Will GM woes hit the executive suite?

With rumors of discontent among the General Motors Corp. brass swirling, George M.C. Fisher, head of GM's directors and corporate governance committee, said today that chairman and chief executive Rick Wagoner had the "unanimous" and "unified" support of the board.

Such a nothing to see here, move along kind of pronouncement was apparently necessary because just about the entire business world is beginning to wonder if and/or when Wagoner might get the ax in the face of crashing revenue, nonexistent profits, plummeting vehicle sales and nosediving stock.

Buried in the news of such hearty support was the fact that the 13-member board has hired independent counsel to help it evaluate the issue. Why would they do such a thing? Angry, litigious shareholders, worried about fiduciary responsibility, perhaps? Since Wagoner took over, GM shares have fallen a shocking 85%.

"He's pretty hard to defend right now because a lot of bad (stuff) has happened on his watch," said David Healy, analyst at Burnham Securities. Except he didn't use the word "stuff."

After all, it was angry stockholders who led to the ouster of Bob Nardelli from his job at Home Depot Inc. before he took the reins at Chrysler. In his six-year tenure at the Depot, Nardelli more than doubled earnings and revenue. Yet the stock only grew 6% on his watch, and shareholders, tired of his performance and boardroom antics, called for blood -- and got it. (Of course, Nardelli got compensated with a severance packaged valued at over $200 million.)

Here are some fun facts about the General:

• Wagoner took over as chief exec on June 1, 2000. GM share price that day: $69.81
• Wagoner became chairman on May 1, 2003. GM share price that day: $35.74
• Today, GM shares closed at $10.25, up from a five-decade low of $9.38 on July 14.
• Last month, GM canceled its 25 cents per share quarterly dividend.
• GM's market cap now stands at $5.8 billion, about $200 million below GameStop Corp., as pointed out here, and only slightly less than the phantom valuation for Facebook, which is "worth" $5 billion, according to latest estimates.
• Last week, GM reported a $15.5 billion loss in the second quarter, or $27.33 per share. 
• Revenue for the period was $38.2 billion, an 18% slide.
• GM lost $3.3 billion in the first quarter.
• GM hasn't had a profitable year since 2004, when it earned $2.8 billion. In the last three full years, it's lost around $50 billion total. 
• GM market share in the U.S. is down to 21.2% through July. In 2003, Wagoner's first year as chairman, it was 28%.
• Light trucks and SUVs made up 61% of the vehicles GM sold through the first seven months of this year. That category is off 23% for GM and 19% industrywide.

Since the last year GM made a profit, Wagoner has received $30.1 million in compensation, not including this year, but definitely including the $14.4 million he received in 2007. It can be assumed that in the event he were to leave GM, his golden parachute would be generous. Here are GM's bylaws on executive severance.

Of course, GM, and particularly Wagoner, are aware of the troubles the company faces. That's why it's already made upwards of $8 billion cuts, renegotiated its United Auto Workers contract and recently announced a new package of cuts, asset sales and borrowing aimed to increase the company's cash position by $15 billion by 2010. It's making forecasts based on $150 a barrel oil, shifting production towards cars and crossovers rather than trucks and is firing salaried workers in droves.

But the question is, with the kind of record GM has displayed over the past eight years, who, if anybody, will be held accountable?

One more list to consider -- GM's board of directors:

Percy N. Barnevik, retired chairman of pharmaceutical maker AstraZeneca PLC
Erskine B. Bowles, president of the University of North Carolina
John H. Bryan, retired chairman and CEO of Sara Lee Corp.
Armando M. Codina, president and CEO, Flagler Development Group
Erroll B. Davis, Jr., chancellor, University System of Georgia
George M.C. Fisher, retired chairman and CEO, Eastman Kodak Co.
Karen Katen, chairman Pfizer Foundation, retired vice chairman Pfizer Inc.
Kent Kresa, chairman emeritus, Northrop Grumman Corp.
Ellen J. Kullman, exec. VP, DuPont
Philip A. Laskawy, retired chairman and CEO, Ernst & Young
Kathryn V. Marinello, chairman and CEO, Ceridian Corp.
Eckard Pfeiffer, retired president and CEO, Compaq Computer Corp.

and, of course,

G. Richard Wagoner, chairman and CEO, GM

-- Ken Bensinger

Photo of GM chairman and CEO Rick Wagoner by General Motors

Comments

[Robert E. Cramer]

The first thing that I would like to say is that GM is still a great company and I believe it will be even greater again in the not to distant future, BUT it needs to get rid of the bean counter mentallity and lead in the market, not follow. GM needs the volt now!!! And not later. That is even if they have to replace the battery packs once all the patents run out so that the technolgy can be updated or maybe even not even go with a battery pack and go to a capacitor system like the one being designed in Canada, so I,ve heard. But the Board of directors also needs to wake up and quit bleeding the company dry at the top. The pain must be shared and should be done now. You all have a responsibility to America, The stock holders, employees and all who have sacrificed to help keep GM whole. All but the excutives that say that they deserve their pay. Just as we all do but they are the ones bleeding the company dry from way to generous pay packages, to sitting on their duffs to long and not having the forsight that real car people have. The board looks like to me they need to stay retired , retire and get real car people in their with down to earth pay packages. Being envolved with such a great company like General Motors is an honor at such a hightened level and has many many perks and no one in this country should be paid more then the PRESIDENT OF THE UNITED STATES. Come on America wake up. Their is no offense meet by this opinion but this is how I see it and Things need to change at the top. Thank You.

[carl crumpler]

GM never should of killed the 1980's-era Chevrolet Caprice sedan. That car was straight up bad! I think their is too much obsession with gas mileage and not enough interest in cars that can haul ass down the 5. The only way they are going to make any money is more big cars and big trucks, cause those are really profitable. These small cars ain't gonna do nobody any favors. Say goodbye to Wagoner who wants to make GM a seller of weakly-powered mini cars with no soul.

[H Tran]

It might be too late to get rid of R Wagoner. GM doesn't have the time to spare for a new chief.

[exstrah]

What's wrong with this picture? Nobody on the board of directors is a "car guy" None came from car companies. The Volt won't save them. It is not a "bread and butter" car. They will be lucky to break even on the Volt. The Camaro is five years too late to the game, and doesn't look like the show car.

I worked for GM Design twenty years ago. They were clueless then and haven't changed. They should scrub the whole board of directors before the close anymore plants. The factory workers always pay for the mistakes of management.

It's long overdue for a share holder revolt!!!