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Chrysler names Nardelli as CEO
The former chief executive of Home Depot Inc., who abruptly quit in January amid controversy over his lavish compensation, has been named to head Chrysler Group by the new owners of the No. 3 U.S. automaker.
Chrysler confirmed late Sunday that Robert Nardelli would replace Tom LaSorda as head of Chrysler and would also assume the title of chairman. LaSorda will become president and vice chairman, effective immediately.
In a twist, the executive will be paid only if he succeeds in fixing the struggling automaker, a person familiar with the situation said. "He doesn't earn a dime until he turns Chrysler around."
The executive shake-up comes only two days after private equity firm Cerberus Capital Management completed its $7.4-billion acquisition of the automaker from DaimlerChysler of Germany.
"I am very excited to be part of a team focused on reestablishing Chrysler as a stand-alone industry leader, with a renewed focus on meeting the needs of customers," Nardelli, 59, said in a statement.
"Chrysler has many deeply talented and dedicated people, and I am confident that together we can continue the momentum of Chrysler's recovery and return this great American icon to a path for global growth and competitiveness."
Nardelli's resignation after seven years leading the nation's largest home improvement chain was cheered by executive compensation watchdogs, who were critical of Nardelli's outsize pay while his company's stock languished. There was additional criticism of his $210-million severance package.
Cerberus was drawn to Nardelli because of his track record at manufacturing companies such as General Electric and his role in dramatically increasing the size of Home Depot and spearheading its expansion into Mexico and China.
Although Nardelli has extensive experience operating in a consumer-driven environment, his direct experience in the automotive industry appears to be minimal. Last year, Ford Motor Co. also turned to an industry outsider, hiring Alan Mulally from aerospace giant Boeing Co. to run the company.
Cerberus said it asked LaSorda to remain at Chrysler. The new owners are hoping the combination of Nardelli's operational background and LaSorda's deep experience in Detroit will prove a winning combination, said a source familiar with Cerberus' thinking.
Chrysler, based in Auburn Hills, Mich., lost $618 million in 2006. All three U.S. automakers have been losing market share to Asian rivals as American buyers turned away from the gas-hungry pickup trucks and SUVs that had been the bread and butter of the U.S. companies.
Chrysler is in the midst of a wrenching restructuring plan launched by LaSorda that includes shedding 13,000 jobs in the U.S. and Canada by 2009.
The new CEO is taking over at a particularly delicate time for U.S. automakers.
Last month they started talks with the United Auto Workers on a new four-year contract. The companies, saddled with heavy employee healthcare costs, are expected to seek significant concessions from the union. The UAW was apprised of Nardelli's hiring before the news was made public, according to a source.
The carmakers are also facing a steep decline in sales as the U.S. housing market founders and the economy slows. Last week, the Big Three said their combined sales fell 19% in July compared with the year before as foreign nameplates captured more than half of the U.S. vehicle market for the first time. Chrysler, however, suffered the smallest decline -- 8.4%.
In a statement, LaSorda welcomed Nardelli.
"We are excited to welcome Bob to the Chrysler family," he said. "Bob has a proven track record of success and an unwavering focus on performance and brings deep operational experience and a broad industry background to Chrysler.
"His background in operations will provide valuable knowledge as we continue Chrysler's turnaround."
Just last week, Cerberus Chairman John W. Snow, a former U.S. Treasury secretary, had said the firm planned to keep Chrysler's management team in place. Reached late Sunday, Snow declined to comment.