GM Board Member Kresa Said to Retire as Soon as July
GM Board Member Kresa Said to Retire as Soon as July (Update3)
June 18, 2010, 4:08 PM EDT
June 18 (Bloomberg) — General Motors Co. board member Kent Kresa, who served as interim chairman during the automaker’s bankruptcy, will retire as a director as soon as July, said two people with direct knowledge of the matter.
Kresa, who joined the board in 2003, turned 72 in March and will not stand for re-election, said the people, who asked not to be identified revealing internal discussions. GM added a 13th director, Cynthia Telles, an associate clinical professor at the University of California at Los Angeles, in April and she will take Kresa’s place when he retires, the people said.
The departure would leave four directors from the old General Motors Corp. and eight who joined since the new GM emerged from bankruptcy. That may help GM convince potential investors its board has a fresh perspective as it prepares for an initial stock sale, said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware.
“New blood would probably make some sense,” said Elson.
Kathryn Marinello, another director, tendered her resignation from GM’s board after she left her last job as chairman and CEO of Minneapolis-based human resources firm Ceridian Corp. in January. GM’s corporate governance guidelines state that when a director’s job changes “from the position he or she held when originally invited to join the board, the director will tender a letter of resignation.”
The board reviewed Marinello’s situation and decided to keep her as a director, said a company spokeswoman, Renee Rashid-Merem. Kresa’s status is under review, she said, because directors who are 72 or older do not stand for re-election under GM’s guidelines.
The board kept Marinello, 53, as a director with the expectation that she will find a new job before GM holds an IPO in the fourth quarter of this year or first quarter of next year, one of the people said. If she does not, she may have her directorship reviewed again and have to resign her seat, the person said.
Directors who lose their executive jobs often stay on boards long after leaving employment, said Elson.
“It’s rare that the resignation letters are even accepted,” he said. “The value that they bring to the board is not the job that they had. Often they do stay on.”
Kresa, a former chairman and CEO of Northrop Grumman Corp., was named GM’s interim chairman in March 2009 by President Barack Obama’s Automotive Task Force after the government fired Chairman and CEO Rick Wagoner. Kresa helped recruit some of the seven directors who joined when GM emerged from bankruptcy in July.
Kresa didn’t immediately return a telephone message about the matter. Marinello wasn’t available for interviews, Rashid- Merem said.
GM’s equity is worth $70 billion, based on a return of 47 cents on the dollar for holders of bonds issued by GM’s predecessor, according to Eric Selle, a debt analyst at JPMorgan Chase & Co. The debt will be converted to stock and warrants in the IPO.
At current bond prices, GM’s implied equity value is about $51 billion.