GM’s tough board ‘ousts’ CEO to push revamp

MICHIGAN/LOS ANGELES: General Motors 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 on Tuesday 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 US market-share losses. Chairman Ed Whitacre took over on an interim basis, giving the former AT&T 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 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 on Tuesday 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.

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 November 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 US 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 Wednesday’s meeting, the people said.

GM management learned of the board’s decision about 2 pm Detroit time on Tuesday, 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 August 3 meeting that Henderson had a 40-60% 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 Tuesday’s meeting, said one person familiar with the session.