General Motors Confirms First Dividend since 2008
General Motors (GM) confirmed that it will resume paying a quarterly dividend for the first time in nearly six years and named a new chief financial officer (CFO).
An announcement on restoring the dividend was expected following the US government’s sale of its remaining stake in GM late last year. The Treasury received the stake in 2009 in exchange for a US$50bn bailout that saved the company from bankruptcy. While it ended up losing about US$10bn on the bailout, maintaining GM’s production and its workforce avoided the prospect of having to pay unemployment benefit to thousands of redundant employees.
GM’s outgoing chief executive officer (CEO), Dan Akerson, said last month that since GM retired preferred stock that carried high dividend rates and payments, it had accumulated enough money to maintain capital spending and reward shareholders. GM has made more profits of more than US$21bn since emerging from bankruptcy in 2009.
“Our fortress balance sheet, substantial liquidity, consistent earnings and strong cash flow provide the foundation for an ongoing payout,” said Dan Ammann, GM’s outgoing CFO who is taking over the role of president, said in the statement. GM named Chuck Stevens as his successor as CFO. Stevens, who began his career at the company’s Buick Motor Division in 1983, has previously held positions in China, Singapore, Indonesia and Thailand.
The company has already confirmed that its product chief, Mary Barra, will succeed Akerson to become the first female CEO of a major motor producer.
GM’s announcement follows last week’s news that rival Ford Motor is to increase its quarterly dividend to 12.5 cents per share, up from 10 cents. It was the second time Ford has raised the dividend amount since reinstating its dividend in 2012. Like GM, Ford withheld its dividend when the financial crisis struck in 2008.