GM’s official line, that Frederick Henderson’s resignation as president and CEO of GM was agreed by “Fritz and the board”, appears almost as flimsy as the announcement was hasty. Timing is key, but yesterday’s boardroom coup, which saw GM Chairman Ed Whitacre, somewhat wearily, publicly dispatch the company’s president and CEO at a poorly organised press conference, had all the signs (maybe wrongly) of a decision that was carried out without full regard to the implications.
Henderson became associated with bad news. He was the man who announced the company’s entry into Chapter 11 bankruptcy protection. Admittedly, he also steered the company through and out of Chapter 11 – and in a shorter time than many had expected – but his name remains associated with Chapter 11, and the closure of around 2,000 dealers in North America.
His tenure saw him cancel the Pontiac brand, exit the NUMMI joint venture with Toyota, and fail to sell Saturn. The decision to cancel the sale of Opel/Vauxhall to the Magna-led consortium angered the workers and governments in Europe which had worked so hard to secure an acceptable – or the least unacceptable – package. During his eight month stint at the top, GM’s former CFO also failed to complete the sale of two more brands, but the final curtain has yet to fall on Hummer and Saab. Negotiations over Hummer continue, officially, but there is growing suspicion that the patient is being allowed to die quietly. The sale of Saab to the Koenigsegg consortium fell through a week or so before Henderson was sacked, but there is a slim chance that the brand will be rescued in some form by the end of the year.
With the failure to sell these brands to outside investors, there was clearly concern at board level that investors lacked confidence in Henderson’s GM, something which could have jeopardised the success of an eventual IPO.
Henderson may have been president and CEO, but Ed Whitacre clearly pulled all the strings. As the extent to which he did this becomes increasingly clear, so too does the lack of power and influence enjoyed by Henderson in those otherwise powerful positions. Upon his appointment, Henderson asked to be referred to as president and CEO, and not acting president and CEO. We know now that this really was little more than a glorified interim job.
Whitacre was reportedly the man behind the decision to cancel the sale of Opel/Vauxhall, leading the board’s initial opposition to the plan, and finally pulling the plug, just when it was expected to be signed. Whitacre has also spoken out against Henderson’s belief that the company could feasibly be ready for an IPO in 2010. Whilst Fritz represented the company on a corporate level, in particular at press conferences and media briefings, it was Whitacre, not Henderson, who became the face of the company in the eyes of consumers when he presented GM’s post-Chapter 11 television advertisements in the style of Victor Kiam (telling viewers, “I like what I found”).
Henderson may have represented the company’s failings, but with so much change already affecting the company, he also represented stability. Whitacre is now left with yet another post to fill – he is already looking for someone to fill the role of president of GM Europe and chairman of the Opel supervisory board, vacated on 10 November 2009 by Carl-Peter Forster, and the role of CFO, which is currently held by Ray Young, but only until a replacement is found.
Timing, we agreed, is key. Today, 2 December 2009, was the day that Henderson was expected to speak at the LA Auto Show, unveiling the production version of the Chevrolet Volt (and the company’s retail plans for that model), and the Chevrolet Cruze and Cadillac CTS Coupe debuts. Last night’s sacking wipes out almost all the PR value of launching several core new products, and directs all media attention instead to the subject of who might be brought in to head the company.
It is too early to speculate who might take the job. GM’s statement last night indicated that the search will be global, and it is widely expected to be someone from outside the automotive industry, something which has seen success at Ford with former Boeing executive vice president Alan Mulally, and at Fiat (and now Chrysler) with Sergio Marchionne, the former CEO and managing director of business testing and verification company, SGS S.A.
Whoever does take the job must be prepared to take on a company overseen by a new self-confident, actively-involved board, one which feels that an insufficient level of change has taken place since the company emerged from Chapter 11. Following a host of set-backs, such as the aforementioned failed divestments and resignations, confidence and stability must be restored. The new CEO, whose reward will be limited by government-imposed pay restrictions, must be prepared to face a high level of public scrutiny and exceed the expectations of the government shareholders. It is possible, however, that the majority of the bad news has already been delivered, leaving the new CEO to usher in the real rebirth of GM. And it is also just possible that the new CEO could have a market rebound on his – or her – side.
The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.
