GM begins exec search as rattled employees cope with shakeup
December 3, 2009
GM begins exec search as rattled employees cope with shakeup
ROBERT SNELL, DAVID SHEPARDSON AND CHRISTINE TIERNEY
The Detroit News
General Motors Co. Chairman and new CEO Edward Whitacre Jr. reached out Wednesday to reassure employees on one of the most unsettled days in the automaker’s history.
For many staffers just starting to feel there might be a recovery in sight, President and CEO Fritz Henderson’s resignation Tuesday was a hard blow.
From the shock and uncertainty at GM’s Detroit headquarters to the pall cast over the automaker’s events at the Los Angeles Auto Show, many employees struggled to come to terms with the departure of a second CEO in a traumatic year.
GM Vice Chairman Bob Lutz, who replaced Henderson as the show’s keynote speaker, said "all of us were surprised.
"The whole General Motors team I think is genuinely saddened over what transpired," he said.
Tensions between Henderson and the board became evident in recent months, but employees were shaken by what appeared to be an abrupt resignation after a contentious board meeting.
Whitacre, who took over as CEO, told employees during a webcast Wednesday that no further layoffs were planned. He also said he believed that GM would be able to recruit a top-notch chief executive, even though the salary limitations might be challenging.
Whitacre said there seemed to be leeway in the pay restrictions for executives of companies that received federal bailout funds.
Despite GM’s difficulties, the company will be able to put together a competitive package by offering stock options and other long-term compensation tied to GM’s performance, he said.
GM has begun an international search for a CEO and hired a headhunter, Whitacre said.
But he signaled that he may remain CEO for a while, telling employees that whether the search took three or four months or a year, the important thing was to find the right person.
Some industry insiders said Whitacre might conclude he’s the right person. He’s wealthy, after taking home more than $200 million in compensation and pension in his last two years at AT&T Corp., where he was chairman and CEO.
Appointed in June by the government to head GM’s board, Whitacre has been an activist chairman. He has appeared in TV ads for GM and has spoken often to the media — occasionally to contradict or chide Henderson.
The talk of LA
Henderson, 51, packed up his office Wednesday and met with some of his colleagues, who described him as resigned but not bitter.
People close to Henderson said he regretted that he wasn’t going to see the company through its recovery. But they said he had always thought his tenure as CEO might be short because he was a company insider who was not picked by the board.
In Los Angeles Wednesday, GM’s marketing and product specialists struggled to steer the conversation to the Chevrolet Volt electric car and other models they were showcasing.
Privately, they groused about losing a great opportunity to attract consumers and publicize new vehicles at an auto show that in many ways was viewed as GM’s coming-out party after emerging from bankruptcy in July.
Despite the stream of gloomy news reports, GM is getting some things right, said David Cole, chairman of the Center for Automotive Research in Ann Arbor.
"The product execution is very good right now," he said.
Speaking about Henderson’s departure, he said: "I don’t think it was planned but I think it might have been inevitable."
Lutz, whose name was taped over Henderson’s on convention signs at the L.A. show, refused to discuss Henderson’s departure. His post-speech press conference was uncharacteristically short, and he was quickly ushered away by GM officials.
Lutz’s speech, delivered with his trademark wit, was part product chat, part eulogy. "I really feel that I should apologize on behalf of General Motors," he told a crowd of reporters and industry insiders. "I know there’s not much news coming out of the corporation lately. We’re doing little to fill pages and TV screens."
But he became serious as he discussed Henderson’s contributions. "He guided General Motors through perhaps the most difficult period in its history."
Industry analysts offered varied assessments of the change at the top of the automaker.
"It is certainly an aggressive statement of intent from GM’s board, but it remains to be seen whether it is the right direction for the company," said Tim Urquhart, an auto analyst at consulting firm IHS Global Insight.
"The recent history of appointing chief executives from outside the automotive industry has been mixed. There is no doubt that former Boeing commercial airplanes CEO Alan Mulally’s appointment to the position of chief executive of Ford (Motor Co.) has been a success.
"However, former Home Depot CEO Robert Nardelli, who was appointed as Chrysler’s CEO under the ownership of Cerberus Capital Management, did not enjoy a happy tenure."
Pay limits pose challenge
A few names were surfacing as possible CEO candidates: Carlos Ghosn, the CEO of both Renault SA and Nissan Motor Co., John Krafcik, Hyundai Motor Co.’s senior U.S. executive, and Detroit entrepreneur Roger Penske.
AutoNation Inc. CEO Mike Jackson told CNBC that the pay restrictions would be an issue. "Let’s not forget," he said. "Alan Mulally did not get a gold-plated package. He got a pure-platinum package, and that’s not going to happen in this environment."
Henderson’s salary of $950,000, after a 25 percent cut by the U.S. Treasury Department, might be all the salary that GM could offer a new CEO.
A source familiar with the search for a new CEO said GM’s board and Treasury would have to work out the details of any CEO pay package. If the perfect candidate appeared, they would probably be able to work out something with the government, the source said.
The board "decided they were going to make a quantum leap and go outside like Ford did, when it went to Boeing," said Rep. Dale Kildee, D-Flint, who is a member of Congress’ auto caucus.
When the White House tapped Henderson to be CEO, it "picked the best man from within," he said.
The White House reiterated on Wednesday it had no role in Henderson’s departure.
"Fritz Henderson has done a good job in a period of transition," spokesman Robert Gibbs told reporters. "But the board of directors runs General Motors, not the president of the United States."
Staff Writer Alisa Priddle contributed.
Who’s next for GM?
Some top candidates to be GM’s next CEO, according to auto industry experts and insiders.
Carlos Ghosn, CEO, Renault-Nissan
Roger Penske, CEO, Penske Automotive Group Inc.
John Krafcik, CEO, Hyundai Motor America
Joe Hinrichs, Ford Motor Co., president, Asia Pacific and Africa
Derrick Kuzak, Ford, global product development chief
Jim Farley, Ford, head of global marketing, and Canada, Mexico and South America
Mark Fields, Ford, president of the Americas.
Mike Jackson, CEO, dealer group AutoNation Inc.
Robert W. Lane, chairman, Deere & Co.
Jim Owens, CEO, Caterpillar Inc.