GM officials have complained that due to government restrictions on executive pay, the company couldn't offer the salaries it needed to in order to hire the best potential employees.

G

eneral Motors took a big step in its efforts to recover from near collapse this week. The automaker, which underwent a federally managed Chapter 11 bankruptcy in 2009, will be buying back 200 million shares of common stock currently held by the U.S. Treasury for the cost of $5.5 billion, or $27.50 per share.

It's all part of a larger plan for the Treasury to fully divest itself over the next 12 to 15 months, depending on what's going on with the stock market at any given time. The Treasury Department is also going to relinquish what a press release called "governance rights." Those were restrictions on what GM could do—for example, the company wasn't allowed to buy corporate jets. The plan is to begin selling the rest of the shares—about 300 million—back as soon as next month.

GM General Motors is slowly shaking its way loose from the Treasury Department.

“This announcement is an important step in bringing closure to the successful auto industry rescue, it further removes the perception of government ownership of GM among customers, and it demonstrates confidence in GM’s progress and our future,” company chairman and CEO Dan Akerson said in a statement.

While there's no doubt that GM's ability to buy the shares back means that the automaker is experiencing a positive recovery from the dark days of 2009, it's harder to predict whether GM will be able to shake the stigma of partial government ownership. Some consumers shunned "Government Motors" and Chrysler (which underwent a similar bailout) because they felt that the government shouldn't own so much stake in a major corporation. GM officials have also complained that due to government restrictions on executive pay, the company couldn't offer the salaries it needed to in order to hire the best potential employees, and GM also fought the perception that it couldn't manufacture certain products because they wouldn't meet the government's approval.

GM may never be able to shake those concerns—or any stigma from making business decisions that lead to massive debt and the bailout in the first place--and the company will probably take further flack unless the government can break even, which won't happen unless the share price moves to $70. Right now, the government is $21 billion short of the break-even point.

Treasury
The U.S. Treasury building.

We reached out to GM, and spokesman Greg Martin acknowledged that consumers' perception of the company was colored by the bailout.

"[It was] distracting, diverting from what was probably our strongest product lineup in a long time," Martin said.

When asked what GM needed to shake the stigma, Martin replied, "Time and great products." He also said that this week's news of the buy back should help GM. "The announcement helps remove that perception," he said.

Dave Sullivan, manager for product analysis at automotive-industry analysis firm AutoPacific, said that GM's ability to buy the shares back shows that the company's cash-flow situation is in good shape.

"They're in a very good situation for accumulating cash," Sullivan said. "This is a lot sooner than anyone expected."

As for the consumer perceptions, Sullivan said that it won't take long for folks to move on.

"There's a small percentage of people who think like that," he said about the "Government Motors" nickname. "Consumers have a very short memory span it comes to things like that."