General Motors Headquarters, Detroit, Michigan, USA, Interim Board of Directors

"The benefits of letting Saturn Motors spin off and go public independently are clear, Saturn Motors is the youngest brand in the entire General Motors Company, almost no historical baggage, and Saturn Motors since its launch in 90 years has won unanimous applause and applause from the market, the current bottleneck of Saturn Motors is insufficient production capacity, last year only produced a total of 200,000 Saturn cars, the average price of a single car is 22,000 US dollars, gross profit margin of 16%, and the overall gross profit margin of General Motors is only 9%! It is imperative to make a high-quality asset like Saturn Motors travel lightly and become a cash cow for General Motors! ”

As the current president and CEO of the interim board of directors, 55-year-old John Francis Smith Jr's opening remarks were straightforward, "The spin-off may not have been ripe a few years ago, but now GM has been losing money for three consecutive years, and if this continues, the market and investors will lose confidence in GM, and I think Saturn, a fashion brand aimed at young people, will become the focus of the world's attention!" As long as the controlling stake remains in GM's hands, I don't see anything that can't be done! ”

"Francis, General Motors has invested almost $3 billion in capital for Saturn Motors over the years, and now Saturn Motors has just started to make stable profits. You've always heard of the saying that fertilizer and water don't flow into outsiders' fields, right? As the chairman, John G. Smail opened his mouth coldly, because it was a temporary board of directors, most of the independent directors did not have time to fly to Detroit to attend the meeting, of course, the real battle for the right to speak in the board of directors is nothing more than the 20s led by Chairman Smyer and the Mesozoic executives led by President and CEO Smith, in addition, UAW (National Auto Workers Federation), as one of the major shareholders, also has a decisive force.

General Motors is not like Ford Motor, which occupies most of the voting rights of the Ford family, since General Motors kicked the founder Durant out of the company, the largest automaker in the United States has become the preferred blue chip stock of all strategic investors, so none of the top ten shareholders holds more than 10% of the shares, in fact, due to the relevant provisions of the U.S. securities law, shareholders holding less than 5% of the shares do not bear the obligation to announce when buying and selling stocks, so a large number of investment funds and trust funds are among the top ten shareholders but only hold 4.98% of the shares.

The total share capital of General Motors is not 560 million shares in later generations, but only 370 million total shares at the moment, and the largest shareholder UAW only holds 8.9% of the shares, and the second largest shareholder is actually 5% held by the Canadian government, and other large and small shareholders do not hold more than 5% of the shares, but at the same time, there are more than 1,000 institutions and funds that hold shares in General Motors.

"Chairman, after the spin-off of Saturn Motors, the IPO can recover the 3 billion US dollars invested in the previous 10 years for General Motors, which is not counting, Saturn Motors can also obtain the funds needed for technology research and development and marketing promotion and expansion of production capacity from the market, and the current production capacity of Saturn Motors will be greatly increased, my plan is to increase the production capacity of Saturn Motors to 500,000 units this year, and 1 million units next year, so that Saturn Motors will become the flagship leader of General Motors!"

Smith's tone was much more sincere than usual, although in his mind, Smail should have given up the chairman's position to himself, just like Roger Smith in the 80s, in fact, Roger Smith is still a member of the board of directors of General Motors at the moment, but obviously not in his position, Roger Smith did not come to this interim board of directors today, and generally when the board of directors was divided, Only then will the two sides find a way to move the rescue troops and find someone to speak fairly.

"GM's current market value is only $22.2 billion, how much money can be raised by a mere Saturn car spin-off? Have you measured this? "Smail is not stupid, although he is not responsible for the day-to-day operation and administration of General Motors, he can still exercise 20,000 GM call options every year during his tenure, the price is only $31 per share, plus his annual salary of $1.2 million as chairman, unless he is removed by the board of directors and replaced, he will definitely show his sense of savings!

"Saturn Motors is currently in Chunshan City, Tennessee, plant equipment R&D center building and other net assets are 1.8 billion US dollars, total assets are 5 billion US dollars, the asset-liability ratio is only 64%, the current annual production capacity of the production line with 8,000 workers is 200,000 vehicles, if you want to increase the production capacity to 500,000 vehicles, the personnel need to expand to 12,000 people, and then on a production line, you need to increase the investment in plant and equipment by 500 million US dollars, and the salary will increase from the current 400 million US dollars per year to 600 million US dollars, in other words, As long as another $1 billion is invested, the production capacity can be doubled! ”

Before Smith's voice fell, Smail had already said, "Even if the production capacity is increased to 500,000 units, based on the current average price of Saturn cars at $22,000 per vehicle, there will only be 11 billion operating income for the whole year, and 16% of the gross profit will be 1.76 billion profits, and 800 million US dollars will be invested to maintain the working capital and financial financing costs of normal production every month, how much cash flow and profit do you think GM can get from the Saturn company's listing?" ”

"In the first year, because of the expansion of investment to increase production capacity, Saturn can be tied to ensure that there will be no losses, and in the second year, it will generate a net profit of 1 billion US dollars per year, and if the production and sales volume is increased to 1 million vehicles, it can achieve a net profit of 2.5 billion US dollars, even if General Motors only holds 51% of the shares, it can obtain at least 5-1.2 billion net profits per year! The key is that the IPO can enable GM to recoup its previous investment of $3 billion in one fell swoop, and give Saturn the opportunity to develop and grow itself! As the controlling shareholder, GM enjoys all the day-to-day decision-making, operation and management powers like a wholly-owned subsidiary! ”

Smith's words silenced the conference room, and several directors who attended the meeting whispered to each other, obviously the blueprint drawn by Mr. President looked idealistic and perfect, and the question was, what is the benefit of the Saturn car listing for the board members present? And what are the benefits for the top management of the Saturn company? What is the cost of negotiations with trade unions? Since Smeyer signed a contract with UAW three years ago and promised that the departing employees would receive three years of annual salary compensation, GM has struggled like a mantra.

"Saturn Automobile's net assets are 1.8 billion, last year's production and sales of 200,000 vehicles, sales revenue of nearly 4.5 billion US dollars, gross profit of 720 million US dollars, removal of 120 million R & D expenses and 400 million salaries, net profit of 200 million US dollars, if the total share capital is 200 million shares, net assets per share of 9 US dollars, earnings per share of 1 US dollars, of which 100 million shares of IPO, with 25 times the price-earnings ratio, Saturn's listing and issue price can be set at 25 US dollars per share, you can raise 2.5 billion US dollars! GM can recoup $2.5 billion in cash back when it goes public to Saturn...... And that's just the basics! Once you launch your IPO, there's so much more to do! ”

As the president and CEO of General Motors, 55-year-old John Francis Smith Jr can still be described as in the prime of life, he was born in 38 years and is almost the old people in the 20s on the board of directors are at least ten years younger, most of the previous presidents of General Motors have been promoted from the position of CFO, and Smith is no exception.

"Is GM short of that $2.5 billion? How much does it cost to expand production capacity and increase salaries? 700 million? Then we are not in a hurry to recover the investment, and then add 700 million to invest in Saturn Motors, if Saturn Motors is indeed excellent, I don't see what is the value of giving up that 49% of the shares? That's the equivalent of giving the chicken that raises golden eggs to the next-door neighbor to share the eggs laid by the chicken! "Smeyer is deaf when he's unconscious, like when he's negotiating with the UAW, but he's still a little bit confident when he suppresses the aggressive Smith on the board.

GM's interim board of directors has formed an impasse on the motion to spin off Saturn, among the 11 GM directors, Chairman Smeyer's supporters are almost four, President and CEO Smith's supporters are five votes, and the remaining two votes belong to the centrists, these GM directors more or less hold shares in the company, for example, Chairman Smyer holds 600,000 shares, and now has 20,000 options every year, and Smith himself holds 400,000 shares of GM stock, The other directors have as little as tens of thousands of shares and as many as more than 100,000 or 200,000 shares, and everyone can see the benefits of Saturn's separate listing, but if the interests of General Motors are damaged, then these directors who hold shares will certainly not be happy.

During the coffee break, Smith invited Owen Bieber, the director of UAW, who represents the majority shareholder, into his office for a secret business, "Owen, my old friend, we used to work well together, last time I nominated me as president and CEO, I can remember your efforts, the listing of Saturn is extremely critical to General Motors this year, I hope to get UAW's support!" ”

"Francis, tell me the truth, what are you hapting? UAW is not my one-handed cover, of course, Smail suffered a loss in the negotiation with us last time, this guy has not given us a good face in the past few years, but if Saturn goes public, it won't be as simple as you say, right? The 64-year-old Bieber is a representative of the majority shareholder UAW on the board of directors, and since three years ago, he pit the chairman of General Motors and let the other party sign a sky-high clause of compensation for three years of salary for departing employees, the relationship between the two sides has been incompatible, but one yard is one yard, and Bieber is of course more concerned about the interests of UAW.