GM shakes up auto industry, names first woman CEO
Detroit, December 11, 2013
General Motors CEO Dan Akerson will step down next month and be replaced by GM "lifer" and global product chief Mary Barra, a sign that the development of new vehicles will be the paramount focus of the company that emerged from bankruptcy four years ago.
The appointment of Barra, 51, is at once groundbreaking - she will be the first woman to lead a global automaker - and yet also very traditional. Her father is a long-time GM employee and Barra has spent her entire 33-year career at the No.1 US automaker.
Barra's ascension also marks the re-emergence of an engineer at the helm of GM, a company long dominated by financial executives who were sometimes criticized by investors as lacking experience on the product side of the business.
With her engineering background, plant experience, time spent running human resources and her current job in charge of product development, purchasing and suppliers, Barra has the expertise needed to help continue the company's turnaround, analysts and investors said.
The big question is whether someone so steeped in GM tradition can continue to drive the cultural transformation Akerson started.
"The promotion of Barra as CEO indicates there is more to come in the evolution of the company and may attract some new longer-term investors who were skeptical about an over finance-dominated executive suite," Barclays analyst Brian Johnson said.
GM said on Tuesday that Akerson, who is also the chairman, will leave on January 15. He had planned to step down in mid- to late-2014, but brought that forward after learning about two months ago that his wife had an advanced stage of cancer.
Barra will be GM's fifth CEO in less than five years since Rick Wagoner was forced out by the Obama administration in March 2009 as the company headed towards its bankruptcy filing. She is currently an executive vice president.
The Michigan native will be GM's fifth female director. Theodore Solso, 66, will succeed Akerson, 65, as chairman.
Before the new CEO was named, some analysts and investors were concerned about whether Barra and the three other internal candidates had enough experience for the job. GM might be trying to address that by naming Solso to the chairman role.
Akerson said Barra had "brought order to chaos" in the global product development process. He said her task would be to finish the job he started: further raising profits by making product development more efficient, bolstering operations in Asia outside China and building on the small progress made in money-losing Europe.
In a town hall meeting with employees, Akerson called Barra a "car gal," playing on the "car guy" term used heavily in the industry to describe male executives who know vehicles well.
He said Barra was chosen for her talent, not gender, and that the board had not looked at any outside candidates. He said Barra's selection was unanimous and it was the board's decision to split the chairman and CEO jobs, a move he supported.
Under Akerson, GM moved to eliminate some of its historic bureaucracy and inefficiencies, recovered its investment grade credit rating and pared financial losses in its European business. He said history would view him as a "transition CEO."
"The bankruptcy transformed the balance sheet, but the transformation of the company is still a work in progress," Guggenheim Securities analyst Matthew Stover said. He added that only time will tell whether Barra, who has spent her entire career at GM, is the change agent as touted by Akerson.
As Akerson leaves the helm at GM, Ford Motor Co is also on the verge of a possible change at the top. Ford CEO Alan Mulally is on a short list to become the next CEO at Microsoft Corp.
Investor reaction to the news was muted: GM shares closed down 1.2 per cent at $40.40 on the New York Stock exchange. However, they hit an all-time high of $41.16 on Monday after the US Treasury announced it had sold the last of its GM shares, something investors believe could lead to the restoration of a common stock dividend.
Some investors see a possible dividend as a bigger stock catalyst than a new CEO.
"Bottom-line is that investors need to focus on valuations, GM's ability to grow its top-line, bottom-line and cash flow," said Martin Gedja, an investment adviser at GM shareholder BMO Nesbitt Burns.
Barra has risen through a series of manufacturing, engineering and senior staff positions, and is currently in charge of reducing the number of platforms on which GM builds its vehicles. Her father worked as a die maker at GM for 39 years.
"The key to General Motors' long-term success is great products," Barra said in a video posted on the company's website on Tuesday.
Sources told Reuters last month that Akerson might step down in 2014, a move widely expected once the government exited its stake. He was appointed CEO just before GM re-entered public markets on November 2010, following a $49.5 billion government bailout and bankruptcy reorganization.
Speculation on his exit gained steam in April, when GM disclosed in a securities filing that his compensation plan had changed.
GM's board began discussing the succession issue about a year ago, but Akerson's wife's cancer sped up the decision, a person familiar with the board's thinking said. The topic was heavily discussed at the late November board meeting before the plan was finalized over last weekend, said the person, who asked not to be identified.
Some GM employees and analysts said Akerson gave Barra's candidacy a boost in September when he said it was "inevitable" that a woman would one day run one of the US automakers. In addition to the women on the board, GM has several women executives in senior management.
In 2013, women accounted for 4 per cent of CEOs in Fortune 500 companies and only 3.3 per cent of those at durable goods manufacturers, according to advocacy group Catalyst.org.
Independent auto analyst Maryann Keller said Barra has many of the attributes that Mulally used to help turn around Ford after his arrival in 2006.
"Akerson's tenure is too short and will be measured on whether or not he has chosen the best successor," she said. "She is an excellent choice, but you won't know that until she actually starts the job and appoints the people she wants to help her finish a job that is only partly done."
GM has not yet disclosed the new CEO's compensation package. Akerson said with Treasury's exit as a shareholder, GM's executive compensation will become more performance-oriented with as much as a quarter tied to quality.
In other management changes, GM said chief financial officer Dan Ammann, 41, would assume the title of president, while North American chief Mark Reuss, 50, would replace Barra as head of product development. Alan Batey, currently vice president of global Chevrolet, will replace Reuss as head of North America.
Vice Chairman Steve Girsky, 51, will move to a senior adviser role until leaving the company in April, GM said. He will remain on the board.
Solso is the former chairman and CEO of Cummins Inc and has been a member of the GM board since June 2012. Guggenheim's Stover expects Solso to be an active chairman at GM.-Reuters