Money Minute: GM Weighs Victim Compensation in Recall

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Victims and the families of General Motors' faulty ignition switch will find out how much compensation they get.

General Motors' (GM) faulty ignition switch caused 13 deaths by GM's count and many others by the tally of lawyers and lawmakers. It also caused numerous injuries. On Monday the automaker is revealing how much it plans on compensating those victims. Kenneth Feinberg who consulted on payouts for the 9/11 terrorist attacks, the Boston marathon bombing and the BP (BP) oil spill has been hired by GM to work on a plan and will have the final say on the sum, which could be reach into billions of dollars. Those who take what's being offered would have to give up their right to sue the company. Compensation is likely to be offered for accidents that occurred before and after GM went bankrupt in 2009.

gm ignition switch recall compensation fund
Joshua Roberts/Bloomberg via Getty ImagesKenneth Feinberg, founder and managing partner of Feinberg Rozen.
On the heels of the Supreme Court ruling against Aereo, the streaming TV service is taking a break but says it isn't shutting down. The court decided Aereo was operating in breach of copyright law by retransmitting local TV signals via the Internet. The case goes back to a lower court and the company says it has decided to "map out its next steps." In the meantime, all subscribers will be refunded their last paid month of service. While the company is saying they aren't shutting down, analysts think the company will either have to close or radically change the way it does business.

On Wall Street last week, the Dow Jones industrial average (^DJI) slipped 0.5 percent to close at 16,851, the Nasdaq composite (^IXIC) rallied more than 0.5 percent and the Standard & Poor's 500 index (^GPSC) fell 0.1 percent.

CEO pay has risen 725 percent since 1978 whereas the average employee's salary has risen 10 percent over the same time frame. The reason often cited for the high executive pay is that they add so much value to a company. Well, a new study contradicts this. The finding from the University of Cambridge, Purdue University and University of Utah is that the highest paid CEOs actually perform the worst. Companies that pay their execs in the top 10 percent tend to earn negative returns over the next few years, the study found. It also found that the longer an executive stays at the top, the worse it is for the company. The conclusion is that when execs earn excessively big paychecks they get overconfident and don't make the best decisions for a firm. There is bound to be a lot of debate about this one.

And finally, if you're in your 40s or 50s and have contemplated starting a new career, you are far from alone. A new survey finds that almost a third of people in that age range plan to change their careers in the next five years and 53 percent of them are confident they could successfully make the transition. What they're generally searching for is less stress and a better work-life balance. The survey also found that half of mid-lifers would quit their jobs tomorrow if money weren't a factor and 75 percent want to make their lives more meaningful.

-Produced by Karina Huber.


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bootsnchaps60

CEOs have learned that regardless of how badly they screw up they'll still get a lucrative golden parachute when they leave a company and that because they were a CEO, they will be attractive to other companies who are willing to gamble the CEO will help their profits.

June 30 2014 at 12:25 PM Report abuse +1 rate up rate down Reply
balugablue21

most families will more than likely take the settlement. but the ones who don't will be in court for a long time and if any judgement is rendered, it could be years beyond that before they would recieve any compensation. GM has screwed many people, towns, cities and States. oh yes and they screwed the Gov't also. I still can't see why people are buying their products. they do not make the best stuff. it's good stuff, but not reliable. this is not a "diehard" scenario. oh yes and I do own GM products

June 30 2014 at 11:29 AM Report abuse rate up rate down Reply
jhrooney

CEO's run the company for the benefit of wall street analysts and traders. That usually means cutting employees, putting as much production overseas, which leads to poor service, poor products and a downward spiral toward going out of business, ie Sears Robuck, Montgomery Ward. Hewlett Packard and Dell Computer to name a few. The CEO's of these companies get the golden parachute and squirrel away the money off shore. For the workers, they could care less.
A few companies still run on a fixed margin, pay the employees good wages, do well, and have good custoner service. ie Costco for one.

June 30 2014 at 10:56 AM Report abuse +1 rate up rate down Reply
1 reply to jhrooney's comment
trewliberal

No dunce. CEO''s run the company for the benefit of shareholders. The only way shareholders benefit is by profitably serving gthe needs and wants of customers more effectively than do competitors. .

June 30 2014 at 11:18 AM Report abuse -1 rate up rate down Reply
omerrica.inda.crapper

ovomit robs $400.000 a year off American tax payers ,when he needs to be removed from our white house in handcuffs n locked up in gitmo along with Hillary Benghazi. !!!!!

June 30 2014 at 10:33 AM Report abuse -2 rate up rate down Reply
scottee

how are these salaries acceptable? http://www.openthebooks.com/search/?PensionCode=840&F_fiscalyear=2013&F_Station=Phoenix&F_Name=&perpage=100 and these are just a small sampling of government salaries.

June 30 2014 at 10:29 AM Report abuse -1 rate up rate down Reply
edatevans

The problem is the way the board of directors are set up. They are not responsive to the shareholders. The compensation committees are loaded with CEO's of other companies, looking for the same outrageous pay from their board.
In most cases companies make profit in spite of the CEO poor leadership. They are more interested in their own paycheck than the long term for the company.

June 30 2014 at 10:24 AM Report abuse +2 rate up rate down Reply
1 reply to edatevans's comment
trewliberal

How does one become a member of the Board of Directors of a public company?

June 30 2014 at 11:20 AM Report abuse -1 rate up rate down Reply