Posted 1 year ago on May 25, 2012, 5:57 p.m. EST by Dgoerz
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Thank goodness Obama's and his regulators are on the job to maker sure this isn't happening. I thought regulations worked...
General Motors told the U.S. Securities and Exchange Commission today that it failed to report a $600,000 deal given to an advertising agency where the wife of a top GM executive is a partner
GM said in an SEC filing that it had “recently learned about” a contract awarded in 2011 to an agency where Chief Financial Officer Dan Ammann’s wife, Pernilla Ammann, is chief operating officer and partner.
The automaker added: “This transaction has been properly ratified under our Related Party Transaction Policy, but not all the required procedures were followed.”
The company has a detailed policy dictating how potential conflicts of interest must be handled. Part of the policy: Deals of more than $120,000 in which a top executive’s spouse has a financial interest must be approved by CEO Dan Akerson and Senior Vice President and General Counsel Michael Millikin. The arrangement must then be reported to the GM Board of Directors’ Governance Committee, which annually reviews each top executive’s independence.
The deal was awarded to Mother New York, an ad agency that employs Pernilla Ammann, for creative work related to Chevrolet’s 100th anniversary celebration last fall, the Free Press has confirmed.
GM spokesman Dave Roman said the automaker “inadvertently failed to disclose in our proxy statement” that the deal had occurred last year, in part because Dan Ammann only found out about the deal recently.
“Dan was not aware of the 2011 transaction, so he didn’t provide that information at the time of the original proxy” statement delivered in April to the SEC, Roman said. “We just discovered this recently, so as a result of that we’re required to inform our stockholders.”
Roman said the deal was “properly ratified” by Akerson and Millikin “after the fact, which under our policies we are certainly allowed to do.”
Mother New York representatives and Pernilla Ammann could not be reached for comment this morning.
Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware, said it’s not uncommon for executives to have to disclose deals that benefit their spouses.
“The question is, how did they miss it?” Elson said.
He added: “How much of that did she share in? It’s certainly something shareholders would want to know.”
News of the transaction was reported Oct. 7 by trade journal AdWeek, which quoted another GM spokesman saying there was no competitive review for the “one-off” deal.
In March, GM consolidated Chevrolet advertising functions into one newly formed agency, Commonwealth, a 50-50 partnership between San Francisco-based Goodby, Silverstein & Partners and New York-based McCann Erickson Worldwide. Commonwealth has the authority to subcontract deals