GM's board members' current woes would make Avenue Q's concerns in "Sucks to be me" seem manageable. With deteriorating profitability, a bailout looking less likely, and mangled PR, life as a GM board member is not fun these days. Might these board members need to worry about legal liability as well?
Board members are fiduciaries; that is, they must act in the best interests of the corporation and its shareholders. But when facing a possible bankruptcy, the board must give increasing consideration to the corporations creditors, who often end up as shareholders in bankrtupcy.
GM has stated repeatedly it is not considering bankruptcy as an option. But with the company's cash dwindling fast and a bailout - if it materializes - delayed for weeks, is this strategy of brinkmanship prudent? Could the lack of preparation for a bankruptcy lead to great harm to GM's stakeholders - workers, customers, creditors, etc. - in the event that a bankruptcy does materialize?
It is not difficult to make the argument that GM's board is abdicating its responsibility to take prudent measures in the best interest of the corporation. GM's board would be remiss in not pushing for a bailout, but it is equally irresponsible in assuming it will materialize.
UPDATE: The Wall Street Journal is reporting that GM's board is now considering a bankruptcy filing. According to the Journal, the Board is breaking with GM CEO Rick Wagoner in considering the filing, and "is committed to considering all options in light of circumstances as they may develop." Good, consider their fiduciary exposure covered. Now the nation can turn to hoping they make the tough decisions on restructuring required if GM is to pull through this crisis.
Board members are fiduciaries; that is, they must act in the best interests of the corporation and its shareholders. But when facing a possible bankruptcy, the board must give increasing consideration to the corporations creditors, who often end up as shareholders in bankrtupcy.
GM has stated repeatedly it is not considering bankruptcy as an option. But with the company's cash dwindling fast and a bailout - if it materializes - delayed for weeks, is this strategy of brinkmanship prudent? Could the lack of preparation for a bankruptcy lead to great harm to GM's stakeholders - workers, customers, creditors, etc. - in the event that a bankruptcy does materialize?
It is not difficult to make the argument that GM's board is abdicating its responsibility to take prudent measures in the best interest of the corporation. GM's board would be remiss in not pushing for a bailout, but it is equally irresponsible in assuming it will materialize.
UPDATE: The Wall Street Journal is reporting that GM's board is now considering a bankruptcy filing. According to the Journal, the Board is breaking with GM CEO Rick Wagoner in considering the filing, and "is committed to considering all options in light of circumstances as they may develop." Good, consider their fiduciary exposure covered. Now the nation can turn to hoping they make the tough decisions on restructuring required if GM is to pull through this crisis.
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