Wagoner gets vote of confidence from GM board

[nadepalma]

Source: http://www.autonews.com/apps/pbcs.dl.../60403014/1003

Wagoner gets vote of confidence from GM board
Jamie LaReau | Automotive News | 1:27 pm, April 3, 2006



DETROIT -- Amid the rumbles on Wall Street questioning the ability of General Motors Chairman and CEO Rick Wagoner to do the job, GM's board of directors made an unusual move Sunday. The board granted him a vote of confidence during a special board meeting.

But the board did not shout its support from a mountaintop. In fact, news of the vote was buried five paragraphs into a press release about GM's agreement to sell a controlling stake in its financing unit, General Motors Acceptance Corp., to a consortium led by Cerberus Capital Management.

"While there is still much work to be done, the GM Board has great confidence in Rick Wagoner, his management team and the plan they are implementing to restore the company to profitability," said George Fisher, presiding board director, in the statement.

Until recently, it appeared that Wagoner had the full backing of GM's board members. But new revelations in the past few weeks of GM's accounting irregularities, coupled with the other problems GM faces in North America, prompted buzz about Wagoner's ability.

Wall Street analysts and the media began questioning Wagoner's leadership after GM's poor sales performance last year. GM initially reported a net loss of $8.6 billion in 2005 and then added another $2 billion in red ink when it restated earnings.

The heat on Wagoner intensified when GM announced last month that it was delaying its 10K filing with the Securities and Exchange Commission because of accounting adjustments. Those included increasing the amount it would spend to help its largest supplier, Delphi Corp., emerge from bankruptcy. It also had underestimated its own restructuring costs.

GM also determined that it erroneously classified cash flows from the residential mortgage subsidiary of its financing arm, GMAC. That unit is called Residential Capital Corp., or ResCap.

Amid these restatements, documents filed with the SEC show that GM is the subject of at least six accounting investigations.

All this is especially embarrassing for Wagoner because he rose through GM's finance ranks and served as GM's CFO. Wagoner took over the CEO post in 2000. GM's board named him chairman in 2003.

Wagoner says that after speculation about his job security last week, "that vote seemed appropriate."

"I appreciate the support," he says.

The board did not attach any goals or timetables for Wagoner to meet with their vote of confidence, he says.

"People are not checking numbers every month," Wagoner says. "That's not how we work."

Wagoner declined to speculate on whether he would have resigned had the board not given him a thumbs-up.

You may e-mail Jamie LaReau at jlareau@crain.com

[JVal14]

I'm sure this is less of a vote of confidence than a lack of adequate replacement. I can't imagine anyone who would want Wagoner's problems, especially if hey're already well-payed. I wonder if it was York who who started stirring this pot to begin with...maybe he was hoping to get installed as CEO by starting a mutiny.

[MrMax]

Definitely a curious situation. I would definitely agree that this isn't just some affectionate endorsement of Wagoner, but a public display to Wallstreet that GM management is together, and working hard to turn things around. They don't need to give the media any more negatives to write about right now. The Delphi situation is enough.

[cfch3399]

They realize that a different vote would further add fire to the anti-GM hysteria at wall street. However, I'm sure that unless something changes during the next two years, he won't be around in 2008. Unless, off course, the board is just as incompetent as he is, which they have proven to be. Wagoner thinks that he is needed at this moment, I wish someone would let him know in no uncertain terms that he, too, is expendable.

[nadepalma]

Originally Posted by JVal14

I'm sure this is less of a vote of confidence than a lack of adequate replacement. I can't imagine anyone who would want Wagoner's problems, especially if hey're already well-payed. I wonder if it was York who who started stirring this pot to begin with...maybe he was hoping to get installed as CEO by starting a mutiny.

I never would have considered York for the CEO spot, but like you say, who would want Wagoner's problems?

Honestly, can you imagine that there is a sane person out there that would want Rick's job? He has more problems and issues leading GM than most of the larger automakers combined. While I would agree that there is plenty that he has done wrong or mismanaged, I don't think that he's been a failure overall. I think that he must accelerate this turn around, neverthless, and focus on the product. We're seeing that -- but just as with any titanic organization, it takes time to filter down.

Besides which, from what I've understood, Rick is kind of a GM "wonder boy" in that he was fast tracked to the top and was a star in the organization. Firing him would be huge hit to morale (though probably placate the Wall Street investors out there) but who could they get to replace him that knows the organizaiton as well as he does and knows where cuts need to be made? Even if they do find someone, you almost have to wonder how effective they will be to navigate GM's enormous bureaucracy while showing results. Hell, even if they did find the guy, its not as if he can right the ship tomorrow -- just as with Rick, it will take time.

[desmo9]

More lumps to be taken. If a new guy's coming in, wait until all the near-term hurdles have been crossed. Otherwise, you'll be replacing Rick and his replacement.

[steverino]

Rick, watch out. How many times do you see a baseball owner give his manager a vote of confidence and then fire the guy next week.

In the sports world the "vote of confidence" is the kiss of death.

[zaxxis]

Originally Posted by JVal14

I'm sure this is less of a vote of confidence than a lack of adequate replacement. I can't imagine anyone who would want Wagoner's problems, especially if hey're already well-payed.

It depends, I'm sure there are plenty of people that would take Wagoner's job. Does the person need to be highly qualified? There is no sortage of people who want to stroke their ego and pulling GM out a turnaround would allow any CEO to write any meal ticket they want.

-Z

[JVal14]

Hell, even if they did find the guy, its not as if he can right the ship tomorrow -- just as with Rick, it will take time.

That's the rub right there. So many people want Wagoner's head because the company hasn't been fixed yet. But quick fixes is what got GM into this mess to begin with. If GM survives, it will be partly because of Wagoner, and he probably wouldn't get credit for another 5-10 years. It took GM 50 years to get all the problems that they have. Anyone who thinks those problems can be corrected in two quarters is crazy.

[JVal14]

Originally Posted by zaxxis

It depends, I'm sure there are plenty of people that would take Wagoner's job. Does the person need to be highly qualified? There is no sortage of people who want to stroke their ego and pulling GM out a turnaround would allow any CEO to write any meal ticket they want.

-Z

But the odds of a CEO - especially a new one - making GM a success again are slim. And whoever is at the helm if/when they declare BK will be crucified as the person who wrecked one of teh biggest corps in the world. Sure the pay is great and you have a chance to be a hero; but if you already have a good paying job, why risk the rest of your career on a long shot?

[Dano702]

Sad state of affairs at the General.

Just imagine how much the stock would be worth without the UAW .

[ChevroletRevived]

Well, this is good. This lets everybody know that Wagoner is with GM for the long haul. Hopefully, in time, he can turn things around. Nobody in their right mind would want his job. Nobody knows more about GM then Wagoner.

[2648562]

I wanna like the guy, I really do. But then I remember he's the same guy that got GM into this mess. I know some of you are going to say otherwise, and you're right too. But you've got to admit he sure waited until the last minute to do anything to help GM. I'm really not sure he's helping anyhow, but that's another story. Anyhow, just like the guy running the country into the ground, I wish him the best and hope he leaves his post with a 100% approval rating.

[ChevroletRevived]

And might I ask who is the guy that is ''running the country into the ground''?

[2648562]

Originally Posted by ChevroletRevived

And might I ask who is the guy that is ''running the country into the ground''?

I knew if anyone would it would be you. But we probably shouldn't go there.