2007

GM will let top executives trade company's shares

Wednesday, May 09, 2007
GM will let top executives trade company's shares
Company had banned them from buying and selling stock on fears over insider trading.
Jeff Green / Bloomberg News

General Motors Corp. will let Chief Executive Officer Rick Wagoner and about 20 other top executives buy and sell the company's shares, after a two-year ban because of concerns about inadvertent insider trading.

The executive trades will be allowed until May 31, spokeswoman Renee Rashid-Merem said in an interview. The Detroit-based automaker banned such trading in 2005 at about the same time it halted financial forecasts. GM doesn't intend to begin forecasts again, Rashid-Merem said.

"We have resolved a lot of significant matters and provided a lot more detail on pending matters," such as the sale of a stake in its finance unit and labor issues such as health care and buyouts, she said in an interview.

Executives with significant future financial information not available to the public may still be prevented from trading, Rashid-Merem said.

Resuming the trading is another sign of confidence at GM, the largest U.S. automaker, after Wagoner and his top two deputies last month regained half of a 2006 pay cut and in March received their first restricted stock grants since 2003.

Wagoner reiterated last week that he expects automotive operations to improve this year from a $2 billion loss last year.

"If you saw executives buying now, if Rick Wagoner buys some shares, that would probably be a positive signal to the market," said John Novak, an analyst at Morningstar Investment Service Inc. in Chicago who rates GM shares the equivalent of a sell.

"These people have had their hands tied for two years, some people at lower levels may need to sell."

GM hadn't allowed top executives to buy and sell its shares since 2005's first quarter, just before the automaker in April of that year stopped giving profit estimates. The company said it wanted to prevent those with internal financial information from inadvertently engaging in insider trading.

The automaker told employees of the decision on executive trading in an internal announcement Tuesday.

The ban is being lifted after Wagoner narrowed GM's loss to $2 billion last year from $10.4 billion in 2005. The automaker paid 34,400 union workers to leave, closed plants and sold assets that will raise about $16 billion.

Last week, GM said first- quarter profit fell 90 percent because of losses related to home loans at a finance unit and continued North American losses.

Wagoner on April 25 reassured employees that his plan to end losses is working after Toyota Motor Corp. passed GM in first- quarter global sales.

GM said last week it expects to sell 9.2 million cars and trucks worldwide this year, while Toyota forecasts sales of 9.34 million. GM has been No. 1 in global sales for 76 years.

Wagoner's last share activity was in March 2005, when he bought 50,000 shares valued at $1.5 million.

GM shares were the best performers in the Dow Jones Industrial Average last year, climbing 58 percent. In 2005, they tumbled 52 percent.

The shares fell 14 cents Tuesday to close at $29.77 on the New York Stock Exchange and have declined 3.1 percent this year.

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