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The “hands off” Presidential Task Force on Automobiles has chosen Ed Whitacre Jr., formerly of Southwestern Bell, to become New GM’s New Chairman of the Board. The appointment is still go, despite Whitacre’s admission that “I know nothing about cars.” Anyone fearing for Whitacre’s ongoing ignorance of all things automotive can breathe a sigh of relief today, as the BOD jeffe told the San Antonio Business Journal that he has no intention of re-locating to Motown to oversee the men and women spending tens of billions of U.S. tax dollars to “reinvent” GM. “This is my city,” Whitacre told the local press. “I’m not moving.”
55 Comments on “GM’s New BOD Chairman: I’m Not Leaving San Antonio...”
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So what? “No knowledge” can be phoned in.
Well we are talking about Detroit.
Can’t say I blame him.
I moved from metro Detroit to TX. can’t say I blame him one bit.
MI has become a horrible mix of all that’s wrong with Midwest US with all that’s wrong about Ontario.
“Don’t know nuthin’.”
“Ain’t gonna be there.”
We’ve gotten to the point where they don’t even bother to pretend.
They think they can get away with it.
They’re right.
I remember a few years ago when it was easy to get a high-paying job in a field I knew nothing about while refusing to relocate, but damn this economy…
So he knows nothing about cars? The people who were considered to know a lot about cars where the ones that helped drive GM into the proverbial ditch.
Hmmm…
Detroit… San Antonio…
Detroit… San Antonio…
Detroit… San Antonio…
Sounds like pretty much a no-brainer to me!
The guy can buy a nice condo near Wayne State (near the RenCen) for the price of a dinner on San Antonio’s Riverwalk, there’s no excuse to not have some form of residence in Detroit.
Jeez, at least pretend to try to change things. Make a show about it. That’s what (people associated with) politicians are supposed to do, right?
He’s a non-executive chairman right? He just presides of a few board meetings – it’s not really a 9-5 type job, is it?
He is being appointed to be the Chairman of the Board. That is not an executive job, and he will not be responsible for the day to day operations. His job will be to run board of directors meetings, and to conduct oversight on management.
Robert Schwartz
There is no substitute for on-the-ground experience. None. The only possible excuse for NOT moving to Motown: he’ll be too busy traveling around the country checking GM’s ops to stay in one spot.
If Whitacre relies on GM’s Directors and or its executives for his information about what’s happening with GM, he’ll be just as isolated and ineffective as GM’s last Chairman of the Board, if not more so.
Robert Fargo,
But he’s a non-executive chairman. “Traveling around the country checking GM’s ops” is the job of the CEO.
“Take him to De-troit!”
JMO: Thank you.
RF: A non-executive Chairman really does not have to be on the scene. He needs to read reports from the top officers of the corporation and he needs to conduct dialog with the CEO, but those things can be done from the comfort of his living room.
It seems to me that decades of a “lay-down” BODs unable or unwilling to ask tough questions of management is one of the top reasons we got to this point.
The job of Chairman is to ensure that the company management is taking care of its responsibilities to shareholders. “Reading reports” and sitting through powerpoint presentations from upper management who are trying to cover their rear-ends seems like a piss-poor way to accomplish this. In any case, I’m sure the PTFOA will authorize him to use the corporate jet whenever he wants to run up to Detroit for board meetings… perhaps he can use it to visit some manufacturing facilities and visit a few of the bigger dealers to get a feel for what’s really going on as well?
He can probably buy a nice lake-front home in Bloomfield Hills these days for a song. Heck, I’m sure there are even a few empty floors in the RenCen they can fix up with a cott and a couple of fluffers for him when he’s in town.
His strength is running a business that has constant government oversight and regulation.
He was a whiz at using that regulation to crush competitors.
He stuffed his pockets well with AT&T. Shareholders? Didn’t do quite as well as “Aw Shucks Ed”.
stevelovescars,
The primary responsibility of the board and its chairman is to determine the metrics by which the CEO and others will be judged. Is it going to be market share, profitability, warranty claims, etc?
The key for the board is to ensure those metrics can’t be gamed. For example, executive bonuses could be tied to the cost of warranty claims. But, that system could be gamed, as they could just start denying more claims. The board might insist that incentives be based on the total number of claims submitted (regardless if they were eventually paid) as a percentage of cars currently under warranty.
Similarly the board could determine that bonuses would be paid for each point of market share increase. Executives might then try and pawn as many cars as possible off on fleet buyers. If they were smart the board could preemptively insist that bonuses only be paid for market share calculated based on purchases made by retail buyers.
These are the things that a board and chairman should be primarily working on.
Robert Schwartz
I get it.
But wouldn’t you feel more comfortable with a GM Chairman of the Board who A) knew something about the car biz (or at least, Mulally-like, understood manufacturing) B) didn’t take anything he was told by GM’s Directors or executives at face value and C) had independent, on-the-ground experience with which to judge the veracity of what he’s being told?
Robert Farago,
“knew something about the car biz (or at least, Mulally-like, understood manufacturing)”
You really need someone who knows about incentivizing executives using metrics they can’t game. How much manufacturing knowledge you’d need to do that I don’t know.
A non-executive Chairman really does not have to be on the scene. He needs to read reports from the top officers of the corporation and he needs to conduct dialog with the CEO, but those things can be done from the comfort of his living room.
Yeah, but what’s he driving? Any bets it’s NOT a Ford product, and it’s not over a year old?
Juno:
Excellent points! Only . . .
How is Whitacre supposed to know that stuff if he, uh, doesn’t know that stuff?
I still don’t understand this choice of Chairman. If you have a stong operations guy as President who can manage a turnaround, then someone like Whitacre is fine to oversee the big picture from the comfort of his living room thousands of miles away. But GM doesn’t have this. Instead, it has Fritz Henderson and multiple levels below him who are products of an entrenched and famously dysfunctional culture, and who got the company where it is today.
This appointment only makes sense if the task force is ready to spring a genuine experienced operations guy on the company who will come in and clean house when New GM completes its purchase of assets through the bankruptcy court.
Can’t remember who linked the Fortune magazine article from 1988 with their interview with Ross Perot, but sadly, GM needs that type of handholding and rear end kicking more than anything else.
While the BoD Chairman doesn’t get involved at that level, considering the circumstances, I’m disappointed that the PTFoA didn’t see fit to hire someone to do that job… like maybe firing Fritz or making him the night janitor and hiring a Ross Perot type to be that communication liaison.
Yet another opportunity squandered.
This guy didn’t get to where he was by simply taking people’s word for things. There’s nothing on his resume to suggest he’s that stupid or naive to take what some entrenched GM toadie says at face value.
Again, I don’t know if this guy is really any good or not but once again, the “damned if they do/damned if they don’t” attitude here toward anything GM or the gubmint is rearing its head again. This guy, if nothing else, knows his way both around corporate board rooms and Capitol Hill. That’s probably one reason why he was put in the position.
JMO,
Legally, a BOD is charged with overseeing the company’s fiduciary responsibility to shareholders, executive pay is a part of this, no doubt.
I think a lot of issues that I and a lot of people have with corporate boards of directors isn’t just aimed at the car manufacturers. Accurately or not, there is a perception that BOD positions are handed out as favors to people have relationships with each other. The CEO of one company, for example, serving on the board of the investment bank that took her company public. And, because of these interelationships and back scratching, these board members aren’t as tough on one another as they need be (CEOs on the boards of each-other’s companies, for example). Basically, that executives at that level behave like members of a small club (it is a small club, thus one doesn’t want to act like an unwelcome guest) and act as if they are immune from the corporate rules and conflict of interest policies that they themselves often put in writing.
Combine this with crazy severance packages for top executives, signing bonuses that would create jobs for hundreds of now layed-off employees, and perquisites that make Gordon Gecko look Amish, and, well, you get my point.
Anyone know what he currently drives? Hope its not a GM but a foreign competitor too much group think in Detroit. He needs to be able to ask honest questions and ask management to be accountable. If he doesn’t plan on moving to Detroit good. Again too much group think.
Should have hired Ghosn of Renault.
This goes to show it’s not what you know, but WHO you know. This chap must have put in a favor or two, and has henceforth been given the equivalent of a cushy desk job that literally shits money. You can see it in his attitude.
GM is now officially a government-backed graft machine for high-level execs and politicians.
And people were worried about GM being treated with favored status that would harm Ford…
No worries.. The only worse management than GM is the US Government.
Ford stock looks better every day….
Accurately or not, there is a perception that BOD positions are handed out as favors to people have relationships with each other.
Exactly, that’s why I hope we move towards separating the roles of Chairman and CEO it’s just unworkable when they’re the same person.
Combine this with crazy severance packages for top executives, signing bonuses that would create jobs for hundreds of now laid-off employees, and perquisites that make Gordon Gecko look Amish, and, well, you get my point.
If there is someone out there who has a proven track record of turning around large, floundering, industrial companies – Carlos Ghosn for example – they are going to have to pay handsomely for him. Only an idiot would leave the comfortable success they enjoy at their current job to take over at GM without guaranteeing all their current pay, perks, stock options, retirement benefits, severance package, etc. Unless of course they were granted a massive equity stake. But then, would you work for an equity stake in GM?
@Sherman Lin,
A bio from a couple of years ago reported that he drove a Cadillac Sedan deville.
Unfortunately for taxpayers, Mr. Whitacre’s expertise is perhaps ideally suited for Government Motors.
Whitacre executed a brilliant lobbying campaign to put the old AT&T back together again, throwing huge sums at state and federal elected officials for favorable legislation. The contrast between GM and Ford’s leadership could not be more stark…..
A bit of recent history here:
http://www.zmetro.com/cgi-bin/mt/mt-search.cgi?IncludeBlogs=1&search=whitacre
http://www.zmetro.com/archives/cat_broadband.php
http://isen.com/blog/2006/04/telco-lies-whitepaper.html
$7Billion in Telco Subsidies for?
http://www.zmetro.com/archives/005828.php
Whitacre mentioned something about them big Tundra trucks they build in San Antone. They’re Chevys ain’t they?
I hope he’s the contrarian, ass kicking Texan type, because that’s what is needed in his role at GM right now.
Re: setting exec bonuses, there should be only two simple criteria: % of annual profit and a bonus on every 100 million repaid to the governments.
Also, like Ford (there is that Ford again) bonuses should be available to all employees as profit sharing, not just execs. Gets everyone focused on the primary objective – profit.
Whitacre doesn’t know anything about the telecom business, let alone cars. He’s just a money man, and Google “ain’t gonna use his pipes for free”, even though they aren’t doing that.
Detroit is just a short commute from San Antonio in a publicly funded/private jet!
# Sajeev Mehta :
June 24th, 2009 at 4:39 pm
The guy can buy a nice condo near Wayne State (near the RenCen) for the price of a dinner on San Antonio’s Riverwalk, there’s no excuse to not have some form of residence in Detroit.
Jeez, at least pretend to try to change things. Make a show about it. That’s what (people associated with) politicians are supposed to do, right?
Texas has no state income tax. How much would it cost Ed Whitacre Jr. to live and work in Detroit vs. literally just phoning it in?
booster,
there should be only two simple criteria: % of annual profit and a bonus on every 100 million repaid to the governments.
How would that encourage them to contribute to the long term viability of the businesses? It may be best to hold off on profits and paying off the gov’t while delivering the best car for the money. After public perceptions have improved, then they can raise prices and profits and pay back the government.
Why would you want to encourage them to bleed cash early-on thus preventing them form every paying back the total?
I can’t blame him one bit for not moving to Michigan, even though San Antonio is ranked about 4th on my Texas cities list. Any Texas city is better than living in Michigan. However, he does need to visit regularly.
Boards of Directors meet only several times per year, and the members usually have quite a bit going on in their professional lives. They don’t work at the company every day and they aren’t full-time managers.
It doesn’t matter where they live, just so long as they can get to an airport and have access to a phone. If anything, it’s probably better if they are geographically dispersed so that they can view the world from a broad variety of perspectives.
GM would probably be better off if it moved, anyway. Detroit is located in some alternative reality bubble that poisons competitiveness; if my tax dollars are going to prop it up, I’d rather see the whole thing moved to the Silicon Valley with a branch office in Atlanta, so that they can get a grip on how the country actually thinks.
Pch101,
Good point. I wonder if it wouldn’t realy make sense for GM to move its headquarters from Detroit to LA, SF, Seattle, Miami, Atlanta, Chicago, New York or Boston? Just to get a new take on things and be in better tune with the tastes of the majority of Americans. What is it, 80% of Americans live within 2 hours of the coast?
Any Texas city is better than living in Michigan.
From a business standpoint that may make sense. From a living standpoint, I’d take Charlevoix or Grand Rapids over any hee-haw cousin-loving city anyway.
GM would probably be better off if it moved, anyway. Detroit is located in some alternative reality bubble that poisons competitiveness; if my tax dollars are going to prop it up, I’d rather see the whole thing moved to the Silicon Valley with a branch office in Atlanta, so that they can get a grip on how the country actually thinks
Deep down you are really trying to say that the people in Metro Detroit are a bunch of hicks or rubes who know nothing about the automobile. Atlanta? Are you serious? Silicon Valley actually has a grip on what the country thinks because why? It’s the home of Pelosi and Feinstein.
If the Detroit area is so Sh**ty, why did Toyota opt to build its world class technical center here? The same goes with Nissan….and Hyundai….and Daimler. Hell, even Tesla (Silicon Valley)and Fisker opted to open new engineering and development centers here.
Geographic preferences have absolutely nothing to do with success. That nimrod economist John Tamny suggested the same thing about a year ago and got chewed out. Not gonna happen. From a transportation standpoint, Detroit’s new airport system is arguably the best in the country. As a matter of fact, it will be Delta’s hub to Asia. And dont try to use the “Grosse Pointe myopia” argument since it falls flat rather quckly. Contrary to popular belief, auto execs dont drink and golf together anymore. This isn’t 1962.
Atlanta? Are you serious? Silicon Valley actually has a grip on what the country thinks because why? It’s the home of Pelosi and Feinstein.
Detroit and its midwestern “mullet” values just don’t jive with those held by the vast majority of Americans. Atlanta and San Jose are much more representative of new car buying America than Michagan can ever hope to be.
So somehow, GM is going to pack up thousands of employees and ship em south? So Michigan is just a hick state then and we know nothing about cars and the people in Atlanta and San Jose somehow do?
derm81,
we know nothing about cars
No, you don’t that’s why 2 our 3 of the car makers headquartered in your state have filed for Chapter 11. Why? Cause you don’t know how to make a decent car. The people in ATL or San Jose can’t really do any worse now can they?
Deep down you are really trying to say that the people in Metro Detroit are a bunch of hicks or rubes who know nothing about the automobile.
It wasn’t deep down. The Michiganders are clearly clueless. Things wouldn’t be like this if they knew what they were doing.
Their insularity and home-team cheerleading led to their destruction. Instead of acknowledging that they were sliding, they just built an ideological moat and pretended that the majority of the country was either unpatriotic or wrongheaded. We can all see now how well that attitude worked out for Michigan.
So Michigan is just a hick state then and we know nothing about cars and the people in Atlanta and San Jose somehow do?
California is the leading edge of automotive tastemaking, Atlanta is a good representation of the great middle of the country. The west coast will lead the trend; a trend that takes hold in the New South has clearly made the leap from quirk to mainstream. Anywhere but Michigan and the Rust Belt.
It wasn’t deep down. The Michiganders are clearly clueless. Things wouldn’t be like this if they knew what they were doing.
So you are saying a whole State is ignorant? All 9 million people?
California is the leading edge of automotive tastemaking
Who said that California gets to dictate what I want to drive? I am sure millions in the Midwest would disagree with you. Plus, Ford, GM and Chrysler have a large number of employees on the left coast. Ford is VERY aware of what is going on in California.
So you are saying a whole State is ignorant?
Yes, ignorant doesn’t mean stupid.
I’d be willing to bet that high wage UAW jobs for the uneducated helped foster a culture that doesn’t value education. Many a Michagan child was told – why go to college when you can make $28 to start down at the plant? This embrace of ignorance has come home to roost.
On and endnote, look at the shift in political power. Do you honestly think Barry Obama would let that happen? Let us just say it did happen and GM did relocate its HQ and a good chunk of employees to Dallas…the Republicans can kiss WI, OH MI, IN, and IL goodbye for the next 2 decades. 79 votes right there.
But even then, let us look at a real example of this. Take Comerica, which is a large regional bank founded in Detroit back in 1849. CEO Ralph Babb thought that he could find more talent and make more $$ right away by relocating to Dallas. Heh, the last few years the only place Comerica made money was in Michigan.
I’d be willing to bet that high wage UAW jobs for the uneducated helped foster a culture that doesn’t value education. Many a Michagan child was told – why go to college when you can make $28 to start down at the plant? This embrace of ignorance has come home to roost.
I guess that is why the colleges in Michigan seem to develop more future teachers for states such as TX, GA, FL and NC. Our nimrod local politicians cant change the business tax structure fast enough so the Sunbelt eats out lunch.
This Michigander says ouch.
It’s true, the US is a big, diverse country and what sells/works in one area may not work so well elsewhere.
However, picking up and moving geographically may just trade one regional bias for another. The Detroit 3 need to change their corporate cultures to rid themselves of insular thinking and include other opinions and perspectives.
Pch101, I do see what you’re saying. The Detroit 3 were certainly guilty of insular thinking. This is what me and my neighbors want, so therefore, it’s what everyone wants, and if you’re buying something else, what’s wrong with you? You could tell by how they compared their products to the market. Until fairly recently, they only compared their products to each other and not the market as a whole. They treated the market as domestics and imports, as if buyers shopped for cars that way.
On a side note, it’s amazing how regional biases persist. As a Midwesterner, I dislike when others consider me a somehow inferior member of flyover country. OTOH, some Midwesterners still look down on other parts of the country, especially Southerners. It’s 2009, people…
It is simply much each easier to bring the country (Mulally) to you rather than take yourself to another part of the nation….especially when there are hundreds if not thousands of jobs.
So you are saying a whole State is ignorant?
The management teams certainly are. They drive Buicks on roads surrounded by other Buicks, and then falsely believe that this is what Americans want.
That isn’t what Americans want, obviously. What these people need is to spend time driving on the 280 and 405, and get a clue when they realize that the only people driving their cars just came from an airport rental counter.
Who said that California gets to dictate what I want to drive?
No one did, so quit with the strawman routine and try to understand what’s up.
Californians tend to lead the country in creating vehicle tastes. Nobody has to follow California’s car culture, but they often choose to follow. Not every trend makes it out of the west coast, but if you find a trend ending up in the South, then it’s probably everywhere else in the country outside of MI. A car company trying to predict the future had better be in California and sorting out which trends are going to take and which one’s are just fads that won’t.
The imposition comes from Detroit, which insists on trying to sell cars that people outside of Michigan apparently don’t want. Of course, consumers are free to choose, and they respond by buying other cars that they actually do want. Meanwhile, Detroit accuses them of being unpatriotic, instead of meeting their wants, before begging for handouts.
look at the shift in political power.
Let’s not. We’re talking about cars here. You’re trying to confuse it with politics, when the business issue here is what consumers want and are going to want, not for whom they’re voting.
Let’s not. We’re talking about cars here
When you bring up your tax dollars, then YES, you are talking about politics whether you like it or not….didnt you just mention the following:
if my tax dollars are going to prop it up,
If that is not a strawman argument I dont know what is.
The new chairman is a purely political animal. That’s why he was selected. To do the job he was hired for, the only place he need consider relocating to is Washington DC.
Likewise, he does not need to know anything about cars. He need only know what the Democrats want to have happen in the auto industry, in the energy industry, the Green placibo industry, and for labor unions. Look for him to discover the wisdom of windmills, light rail transit, solar panels, carbon capture, cap-&-trade, and the “need” for maintaining at any price a US heavy industrial base. Every other word out of his mouth will be “renewable” or “sustainable”.