Ed Whitacre surprised the business world on Thursday when he announced that he would step down as GM’s CEO on September 1 and as Chairman of the Board at the end of the year. Whitacre became Chairman when GM emerged from bankruptcy protection in July 2009 and was officially named as its CEO in January 2010. GM has reported profits for each of the first two quarters of 2010. “It was my public duty to help return this company to greatness,” he remarked, “and I didn’t want to stay a day beyond that, really.”
Something isn’t right here. First, the notion that Whitacre took on the challenge as a public duty strikes me as disingenuous. Including stock options, Whitacre will earn about $9 million for 8 months service as CEO. If this was merely a public duty, then why is he accepting the stock option piece of his package totaling $7.3 million? Maybe he’ll refuse it as part of his “public duty.” Don’t hold your breath.
Second, the idea that Whitacre has “returned GM to greatness” is a massive overstatement as well, and it takes a lot of chutzpah to make such a claim in the first place. Even if these profits are the basis for optimism (and I’m not convinced), two quarters in the black just doesn’t constitute greatness.
The more I think about his decision and departing statement the more bizarre it sounds. It’s as if Whitacre’s team cut a 30-point half-time lead to 25 by the end of the third quarter, at which time he claimed victory and left the arena.
My guess is that Whitacre sees long term problems with GM, decided to appoint himself as company savior and bail out with a cool $9 million before things turn sour. GM’s fundamental problems haven’t been resolved and the company’s international operations aren’t doing well. Perhaps we’ll find out why he really stepped down in the coming months.
Lee Iacocca’s stint at Chrysler from 1979 to 1992 is one of the best known corporate turnarounds in American history. Iacocca secured a $1.2 billion government loan guarantee, a mere drop in the bucket when compared to the US government’s 61% ownership stake in GM. Iacocca wasn’t perfect, but when all is said and done, I doubt historians will mention these two names in the same sentence.
What world is this guy living in? GM hasn’t been a great company for years and it’s a long way from becoming one. IMHO, we can’t even talk about greatness until every dime is repaid to the government.
I agree-I don’t want GM to fail, but I want it to succeed on its own like all other companies.
Now GM is trying to raise $ through an IPO. Is anyone crazy enough to invest in this company?
There’s another way to look at this, Cary. GM carries a lot of risk for obvious reasons, but I’m convinced this company will “succeed” as long as Democrats are in office. They (Obama, in particular) have too much invested in the company to let it fail. We could see another CASH FOR CLUNKERS, revised CAFE standards or other regulations that favor GM, another stimulus package that includes massive purchases of new GM cars for government fleets, or pension bailouts to prop up the company and the unions. Regardless, the taxpayers will continue to keep this company afloat for the foreseeable future. Obama has a vested interested in GM’s profitability, so he’ll find indirect ways to help the company out whenever he can.