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The United Auto Workers’ retiree health care trust has acknowledged that it forfeited its right to nominate a representative to General Motors Co.'s board of directors when it sold 40 million of its shares in the automaker earlier this year.

The UAW Retiree Medical Benefits Trust, known as the VEBA trust, initially acquired a major stake in GM as part of the automaker’s emergence from federally induced bankruptcy during the financial crisis.  But when the trust sold 40 million shares in February, it fell below the threshold detailed in the 2009 stockholders' agreement between GM, the UAW trust and the U.S. Treasury that guaranteed the trust the power to nominate a board member.

A discrepancy over the number of shares initially held by the trust had left open the question whether the union's health care trust still had enough shares to nominate a representative.

It's unclear what resolved that discrepancy, but GM's board on Wednesday named a twelfth member — Jami Miscik, a former Central Intelligence Agency official and current CEO of Kissinger Associates — bringing the board back up to the same number of directors it had before retired UAW Vice President Joe Ashton resigned late last year.

The UAW Retiree Medical Benefits Trust said in an emailed statement Saturday that as contemplated by the agreement, it has been selling stock gradually over time, and that its ownership had fallen below the required threshold.

"In February 2018, the Trust’s ownership of GM common stock moved from 140.15 million shares to 100.15 million shares," the statement said. "The Trust’s right to nominate a candidate to GM’s board terminated at that point when the Trust’s holdings were below the threshold of 131 million shares. That is why GM’s Board of Directors election held this past June did not include a Trust nominee."

The UAW trust's 100.15 million shares still make it GM's largest stakeholder, according to the automaker's latest proxy statement.  

The trust was established as part of the 2007 collective bargaining agreement, moving retiree health care liabilities to a new independent Voluntary Employee Beneficiary Association in order to relieve some of the cost to cash-strapped automakers. The federal courts approved three separate class-action settlements for each of the three Detroit automakers, after which the trust agreement was signed to create the UAW Retiree Medical Benefits Trust.

The 2009 stockholder agreement says the UAW trust must own at least 50 percent of the shares it initially acquired following the automaker’s bankruptcy. It was initially unclear if the original number of shares the trust acquired included a three-way stock split ahead of GM's November 2010 initial public offering that increased the UAW trust's shares from 87.5 million to 262.5 million.

The 40 million shares sold in February — nearly a third of its stake in the automaker — were valued at $39.71 each, according to a filing with the Securities and Exchange Commission. Using the UAW trust’s 262.5 million shares reported in GM’s 2010 filing with the SEC as its original acquisition, the trust’s holdings fell to 38 percent of what it initially acquired, no longer guaranteeing a board seat.

"The VEBA's right to nominate a director for election to the board was predicated on the VEBA owning a certain percentage of the shares that they initially acquired in 2009," GM spokesman Tom Henderson said Saturday. "They no longer meet this requirement."

The seat on GM's board may not be as valuable as it originally was in 2009, when the UAW chose Steve Girsky, a former Wall Street analyst and private-equity executive who had later become GM’s vice chairman and a trusted adviser to the UAW ahead of GM's collapse into bankruptcy.

"I don't know that the board representation made bargaining any easier or more insightful," said Kristin Dziczek, vice president of the Ann Arbor-based Center for Automotive Research. "The union has the ability to hire the best analysts in the business (during collective bargaining), and they often have."

The acknowledgement that the trust had lost its right to nominate a board member was first reported by Automotive News.

The trust has been without representation on GM's board since December, when Ashton resigned. His sudden resignation, announced by GM in a four-sentence statement at the time, came six weeks after The Detroit News reported that Ashton had drawn the scrutiny of federal agents looking into potential corruption at UAW joint training centers funded by all three automakers.

The UAW declined to comment Saturday.

nnaughton@detroitnews.com

Twitter: @NoraNaughton

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