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December 2, 2009

GM CEO Hastily Out Of Struggling Automaker

GM CEO HASTILY OUT OF STRUGGLING AUTOMAKER

GM CEO Fritz Henderson quickly exited as GM CEO yesterday, apparently being forced out by the government appointed Chairman and Board of Directors. The Board cited a lack of progress in GM’s transition towards a profitable company. GM government appointed chairman Ed Whitacre will become the interim CEO while the search for a permanent CEO is underway.

Would you want to be the CEO of a government run company?

What incentives do talented executives have to go to a government controlled company as opposed to a private or publicly traded company?

There are also signs that General Motors’ board and the federal government are at odds. The federal government told Fritz Henderson a few months ago that they needed to sell the Opel division. Later, the Board overruled this decision stating that Opel fit with GM’s global strategy.

Chairman Ed Whitacre who stated “I’m not a car guy” when the federal government appointed him as chairman, is now the chairman and interim CEO of the largest auto manufacturer in the US.

Does this bother anyone?

Because of the pay czar and pay restrictions, the CEO of General Motors cannot make more than $500,000 per year. Why would a talented CEO step away from (likely) a successful company to run GM?

Does this bother anyone?

GM lost $2 billion in the last quarter, while the government and Fritz Henderson said that GM was making good progress in its transition towards a better company. Yet, Henderson is now gone and quickly as the CEO.

Does this bother anyone?

I believe that the key to General Motors future is as follows (at least):

1) Any cars sold globally should NOT be produced in the US.

2) Any cars sold in the US should not be produced in the highest wage demand areas of the US (New England, Rust Belt, West Coast).

3) Productivity and labor force size should statistically equal or be greater than Toyota’s.

4) A company that is 0% owned by the unions and the federal government.

Many of these keys are counter to what the federal government and unions (which comprises a supermajority of the GM ownership) are pushing GM to do.

Does this bother anyone?

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