Employee "Ownership" at Chrysler and GM?

As part of their efforts to recover, General Motors and Chrysler both are pursuing agreements with the UAW to provide the union with company stock to help fund retiree health-care trusts. Chrysler had agreed with the UAW to give shares to the union health fund trust valued at 55% of the company and a promissory note for $4.59 billion to be paid with interest in installments. But if the shares can be sold for more than the price at which they were contributed, the U.S. Treasury gets the difference. It is not clear whether the bankruptcy filing will undo this arrangement. GM is negotiating for a similar deal to fund half of its $20.4 billion obligation, leaving the UAW with 39% of the company.

The press is presenting this as "employee ownership," but that seems a stretch. Employees would benefit only in the sense that if the companies can keep their stock values from falling further, then the trust will be much more likely to pay for retiree health care. That is a far cry from a typical employee ownership arrangement where employees personally benefit from increases in share value.

For the most part, the press is explaining this not as employee ownership but as union ownership. An exception is BusinessWeek (at this link), although the story does a good job of explaining what it takes to make employee ownership work.