General Motors CEO Edward E. Whitacre Jr. to step down
Edward E. Whitacre Jr., the chief executive who led the turnaround of General Motors Co, is stepping down at the end of the month. The surprise announcement came as the nation’s largest automaker reported $1.3 billion in quarterly profit.
The earnings were a stark contrast to the staggering $12.9-billion loss the company recorded in the second quarter last year, as it was emerging from bankruptcy protection after receiving more than $52 billion in federal bailout funds.
Whitacre, a former AT&T executive who came out of retirement to run GM, will be leaving on a high note. Just a year ago, the nation’s iconic automaker was on the verge of collapse, weighed down by huge debt and sagging sales.
“Ed Whitacre was exactly what this company needed, at exactly the right time,” said Pat Russo, lead director on the GM board. “He simplified the organization, reshaped the company’s vision, put the right people in place and brought renewed energy and optimism to GM.”
Whitacre, 68, will be succeeded by Daniel F. Akerson, a GM board member and a top executive at Carlyle Group, the buyout giant that owns Dunkin’ Donuts and Hertz rental cars, among others. Like Whitacre, the 61-year-old Minnesota native had no auto industry experience before joining GM’s board a little more than a year ago.
“There are remarkable opportunities ahead for the new GM, and I am honored to lead the company through this next chapter,” Akerson said.
Akerson will be inheriting a company that appears to be on an upswing despite questions about the slow pace of the nation’s economic recovery.
On Thursday, GM said it had its second straight earnings gain and its highest quarterly profit in six years after a string of 10 consecutive money-losing quarters. Sales rose to $33.2 billion from $23 billion a year ago, bolstered by the improving economy and a massive restructuring that allowed the automaker to shed vehicle brands, factories and workers.
Analysts said the results were a positive step toward an initial public stock offering that would help the federal government recoup some of its investment in the automaker. The public offering is expected later this year or early in 2011.
“It was my plan all along, and the board was aware, that it was my public duty to restore this company to greatness and I didn’t want to stay a day beyond that,” Whitacre said during a teleconference with reporters. “There is a good foundation in place, and I see no reason to delay.”
Some viewed the announcement as a proactive step by the automaker to reassure Wall Street before the crucial stock offering that it had a succession plan in place.
“This IPO is pending and one obvious question is who takes over for Whitacre. GM wanted to take that right off the table by dealing with the issue now,” said Jeremy Anwyl, chief executive of auto industry information company Edmunds.com.
Such an offering would repay part of the $52 billion the federal government has poured into the company to keep it afloat. The bailout made the government GM’s biggest shareholder, with 61% of the automaker’s stock. GM exited from a bankruptcy reorganization in July 2009.
Whitacre has said that the company is eager to float the stock offering and shed the “Government Motors” label that comes with the financial support. GM could file the documents required for such an offering as early as Friday.
Whitacre initially took GM’s helm in December as an interim chief executive after the board pushed out longtime insider Fritz Henderson, who himself had been on the job for only eight months. Henderson had been named to GM’s top job in March after his predecessor, Rick Wagoner, was ousted by President Obama’s auto task force.
Upon taking the post last year, Whitacre acknowledged that he knew almost nothing about cars, but the former telecommunications executive dived into restructuring the business, changing much of its top management.
Whitacre is known for using public elevators, attending meetings uninvited and eating in the company cafeteria.
Whitacre acted as a “headmaster who came in and cleaned up the classroom and stepped aside for the next teacher,” said James Bell, an analyst with auto pricing information company Kelley Blue Book.
Still, how much credit Whitacre deserves for GM’s turnaround will be up for debate.
Henderson should be credited with GM’s quick exit from bankruptcy, while recently retired Vice Chairman Robert Lutz was behind a “renaissance” of new vehicles that are driving the automaker’s current gains in sales, Anwyl said.
“What Whitacre did bring was credibility — he was not tainted by the old GM — and that was really key in the CEO position,” Anwyl said.
Like Whitacre, Akerson also has held a succession of positions in the telecom industry, where he was known for turning around struggling companies. The former naval officer was a top executive at MCI Communications Corp. from 1983 to 1993 and was CEO of Nextel Communications Inc. and General Instrument Corp.
“I get a lot of 30-year-old analysts on Wall Street who just got out of business school who want to debate with me,” Akerson said in 2001 while running XO Communications Inc. “They want to tell me how to spend money…. I’ve run a couple of companies in my life, and I know what we need to do.”
jerry.hirsch@latimes.com
Times staff writer Walter Hamilton contributed to this report.
