GM Re-Hires Ex-CEO Fritz Henderson as Consultant, Reveals Whitacre’s Pay Package
By Chris Haak
In a surprising twist, GM has disclosed that it re-hired deposed CEO Fritz Henderson, whose brief tenure as President and CEO lasted from March 31, 2009 through December 1, 2009, as a consultant to advise on GM’s international operations. Henderson, who did not receive a severance package upon his departure from the automaker, will receive $59,090 per month ($709,080 annualized) for approximately 20 hours of work per month. This arrangement will be in place until some point prior to the end of 2010.
Though Henderson’s tenure as CEO was very brief, it was certainly eventful, as he guided GM through its trip through Chapter 11 bankruptcy proceedings in the middle of 2009. He began his career at GM in 1984, and served in various leadership roles throughout his career. Most notably, he headed GM’s Brazilian operations in the late 1990s, then led Latin America/Africa/Middle East, then GM Asia-Pacific, and his overseas sojourn concluded with the job of Chairman, GM Europe. He then returned to the US in 2006 as GM’s CFO, and was promoted to President and COO in March 2008, and a year later, took over as President and CEO following the departure of Rick Wagoner.
The company was careful to point out that its arrangement with Henderson is not a severance arrangement, but a legitimate consulting arrangement. He is expected to meet once a month with GM’s international president, Tim Lee, or one of his representatives. So, while it’s a little odd to hire back a recently-ousted CEO as a consultant to the company, Henderson’s strength is his global experience; he was reasonably successful in his overseas assignments.
By having him meet with a lower-level employee rather than someone at the top of the house like his successor as CEO, Ed Whitacre, the company is clearly trying to send a message that it’s not trying to undermine Whitacre’s authority, keeping the old CEO at arm’s length away from the C-suite. It’s interesting that the very issue that is rumored to have led to Henderson’s departure – his support for a sale of Opel to Magna while the Board of Directors opposed it – is now presumably one of the areas on which Fritz will be advising GM. Indeed, it’s a strange world we live in. Henderson will actually be working for a subsidiary of General Motors Company called General Motors Holdings, LLC and not the parent company itself.
Meanwhile, GM’s current Chairman and CEO, 68 year old Ed Whitacre, will receive a somewhat-rich pay package under the blessing of US “Pay Czar” Kenneth Feinberg. Whitacre will receive a $1.7 million cash base salary, $5.3 million in stock, and $2 million in restricted stock, in what the media is reporting as a “$9 million pay package.” The company did not specify the vesting schedule for the restricted stock as of this weekend.
Feinberg approved a significantly larger pay package for Whitacre than he had approved for Henderson prior to the latter’s ouster; Henderson’s CEO pay package was $5.45 million ($1.26 million cash salary and the rest in various forms of stock). The rationale for this disparity was presented as the fact that Whitacre had prior Chairman and CEO experience, while Henderson did not; however, the flip side is that Fritz Henderson had a quarter century of auto industry experience, while Ed Whitacre readily admitted last summer when he became GM Chairman that he had no experience in the industry.
Whitacre has seemingly embraced his outsider/newcomer status as he pushes hard to remake GM into a faster, leaner, more innovative company. Upon his appointment as Interim CEO last December (which has since changed to just “CEO”), he shuffled the ranks of many of his top direct reports. These included a new CFO (recruited from Microsoft), a new President of GM North America, a new head of sales and marketing, and many other role changes – primarily moving out older GM veterans that had been the face of the company during its spiral into bankruptcy and replacing them with younger executives who are hopefully going to bring some new ideas (and at the least new blood) into the organization.
Whitacre told workers last week that the company “wasn’t adapting quickly enough” to changes, and therefore he would have to make even more changes. One big cultural change that he’s pushing is to dramatically cut the number of scheduled meetings, and to push executives to actually get out and do more work, rather than sitting in meetings much of their time. He’s taken his own advice to heart, too, by cutting the number of executive committee meetings with his 12 direct reports from twice-weekly to just once per week.
Whitacre’s ultimate goal is to pay back the “loan” portion of the US Treasury bailout of GM, which is $6.7 billion, and to get the company back to profitability as quickly as possible, with that hopefully leading to a successful IPO. The better the IPO goes, the more money the government gets when it exits its investment in GM and gets its hands off the company and out of private enterprise.
GM wouldn’t have survived the past 12 months without US government help, but if the government doesn’t stop “helping” the company soon, I wonder how its prospects for long-term survival look. GM has some promising new products on the market right now, and several more in the pipeline. I wonder whether the company’s “Government Motors” stigma is causing customers to consider other brands first – which, if true, is all the more reason to finish turning the ship around and complete that IPO.
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