GM Shares Flat After Defect Compensation Plan Is Revealed
DETROIT ( TheStreet) -- "There is no ceiling" to what GM
Nevertheless, GM shares were flat following the announcement. The stock rose 0.1% to $36.66.
Feinberg, whom GM selected to oversee a compensation plan that experts suggested could distribute a billion dollars or more, spoke at a press conference at the National Press Club in Washington. He declined to estimate the cost to GM.
"GM has basically said whatever it costs to pay any eligible claims under the protocol they will pay it," Feinberg said, according to The Associated Press. He noted that GM will not know the total amount of the claims until May 2015.
Feinberg said he was not considering whether alcohol, speeding or the absence of seat belts contributed to a crash, noting, "We have no interest in evaluating any alleged contributory negligence on the part of the driver." However, he said payment would be limited to people injured in crashes caused by the ignition switches.
GM has acknowledged that faulty ignition switches contributed to 13 deaths, and it has recalled 2.6 million cars this year to replace the switches, which could unexpectedly shut off the engine, eliminating power steering and braking capability. Also, the lack of power means air bags wouldn't inflate.
Feinberg, who oversaw the distribution of a $7 billion government fund to victims of the Sept. 11, 2001, terrorist attacks, said he would use a similar methodology to determine claims based on age, earnings potential and extent of injuries.
Feinberg also oversaw compensation for victims of the Boston Marathon bombings, the 2007 shooting at Virginia Tech and the BP oil spill.
"GM has agreed that it cannot challenge my ultimate determination," Feinberg said. "They have no right to appeal."
In a brief prepared statement, GM CEO Mary Barra declared: "We are pleased that Mr. Feinberg has completed the next step with our ignition switch compensation program to help victims and their families. We are taking responsibility for what has happened by treating them with compassion, decency and fairness. To that end, we are looking forward to Mr. Feinberg handling claims in a fair and expeditious manner."
In an interview with The Detroit News , Feinberg said: "GM understands. GM wants to do the right thing -- and the right thing is paying people who can document their claims, and that's a challenge.
"I would not dare estimate how many deaths or how many injuries until people file their claim and we evaluate the claim," he said.
TheStreet Ratings team rates GENERAL MOTORS CO as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation: