General Motors’ (MTLQQ) Board of Directors has ousted Chief Executive Officer (CEO) Fritz Henderson from his position, blaming the slower-than-expected recovery of the company. For the time being, General Motors (hereafter, GM) Board’s Chairman Ed Whitacre Jr. – the former head of AT&T (T) – will serve as CEO until a suitable candidate is found outside the organization.
Henderson, who joined GM in 1984, was promoted to CEO from Chief Financial Officer in March, replacing Rick Wagoner. Wagoner was forced to resign by the Government on the same account – more radical change is expected. Henderson’s appointment as CEO had provoked much skepticism, primarily due to him being an insider.
Some proponents believe that its time for GM to look for an outsider like Ford (F) did by appointing the Boeing (BA) CEO, Alan Mulally. Mulally was successful in keeping Ford out of the bankruptcy filing and turning a surprise profit of $1 billion in the third quarter. Henderson drove GM out of the bankruptcy filing process in June, which gave birth to “New GM”.
The company had to seek for $52 billion in federal loans to save itself from a massive debt and burdensome contracts. Henderson largely succeeded in his goal to scale down GM’s products to four core brands: Chevrolet, Cadillac, Buick and GMC. He has also been successful in reaching a tentative sale of Hummer to a Chinese construction machinery maker, but has failed in similar attempts to sell other brands such as Saturn and Saab.
However, Henderson had always complained privately about being handed less-than-expected autonomy by the GM’s Board – 60% owned by the U.S. Government – which challenged some of his decisions. Last month, GM’s Board voted to decline selling its sick European unit, Opel, to Canadian parts maker, Magna (MGA), backed by Russia’s Sberbank.
The sale was strongly promoted by Henderson. In spite of the differences, Whitacre praised Henderson for his contribution to the company. A time has now come for GM’s Board to prove that merely changing the faces would be able to help the company to obtain faster recovery.
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