The Obama Administration appears to understand that when you are providing the financing for the restructuring of a financially-troubled company, you get to make certain demands. Apparently, one of the requirements will be the resignation of GM CEO Rick Wagoner according to press reports.
The rule of thumb in the workout of financially troubled companies is that the CEO, and usually the CFO, must be replaced sometime during the restructuring. A number of years ago I looked at approximately 200 cases we had worked on and in 85% of the matters both the CEO and the CFO were replaced. Wagoner has been the CEO since 2000. I am afraid it is time for him to go.
But, who replaces him? Should it be someone from inside GM? Should it be an auto industry executive? Should it be a crisis manager? What say you?
Cheers, Mike
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Can an insider get outside the culture and history to make and accept the vital decisions enabling survival? That is hard to imagine.
ReplyDeleteAlso, let's see what Wagoner's key-man contract gives him in departure pay out. His house may get TP'd by the rank and file.
Carla, you have made a couple of good points. First, an insider such as the COO is usually part of the problem and will usually not move as far, as quick and as deep as an outside. GM needs radical change now!
ReplyDeleteFurther, key man contracts are ridiculous. I don't know how they got so high but CEO's get entirely too much for failing.
Cheers, Mike
The challenge will be to find a leader who can successfully broker such compromise with the bondholders, UAW, GM, and the government.
ReplyDeleteI concur a radical restructuring is needed to alleviate GM from onerous debt, pension, and healthcare obligations.
Crisis managers deal with brokering compromises amongst various stakeholders all the time. If GM's board brought on a name brand crisis manager that may help.
ReplyDeleteMaybe the new CEO will make better use of GM's advisors Evercore. They have a few very experienced and capable people to deal with these issues.
Cheers, Mike