GM CEO Wagoner Out as Obama Administration Goes "Hands On" With Detroit
March 30, 2009
By Bill Visnic
General Motors CEO Rick Wagoner has been asked to resign as a condition of extending addition federal aid to the auto company he's run for nine years.
"On Friday I was in Washington for a meeting with [Obama] administration officials. In the course of that meeting, they requested that I 'step aside' as CEO of GM, and so I have," Wagoner said in a statement early this morning.
The prospect of Wagner's leaving or being forced to resign first emerged last fall when the Detroit Three automakers initially reported to Congress about their deteriorating businesses and GM and Chrysler LLC proceeded to accept federal "bailout" loans from the U.S. Department of Treasury's now-infamous Troubled Assets Relief Program (TARP).
Wagoner, who assumed the post in 2000, is by far the longest-standing CEO among the Detroit Three automakers and has served a 32-year career at GM. Yet critics, including some in Congress, advocated for his resignation last fall when the depth of GM's snowballing financial troubles became public knowledge.
Now, with the Obama administration and its newly formed auto industry task force anxious to set parameters that ensure the future "viability" of the troubled U.S. auto manufacturers -- not to mention imbue its political imprint on the process -- Wagoner's resignation is being presented as an effective condition of the administration's approval for the billions of dollars in new funding GM seeks.
Wagoner will be succeeded, at least temporarily and partially, by Frederick "Fritz" Henderson, who will be GM's CEO. The GM chairmanship will be held by an outside GM board member, Kent Kresa, who is chairman emeritus of Northrop Grumman Corp. and a GM director since 2003.
Henderson became GM president and chief operating officer for the past year, setting him up to replace Wagoner. Henderson also has been one of the chief architects of GM's restructuring plan submitted to the government.
"Fritz Henderson is an excellent choice to be the next CEO of GM," Wagoner said in his statement. "Having worked closely with Fritz for many years, I know that he is the ideal person to lead the company through the completion of our restructuring efforts. His knowledge of the global industry and the company are exceptional, and he has the intellect, energy and support among GM'ers worldwide to succeed."
GM Director of News Relations Tom Wilkinson said the company expected to "issue some statements" on Monday relating to a scheduled announcement from President Obama regarding recommendations from the auto-industry task force about the next direction for reorganizing GM and Chrysler.
It also is widely believed Obama is to announce the government will provide both companies with further financial assistance -- if not, perhaps, commitment for the entire additional $16 billion-plus GM seeks and the $5 billion Chrysler requested to continue operations past the end of March. Combined, the two companies already have accepted in excess of $17 billion in TARP-backed funding.
The replacement of Wagoner with Henderson may appease those demanding Wagoner step down as a form of acknowledgment of GM's management missteps. And indeed, during Wagoner's term as CEO, GM lost a debilitating -- and difficult to ignore -- seven points of market share in the U.S. market from 2000 to 2008.
Yet at this juncture, Wagoner's "removal" at the behest of the Obama administration has the appearance of political grandstanding, giving the administration a convenient and highly placed martyr as it proceeds with the inevitably unpopular decision to extend more bailout funding to GM.
If the purpose of Wagoner's removal truly is in the interest of accelerating meaningful restructuring at GM, then the appointment of Henderson, a career GM executive, seemingly does little to further that goal, no matter how "temporary" Henderson's tenure as CEO.
It also is unclear how the situation at GM might affect the status of Chrysler CEO Bob Nardelli, who has been on the job at Chrysler less than two years. Chrysler's status as a privately owned company could impact management decisions directed by the Obama administration as it also determines whether Chrysler's restructuring plan provides for the company's future viability.
Photos by GM
1 - GM CEO Rick Wagoner, pictured here with the award-winning Chevrolet Malibu, has stepped down as head of the automaker.
2 - Frederick "Fritz" Henderson will assume CEO duties at GM, at least temporarily.
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