When G. Richard Wagoner Jr., General Motors’ embattled chairman and chief executive officer, faces his board this Friday to discuss the move by Renault-Nissan chief executive officer Carlos Ghosn to enlist GM as a global partner, he will probably be thinking about whether it’s his last regularly scheduled GM board meeting.
For three months or more Wagoner, despite recently forcing the board to give him a public endorsement, has been steadily losing their support. Going back to March, certain board members — George M.C. Fisher, Erskine B. Bowles, and John Bryan — have talked to the media on the record without consulting GM officialdom. Despite the “vote of confidence” Mr. Wagoner got, they did call a special board meeting last spring while the CEO was traveling in
And now, the anatomy of the Renault-Nissan offer smacks of a gesture on the part of board member Jerome York to embarrass and marginalize Mr. Wagoner. Remarkably,
If Carlos Ghosn wanted an alliance with GM, the way to go about it would be to call for a meeting with Rick Wagoner to discuss whether the GM chairman and CEO would favor a deal, and if he would support the move in a meeting with his board. Instead, Ghosn responded to an overture from
Wagoner, by contrast, set a five-percent net margin goal when he took over as CEO in 2000. At that level, GM would have earned $10 billion last year. Instead, it lost about $10 billion.
By enlisting Ghosn to stipulate that he will only buy into GM — he is offering to buy 20 percent at a cost of $3 billion — if he has support of management, York has forced Wagoner into a position of having to defend a position that he is better equipped to turn GM around than Ghosn, which is a stretch of the imagination few would exercise. It is, as the saying goes, “the old squeeze play.”
Add this to the lack of respect for Wagoner. Ghosn, prodded by
Twenty percent of General Motors would not give Carlos Ghosn control of GM management. But if the board supports the move and Wagoner doesn’t (how will the board justify not supporting it?), the likely outcome is that Wagoner will resign. Who takes over for Wagoner at that point is anyone’s guess. Chief financial officer Fritz Henderson is most often mentioned as a Wagoner replacement, but it remains to be seen if
Another movement to look for should Wagoner step down this summer is Bob Lutz’s ascension to a bigger role. Both York and Ghosn admire Lutz’s product development savvy. It’s doubtful that Lutz would be made CEO, but absent Henderson or a compelling outsider, York and Ghosn could muster support for Lutz as CEO on an interim basis. At the very least, Lutz could find himself a GM board member in the shakeout.
With York as chairman and Ghosn on the board of directors, with their agendas of rapid reform, the job of CEO becomes more attractive to some candidates that have been bandied about: Textron CEO Lewis B. Campbell or Delphi CEO Robert “Steve” Miller.
The criticism of Wagoner is that he is too much a prisoner of GM tradition and the institution. Yes, he shuttered the Oldsmobile brand after former CEO Jack Smith, former chairman John Smale and former GM North America chief Ron Zarrella tortured the brand into oblivion with one lame product plan and marketing effort after another. But under York and an outsider CEO, it is likely that the Buick and Saab brands would be shuttered as well, and HUMMER possibly sold off (though Ghosn may convince
Yes, when Wagoner calls this Friday’s board meeting to order and looks around the room at the faces, he will likely be wondering how much longer he wants to try and run GM. When board support starts to crack, it’s tough to close the breaks. Making matters worse is when cracks form in a board that was handpicked by the chairman himself. Boards are a bit more anxious these days to not appear as a rubber stamp for the chairman. And that will make for an uncomfortable summer for Rick Wagoner — if he lasts that long.