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General Motors Sideshow

Observations from the Shareholders Meeting

Last month, a share-holder attending the General Motors 76th Annual Meeting at the Fisher Theater in downtown Detroit stood up and asked the chairman of the board, Roger Smith, why the corporation always held its annual meeting in Detroit, Michigan. Why, the shareholder asked, didn't GM rotate the meeting to cities around the world the way other multinational corporations do, to give more shareholders access to GM management?

Smith, who pulled in close to $1.5 million in salary and bonuses in 1983, explained that to rotate the meeting would involve substantial costs to the corporation, costs that Outweighed the benefits that could accrue from improved shareholder relations. Unappeased by Smith's answer, the shareholder suggested that one reason GM didn't want to move the meeting out of Detroit was that GM could better control the press in Detroit.

Predictably, the Detroit press didn't report on this exchange between Smith and the shareholder. Nor did they report on other issues of social concern raised by shareholders at the annual meeting, including questions of auto safety, GM's rough and tumble relations with neighboring communities, the company's operations in South Africa, its low level of charitable contributions, high rates of cancer at GM's Technical Center, increased bonuses paid to GM executives, and Smith's view of the race problem in America.

Discussions around these issues filled the greater part of the four hour meeting, but the press wrote instead about a rumored General Motors takeover of a Texas based computer manufacturing firm. No mention was made of the close to three hours of questioning to which Smith was subjected, or of Smith's avoidance of some of the tougher questions and his congratulation of people who threw him easy questions. There was also no mention made of Smith's habitual attempts to cut off shareholders before their time limits had expired, or of his feeble effort to justify his $1.45 million income in 1983.

Press coverage also overlooked the shareholder who questioned whether Smith had packed the Fisher Theatre with white collar GM workers sympathetic to management, so that when adversarial questioners spoke-as they did frequently-boos would rise from the audience.

Just such a round of boos greeted a shareholder who tried to question Smith on his auto safety policy. The shareholder reminded Smith that 120 Americans would die on the highway that day and each day, and that he personally had the power to cut that death rate dramatically if he would adhere to the promise of one of his predecessors, former GM president Ed Cole, and install airbags as standard equipment in all GM cars.

Smith entered into a discussion of his much publicized seat belt program, explaining GM's programs to encourage passengers to buckle up, and GM's nationwide program to push legislation at the state level that would make the wearing of seat belts mandatory. He also portrayed the airbag as an untested device, although 10,000 airbag-equipped autos which the company sold to the public during the mid1970s have worked remarkably well and saved lives as they were designed to do.

Smith seemed more disturbed by the criticism of his $1.45 million income. In a prepared speech he had made the argument that if you don't pay top people top dollar they will leave the corporation and go to another, higher bidder. "We think General Motors employees are the best in the world," Smith told the crowd. "We say it often, and we mean it. We seek out and always try to hire the best. And to retain those people, we have to compensate them accordingly."

Who, a shareholder asked from the floor, has left the corporation because he wasn't paid enough'? Smith cited a vice-president in Canada and a vice-president in the midwest who, he said, went to corporations that paid them more. "In the long run, General Motors will never be better than its people," Smith said. "That is why the right levels of compensation are important from the shop floor right up to the executive offices. "

He conveniently ducked the issue of the propriety of large executive bonuses in a year when GM faces contract negotiations with a blue collar work force which made concessions valued at $4 billion during contract negotiations in 1982. Before the meeting Owen Bieber, head of the United Auto Workers union, had labelled "obscene" the large bonuses that Smith and his brethren within the industry granted themselves, and said that the bonuses would make a fall labor contract without a strike more difficult.

Smith also came under lukewarm questioning from a Michigan minister about GM's policy in South Africa. Smith, proud to have the Rev. Leon Sullivan, the only black on GM's board of directors, sitting in the audience, reminded the shareholders that Sullivan had drawn up the set of principles known universally as the Sullivan principles which have been widely distributed throughout the world and which many corporations, including General Motors, have accepted as guidelines when doing business in South Africa. (The Sullivan principles require that U.S. companies operating in South Africa de-segregate dining rooms and toilets; pay equally for work; increase the number of non-whites in management jobs; develop training programs for advancement of black workers; and improve non-white workers' housing, transport, health care, and recreation facilities.) Smith ducked the minister's complaint that GM vehicles were being used by the South African government as military vehicles.

Another shareholder argued that Smith should divide the corporation into smoking and non-smoking sections. Smith quickly acknowledged that he agreed with the shareholder about the dangers of smoking, noted that he, Smith, didn't smoke, and urged an associate to form a study group to look into the matter. But while at one point indirectly incriminating the tobacco corporations for causing cancer, he refused at another to acknowledge that his own company may be the cause of the same disease. In February 1980, the Michigan Cancer Foundation reported that wood model shop workers at GM auto plants experienced a 50 percent higher rate of cancer than the general population. When asked whether GM had corrected the problem, Smith failed to even acknowledge that GM was a cause, and instead claimed that the personal lifestyle habits of the workers, such as smoking, may have been responsible. (However, a March 1980 National Institute of Occupational Safety and Health study found that the alarmingly high rate of cancer deaths among wood model makers in the auto industry was caused by something in the shops, not in the workers' life style or heredity.)

The meeting was also peppered with occasional blatant misrepresentations. When asked about Poletown, Smith engaged in a sort of historical revisionism. In 1982, with GM's approval and after a battle with neighborhood residents, the City of Detroit forced the people of Poletown out of their homes and churches, and levelled the neighborhood to make way for a GM Cadillac manufacturing plant. When a shareholder asked why Smith couldn't find an alternative site for his Cadillac plant, Smith claimed that the neighborhood had been run down and dilapidated before GM settled on the location, and-that only a few disgruntled neighbors, led by "outsiders", had resisted. In fact, the Poletown neighborhood was healthy and vibrant when GM first set its sights on it in 1980. Only after the City announced its plans to level Poletown did it begin to deteriorate, when suspicious arson fires ravaged the neighborhood and scared out elderly residents, thus triggering a mass exodus.

Most of the members of the press had departed their perch in the balcony of the Fisher Theatre by the time a nervous student from the University of Toledo stood up and asked Smith why only 5 percent of the company profits are donated to charitable organizations. The student's question went unreported, along with almost everything else "unofficial" that transpired during the meeting. Instead, the press reported on GM spending plans, plans that were conveniently outlined by GM's public relations department in a press release that was handed to each reporter who attended the meeting. They also covered the possible GM takeover of the Dallas, Texas based computer firm, Electronic Data Systems Corp., a takeover that Smith discussed with members of the press at a traditional post-meeting press conference held across the street in the General Motors headquarters building.

"GM Says EDA Link Could Help Its Plan for Diversification," read the Wall Street Journal headline.

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