Recall settlement frees GM CEO to confront new challenges
By Joseph White, Jonathan Stempel and Nate Raymond
DETROIT/NEW YORK (Reuters) - Hours after General Motors Co (GM.N: Quote) agreed on Thursday to pay $900 million to settle criminal charges related to a bungled recall, Chief Executive Mary Barra said the legal and public relations crisis that has shadowed her for nearly two years was "a catalyst for meaningful change."
Now, Barra must show investors and consumers that the change at the No. 1 U.S. automaker is real, and goes beyond the steps she ordered to attack the engineering and managerial lapses that resulted in GM waiting more than a decade to fix dangerous vehicle defects now linked to 124 deaths.
GM shares rose modestly on Thursday as investors digested details of the criminal settlements, for which the automaker will take a $1.475 billion third-quarter charge, including $575 million for private litigation.
However, GM shares are still trading well below their initial public offering price of $33, despite Barra's move in March to promise investors $10 billion in cash and stock buybacks through the end of next year.
Barra could face new pressure from investors to take more aggressive steps to lift the company's shares. Meanwhile, Sergio Marchionne, chief executive of rival Fiat Chrysler Automobiles NV (FCHA.MI: Quote) (FCAU.N: Quote), continues his campaign for a merger of his company and GM - a proposal Barra and her board have rebuffed.
GM executives would rather focus attention on their ambitious plans for launching new vehicles with advanced technology. Product development chief Mark Reuss, speaking to employees on Thursday, hit that note.
"We are going to deliver vehicles with features that astound and amaze people," he said, adding that GM's goal is to be a "zero defects" company.