DETROIT (AP) - Time and time again, General Motors Corp.'s board of directors reaffirmed its support for Chairman and CEO Rick Wagoner, even as the company piled up billions of dollars in losses and begged for government loans to stay alive.
But Wagoner is now a high-profile casualty of government intervention, forced out as part of the Obama administration's sweeping last-ditch effort to save the century-old auto giant.
Wagoner, 56, who spent 32 years with GM working all over the world, stepped down effective immediately, the company said in a statement early Monday. He was replaced as CEO by Fritz Henderson, the company's vice chairman and chief operating officer.
GM board member Kent Kresa, a former chairman and CEO of Northrop Grumman Corp., was named interim chairman and said new directors will make up the majority of GM's board when a new slate is nominated for election at the company's annual meeting in August.
"The board has recognized for some time that the company's restructuring will likely cause a significant change in the stockholders of the company and create the need for new directors with additional skills and experience," Kresa said in a written statement.
GM shares tumbled 92 cents, or 25.4 percent, to $2.70 Monday. That is down 89 percent from their 52-week high of $24.24 on April 30, 2008.
The management shake-up, according to several industry analysts, shows that the administration is serious about forcing GM to change
more quickly and dramatically than it did during Wagoner's nearly nine-year tenure as CEO.
Jeremy Anwyl, chief executive of the automotive Web site Edmunds.com, called the move "political theater" to appease an increasingly bailout-weary public.
"American taxpayers are not happy," Anwyl said. "But this way you're able to point to Rick and say he's gone, and that creates an environment where the loans become politically palatable."
By all accounts, Wagoner made progress in fixing GM. While CEO, he cut its U.S. work force from 177,000 to roughly 92,000 today.
Wagoner also closed factories; shed the unprofitable Oldsmobile brand; globalized GM's engineering, manufacturing and design to save billions; and led a resurgence in quality and performance of its long-neglected cars. In 2007, the company reached a landmark agreement with the United Auto Workers that shifted massive retiree health care costs to a union-run trust and ushered in a $14-per-hour wage for new hires, about half that of a current laborer.
But critics, including many members of Congress, say Wagoner moved too slowly, failing to cut enough of the company's huge health care and pension costs, and relying too long on high-profit pickup trucks and SUVs as gas prices rose and the market shifted toward smaller vehicles.
In the past four years, GM has piled up $82 billion in losses.
Still, Wagoner had the company moving in the right direction, Anwyl said.
"Was he moving fast enough or bold enough? Obviously, in light
of what we know today," Anwyl said, "the answer would be no."
While ousting Wagoner, the Obama administration made no management changes at Chrysler LLC, which also is getting government loans. Chairman and CEO Robert Nardelli has only been in
charge there since August 2007.
David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich., said Wagoner's departure probably will have little impact on GM's restructuring efforts because Henderson was the heir-apparent in GM's succession plans.
"I don't think you would see any shift or significant change at all with Rick's leaving. I think the course that they're on, they're on," he said.
Wagoner became GM's face to the public during a disastrous November appearance before Congress to request assistance. He was
lampooned on NBC's Saturday Night Live after being torn apart by lawmakers for flying to Washington in a corporate jet and offering
vague, rambling answers to their questions.
"Given the history, a change in management could hardly hurt and might do some good," Sen. Charles Schumer, D-N.Y., said Sunday.
Wagoner's ouster came just before President Barack Obama planned
to announce what Chrysler and GM must do to get government loans
beyond the $17.4 billion they have already received.
Several senior administration officials said GM will get enough government aid to restructure over the next 60 days, while Chrysler
will get up to $6 billion and 30 days to complete an alliance with Italian automaker Fiat SpA. If Chrysler fails to reach a deal with Fiat or another partner, the government won't provide any further financing, likely sending the company into liquidation.
The officials spoke on condition of anonymity because they were not authorized to make the details public.
Wagoner, a former Duke University basketball player, joined GM in 1977, serving in several capacities in the U.S., Brazil and Europe. He became president and chief executive in 2000 and has served as chairman and CEO since May 2003.
In a December interview with The Associated Press, he declined to speculate on suggestions that he step down.
"I'm doing what I do because it adds a lot of value to the company," Wagoner said. "It's not clear to me that experience in this industry should be viewed as a negative, but I'm going to do what's right for the company and I'll do it in consultation with the (GM) board (of directors)."
Wagoner isn't the first CEO to lose his job as part of a government bailout. The CEOs of mortgage giants Fannie Mae and Freddie Mac were forced out after the government took over the companies in the fall. Robert Willumstad, the former CEO of American International Group Inc., left the company in September.
GM cannot make severance payments to Wagoner or other senior executives under the terms of its governments loans. The company
said in its annual report this month that Wagoner is eligible to retire under GM's salaried employee and executive retirement plans, but the amount he would receive was unclear.
GM and Chrysler were required by the Bush administration to get major concessions from debtholders and the United Auto Workers, with a deadline of March 31 for signed contracts. But very little headway was made in the negotiations this weekend as the parties awaited Obama's announcement.
Wagoner said in a statement early Monday that he was asked to "step aside" during a meeting with Obama administration officials on Friday, and he consented.
He called Henderson an excellent choice to lead the company and thanked employees around the world.
"GM is a great company with a storied history," he said. "Ignore the doubters because I know it is also a company with a great future."