Dec. 2 (Bloomberg) -- General Motors Co. Chief Executive Officer Fritz Henderson resigned after eight months on the job as directors concluded he hadn’t done enough to fix GM’s finances and culture, people familiar with the matter said.
The board gave Henderson, 51, a 100-day review yesterday on his performance since GM’s July 10 bankruptcy exit, said the people, who asked not to be identified because the discussions were private. Several directors also expressed the view that an outsider was needed to run the automaker, one person said.
Henderson’s exit caps a tenure that included aborted deals to sell the Saturn, Saab and Opel units, a struggle to replace top managers such as Chief Financial Officer Ray Young, and U.S. market-share losses. Chairman Ed Whitacre took over on an interim basis, giving the former AT&T Inc. CEO and chairman a chance to help pick a successor and put his stamp on GM.
“The next person will be the board’s person,” said Michael Robinet, an analyst at CSM Worldwide Inc. in Northville, Michigan. “They will have interviewed and vetted the person.”
The search for a new CEO “begins immediately,” Whitacre said in a statement released by GM after the board met yesterday in Detroit, where the automaker is based.
GM hadn’t started recruiting before that session, said one person briefed on the effort. The pace and scope of Henderson’s progress fell short of what the board wanted, said the people, who wouldn’t provide details. While the new directors have been on the job about 145 days since GM left Chapter 11, they referred to the evaluation as a 100-day review, the people said.
Tom Wilkinson, a GM spokesman, declined to comment beyond the statement.
‘Accelerate Our Progress’
Whitacre, 68, was selected by the Treasury’s auto task force to lead the revamped board when GM left Chapter 11 with the government as the majority owner. He told reporters yesterday that “we need to accelerate our progress.”
The comment echoed Whitacre’s remark in a Nov. 10 interview in which he said he was urging executives to “hurry” while saying the board was “fully behind Fritz.” Henderson, a 25- year GM employee, became CEO in March when the task force asked Rick Wagoner to leave as part of a U.S. rescue.
Until midday, there was no sign at GM’s board meeting that Henderson’s job was in jeopardy, two people familiar with the session said. Directors approved GM’s 2010 business plan and a blueprint for restructuring the Opel unit in Europe before the talk turned to Henderson’s evaluation, the people said. Henderson was at today’s meeting, the people said.
Conference Call
GM management learned of the board’s decision about 2 p.m. Detroit time yesterday, when the eight-member executive committee and other senior leaders were summoned to a conference call on which Whitacre delivered the news of Henderson’s resignation, people familiar with the discussion said.
Managers asked Whitacre whether he wanted their resignations, and he told them he had faith in their abilities and wanted them to stay, two people with knowledge of the conference call said.
Henderson’s departure stunned executives, said one person close to the board’s discussion. GM had exceeded the financial targets in the viability plan crafted by management and the Treasury’s auto task force, the person said.
The Treasury’s force told directors at an Aug. 3 meeting that Henderson had a 40 percent to 60 percent chance of fixing GM, a person familiar with the briefing said at the time. Task force advisers also urged GM to bring in outsiders to help shake up a hide-bound culture, that person said.
The value of having an outsider as CEO resurfaced at yesterday’s meeting, said one person familiar with the session.
Bankruptcy, Exit
Henderson’s service as CEO was the shortest at GM since at least 1912, according to records compiled by trade publication Automotive News. His previous posts at GM included working as CFO and chief operating officer under Wagoner.
As CEO, he presided over GM’s slide into bankruptcy on June 1 and emergence 40 days later backed by $50 billion in federal aid.
Last month, Henderson surprised analysts as GM reported generating $3.3 billion in cash in the third quarter and said repayments would start early on $6.7 billion in federal loans. At the same time, he said GM lost $1.15 billion and would consume cash again this quarter.
Whitacre also said last month he favored an initial public offering later than that originally discussed by Henderson.
Board Disagreements
“Whether it was the sale of Opel or the timing of a GM IPO, it had become clear in recent months that the board and the CEO were not always on the same page,” Himanshu Patel, a JPMorgan Chase & Co. analyst in New York, wrote in a report late yesterday.
The disagreements were “useful in some cases, but probably unhealthy for any company longer term,” Patel wrote.
Whitacre told reporters in Detroit that Henderson “has done a remarkable job leading the company through a time of challenge, and momentum has been building over the past several months, but we all agreed changes needed to be made.” He didn’t take questions or elaborate on the executive shake-up.
With his new duties, Whitacre said he will be working at GM’s Renaissance Center headquarters in Detroit on a “daily basis.”
The automaker notified U.S. officials about Whitacre’s ascent and Henderson’s departure, said Chris Preuss, a GM spokesman. GM’s board, not the Obama administration, made yesterday’s personnel decisions, a U.S. official said.
Pressure on Henderson
Henderson was under pressure to return GM to profit after more than $88 billion in losses since the end of 2004. GM’s 2009 U.S. sales through November tumbled 32 percent, and its market share was 19.8 percent, down from 22 percent a year earlier.
GM is cutting its U.S. brands from eight to four, keeping the Chevrolet, Cadillac, Buick and GMC brands. In addition to ending its affiliation with Saab, GM is winding down Saturn and Pontiac and has a deal to sell Hummer to Chengdu, China-based Sichuan Tengzhong Heavy Industrial Machinery Co.
Talks to sell Trollhaettan, Sweden-based Saab to investors led by Koenigsegg Group AB collapsed last week when Koenigsegg withdrew its bid. Parts of Saab may still be sold to Beijing Automotive Industry Holding Co., two people familiar with the talks said this week. Spyker Cars NV, Merbanco Inc. and Renco Group Inc. have also made approaches about the Swedish carmaker, people familiar with the matter have said.
A search is also under way for a new CFO to replace Young, who will be reassigned as a lieutenant to Nick Reilly, the chief of GM’s international operations, people familiar with that search have said.
Henderson’s successor will face challenges including the restructuring of Opel, the quest for profit in North America and the management of the remaining four U.S. brands, CSM’s Robinet said.
“There are still a lot of balls in the air,” he said.
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