Why can’t GM find a CEO?
General Motors can’t find a CEO, complained Ed Whitacre, because of rules limiting pay to only ten or twenty times America’s median household income.
That’s an interesting statement. Lee Iacocca took $1 for his salary until Chrysler was back on its feet, and he was still a desirable executive. Many high-achievingn leaders of profitable corporations take far less than what GM can pay, even with the mandatory pay caps. Indeed, any executive who makes it past the loan payoffs will do quite handsomely, probably getting hundreds of millions of dollars in overall compensation.
Maybe that little phrase is the problem — “any executive who makes it past the loan payoffs.”
Ed Whitacre just trashed a highly respected man, Fritz Henderson, and at least one anonymous board member whined that Henderson was “a GM lifer.” There’s no indictment worse than being loyal to your employer, is there?
Henderson might have been at GM for a long, long time, but he was also unusual. He refused to take private jets because the cost difference, in his words, was the same as one person’s job for a year. When he was put in charge, he acted decisively. Too decisively, in fact, for Whitacre, who had different ideas about what to do.
Perhaps GM is having a hard time finding a CEO not because they cannot pay the obscene salaries demanded by today’s corporate aristocrats, but because their board is playing the “guess what I’m thinking” game, where if you guess wrong, you get snide comments made anonymously to the national media and a sudden dismissal. After all, even Business Week has consistently found there’s no relationship between CEO performance and pay.
Bank of America can’t find a CEO either due to salary limitations. The fact that BoA is a full on mess surely has something to do with that also, I’m sure.
Makes one wonder about what one has to do to qualify for being a CEO. Obviously running things well and leadership have little to do with it, since there are plenty of people making far less than $10 million a year doing both.
Wonder what Tom Gale’s doing these days?
I spotted some other rumors of Whitcare’s next successor on this French article http://www.usinenouvelle.com/article/general-motors-le-trouble-apres-la-demission.N122518 names mentionned: Mark Fields, Roger Penske, Carlos Ghosn http://news.caradisiac.com/A-la-recherche-du-patron-de-GM-les-medias-US-en-appellent-a-Carlos-Ghosn-779 why not putting Bob Lutz as CEO despite then he’s 78 years old?
As for the rules of limiting the CEO paycheck to only ten or twenty times America’s median household income. Maybe they should do the same for some rock stars, Hollywood stars and football/baseball players….I’m a bit sarcastic but we can wonder some questions about it…..
At least athletes and entertainers’ pay can sometimes be justified by their (usually) short careers…
This is a TOTAL side note:
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-Alex
Making comparison to what Iaccoca did as akin to what is happening at GM is somewhat smoke filled and murky. Iaccoca did take a $1.00 per year salary, but, he had stock options that would make your eyes bug out, getting something like 4 for 1 in times when Joe the Stock Buyer couldn’t buy but one share at the market price! Lee made millions for himself all through the manipulation, purchase, and sale of those very lucrative stocks. Of course, had he failed to turn the ship around, then the options would have been just paper, but as we know, he did well.
As for GM, well, their stuff is pricey for what it is. We are looking at a new 2010 car, and wanted a change. Perhaps a Chevrolet HHR, which is the PT Cruiser equalvilent. Equipped with decent options, (and not ALL the options) it rang up just a bit over $20,500, and we shopped through 4 local dealerships. Bit much for me. Then we stopped by two of the local Chrysler Dealers. The new 2010 Cruiser is titled as the “Classic.” Very well equipped, with more toys than I need, including fog lamps, power seat, all power interior, automatic trans, and so forth. Topped out price is stickered at $23,300, but with rebates, and local dealership assistance, and low interest rates, we are looking at $15,997. Yeup. Loaded. Quite a difference, with more stuff, and a known quality. And I have not yet negotiated with the boys behind the desk yet, either.
GM will continue to suffer from “corporateitis” until the board cleans up it’s act. BUT, you can also lay some fault at the very feet of our esteemed (?) Federal Government, which like government wants to do, is to be always looking over your shoulder, and telling you how to run things, like it is trying to do to succeed in running everybody’s life, from birth to after death. Universal health care being the ultimate pandemic, for certain, because it will knock your freedom right out the window. There is some very good solid reasons that it has never gotten passed since it was suggested by President Harry Truman in 1946. Yes, it has been around that long, some 63 years. As well, there are some very good reasons that GM won’t fulfill it’s Presidency any time soon, with anyone that is worth their salt, because the board is knotted up in their lack of direction, waiting for the Fed to give some indication of their pleasure. A huge mistake by GM.
Our rather hysterical friend over at “AUTOEXTREMIST” also howled about the “lifer” quality of Mr. Fritz Henderson, although, he really didn’t nail down why this sort of quality is so wrong. I would think that someone who had been around awhile, steeped in corporate culture, would be a difinative asset, rather than a problem. That Mr. Henderson tried to make a difference, and could have made a huge difference, since he was going “outiside the GM corporate think box” seemed surreal when he was fired. I cannot imagine how Mr. Whitacre must feel in full view of what happened to his friend, Mr. Henderson. And as such, it is no wonder he wants to get out of that climate. Anyone worth their salt, on the par of an Alan Mulhay at Ford, or a Bob Lutz at GM, or a Lee Iaccoca, would NEVER stick their toe in the pool that constitutes the current GM chair. After all, that is the quality that the GM board purports to seek, but offers no concrete evidence that these sort of people would be able to last in the murky smoke filled rooms, and swirling polluted waters.
Yeah, the term “lifer” seems to be perceived as negative….especially at a place like GM where people feel it means “business as usual” and that hasn’t been good enough lately. “Lifer” means stuck in a rut, unwilling to think outside of the box, no new ideas, stale. However, “lifer” also brings with it a historical perspective on what has worked and what hasn’t. As the saying goes, those who forget history are destined to repeat it. Without somebody that’s been around awhile and may understand how GM faltered in the first place, they may be headed down the same track they thought they got off of.
Tell Whitacre I’ll be glad to do the job for $400K-$500K a year if he can guarantee me at least 4 years at the helm. If he wants to throw in stock options along the way, I’ll take those too. I can gurantee him I’ll bring a fresh perspective to the company, because like him, I know pretty much know squat about running a car company.
I’d put Bob Sheaves in charge… but you all knew that. Not sure if he’d take the job.
The thing is, some “lifers” are the people you really want to keep, like Tom Gale and Steve Williams who were there during good and bad times — or for that matter Willem Weertman and Burton Bouwkamp and Pete Hagenbuch and… well, the list goes on.
Man and the press slams Chrysler?. At least they can keep people working there longer than a couple of months. GM seems like a train wreck. Whitacre wanted Henderson to turn around Gm in 100 days. 100 days!? Give the man a chance! Henderson was supposed to turn around a domestic auto company in the worst economy in recent memory, after a bankrupsy, and domectic perception. Whitacre why dont you try to do better!He is the reason no one wants to work there plain and simple. They have gone threw several people in the past month or so.I believe one lasted only 8 days! Why is Lutz still there?
I think part of the problem is that Whitacre and/or the Board had a power struggle and … won.
Yeah, Whitacre/the Board might have won the battle, but they may have lost the war by giving Fritz the boot.
Anybody that could do the job would be crazy to accept it. It’s one of those things where you get the blame if it fails and everyone else gets the credit if you succede.
In hindsight a lot of Iaccoca’s success had to do with the position of the economy when he took over, and I’m not sure the economy is in the same possition now as it was when Lee took over at Chrysler. Maybe they need to lift the pay cap, I’m certain the CEO position at GM is going to offer a career length that will be shorter than that of the average actor or rock star.