Retired United Auto Workers Vice President Joe Ashton’s resignation from General Motors Co.’s board of directors means the union’s health care trust will be without a representative at least until the automaker’s annual meeting in the spring.
But as long as the UAW Retiree Medical Benefits Trust — by far the company’s largest shareholder — owns at least 50 percent of the GM shares it initially acquired following the company’s historic bankruptcy, the trust can name its own replacement.
The union medical benefits trust is a separate entity from the UAW. The trust was promised a seat on the board in the 2009 Stockholders Agreement, forged after GM emerged from federally induced bankruptcy. As of March, the trust held a 9.3 percent stake in the company with roughly 140.15 million shares. That’s about 53.4 percent of what it initially acquired in 2010.
A spokeswoman for the retiree trust declined comment. It’s not clear if the trust will nominate a board member at GM’s annual shareholders meeting, which is usually convened in early June.
Even then, the retiree trust could appoint a board member without any union background. In 2009, the union named Steve Girsky — a former Wall Street analyst and private-equity executive who later become GM’s vice chairman — to represent its interests on GM’s board.
It’s still not clear what caused Ashton’s abrupt resignation, which GM announced late Wednesday in a four-sentence news release. But he leaves the board amid an internal investigation GM launched this fall after learning of a widening federal investigation into potential criminal corruption at UAW joint training centers funded by all three automakers.
Ashton’s resignation comes six weeks after The Detroit News reported that federal agents had expressed interest in talking with Ashton. He headed the UAW’s GM department from 2010 to 2014, when the health care trust named him to the GM board.
The FBI probe focuses on the possible misappropriation of training funds, and if labor leaders at GM and Ford Motor Co. received money or benefits through their tax-exempt nonprofits. The investigation originates from an allegation this summer involving Fiat Chrysler Automobiles NV and General Holiefield, a former UAW vice president who died in 2015, sources said.
FBI probe not-withstanding, University of Michigan business professor Erik Gordon said appointing a former union officer was never in the best interest of the UAW Retiree Medical Benefits Trust.
“Board meetings can be difficult to decode,” Gordon said. “If I were UAW member, I would want someone in that board room who can sort the baloney from the truth.”
Ashton was preceded by Girsky. A quick talker known for his business acumen and deep understanding of the UAW, Girsky earned the union’s trust ahead of the GM’s collapse into bankruptcy. He often spoke candidly with union members about the dire state of GM, Ford and Fiat Chrysler — and was the first person to tell former UAW President Ron Gettelfinger that GM was insolvent.
But UAW member or not, Gordon said it will be important for the union medical benefits trust to thoroughly vet its next appointment.
“Before you send anybody into the board room, you need to investigate them carefully so that you minimize the chances of having the union being embarrassed in such a high-visibility way,” Gordon said. “One hopes that the union has learned its lesson and will investigate its next nominee to the days of when he or she was in grade school.”