After all, as the largest single owner of the company, that would appear to present a serious conflict of interest – and would probably require the breach of the union’s fiduciary duty to its employees and retirees AND/OR the management teams breach of its fiduciary duty to all stockholders.

The United Automobile Workers union has agreed to accept company stock for 50 percent of what Chrysler owes its retiree health care fund.

Now the union has an obligation to look out for the best interests of the employees. But management has an obligation to look out for the profitability of the company and maximizing shareholder return. Since the UAW will be in the driver’s seat with regard to management, it there fore has two mutually exclusive obligations. If it chooses higher wages for workers, it harms the pension fund and the interest of the owners of the other shareholders. If it honors those obligations, then it must adopt a less aggressive stance in negotiating wages and benefits for the workers. Indeed, this sets up the situation that would have existed if Henry Ford had insisted that he would be the exclusive bargaining representative of workers at Ford Motor Company in their negotiations with management – AKA Henry Ford.

And while union leadership tries to downplay the conflict of interest, it is impossible to ignore the very real problem that exists in having an arm of the union control over half of the company.

Posted by: Greg at 01:54 PM | No Comments | Add Comment
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