The Obama Auto Task Force Continues To TWeak GM
Friday, April 03, 2009SUZANNE PRATT: Parts maker Delphi and General Motors will meet with the Obama task force on Monday, the Obama auto task force. The goal -- to figure out how GM might help its old parts division get out of bankruptcy. GM could also discuss recommendations for new board members. And as Darren Gersh reports, some observers think the old GM team may no longer be right for the job.
DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: As CEO Rick Wagoner was the public face of General Motors through its steep decline, but the ultimate responsibility for GM rests with its board of directors. Shareholder activist Nell Minow says it's obvious why the Federal government now wants to see change there.
NELL MINOW, EDITOR, THE CORPORATE LIBRARY: After all, what is the board responsible for? Risk management and strategy and both were very poor at this company.
GERSH: For decades, critics say the GM board was a clubby place, stacked with people who, in the words of Yale management Professor Jeffrey Sonnenfeld, drank the company Kool-Aid.
JEFFREY SONNENFELD, SR. ASSOC. DEAN, YALE SCHOOL OF MANAGEMENT: We get these calls frequently in academia, search firms get these calls. They are looking for somebody who will be a good team player. That's a code word for somebody who's not going to be the proverbial skunk in the lawn party, going to ask the unpleasant issues. These were largely the quote/unquote good guys that are happy to be part of the club.
GERSH: The government's heavy hand in breaking up the club at GM has the rest of corporate America concerned. At the Business Roundtable, John Castellani thinks the government made a political decision to remove Wagoner and push for a new board.
JOHN CASTELLANI, PRESIDENT, BUSINESS ROUNDTABLE: What is fundamentally wrong here and what is fundamentally concerning to the members of the Business Roundtable is that the government stepped in and usurped the role of the boards of directors that are elected by the shareholders to represent the shareholders' interest.
GERSH: Castellani argues GM was aggressively restructuring and the board was best able to judge whether the CEO was on the right track.
CASTELLANI: The amount of change that has gone on at GM and all of the car companies over the last few years has been remarkable. What happened was they ran out of runway.
GERSH: Others say GM was never prepared for takeoff. And the current board members, battle-scarred by their own experiences at struggling companies like Kodak, Compaq, Winn-Dixie and Krispy Kreme, are not suited to driving a turnaround at GM.
SONNENFELD: They were not conflicted commercially. They were conflicted emotionally. These are people who could identify with a CEO in jeopardy, an embattled CEO.
GERSH: GM Chairman Kent Kresa says the company's restructuring has created the need for new directors with new skills and experience. The company hopes to have a new slate ready for a shareholder vote sometime in August. Darren Gersh, NIGHTLY BUSINESS REPORT, Washington.
