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Car Forum / Chrysler Cars / August 2007Bob Nardelli new Chrysler boss
>Chrysler hires Nardelli as boss >By James Politi and Francesco Guerrera in New York >Financial Times >Updated: 4:12 p.m. MT Aug 6, 2007 >Chrysler, the US carmaker, on Monday confirmed it had hired Bob Nardelli, >who was controversially ousted from Home Depot, the second-largest US >retailer, in January as its next chairman and chief executive. > >The selection of Mr Nardelli reflected his acumen as an operational >manager people close to Chrysler said. > >Tom LaSorda, current chief executive of Chrysler, will remain at the >carmaker as vice-chairman and president. > >The surprise move to hire Mr Nardelli follows last week's change of >ownership at Chrysler, which was sold by DaimlerChrysler, the German >carmaker, to Cerberus Capital Management, the US private equity firm, in a >$7.4bn deal. > >Wolfgang Bernhard, the former Chrysler chief operating officer who was >brought in by Cerberus this year to help it execute the acquisition, >decided not to accept a post as executive vice-chairman at Chrysler, >people close to the matter said. They added that Eric Ridenour, current >chief operating officer, would leave the company. > >Mr Nardelli more than doubled sales during his six years as chief >executive of Home Depot. He joined the retailer after narrowly missing out >on the top job at General Electric, but was criticised for his imperial >management style and poor relationship with shareholders. > >His $210m severance package also became emblematic of the outsized >compensation commanded by corporate America's top managers and contributed >to an investor backlash that forced many companies to agree on non-binding >shareholder votes on executive pay. At Chrysler, his compensation will be >directly linked to the equity performance of the carmaker, people close to >the matter said. > >Mr Nardelli's decision to return at the helm of a private equity-owned >group confirms many experts' prediction he would find it difficult to >stage a comeback among listed companies. > >However, even his critics acknowledged that, despite his abrasive >character, his operational skills, forged in the managerial hotbed of GE's >industrial businesses, would be highly sought after by private equity >groups. The main issue for Chrysler would come if Cerberus decides to exit >its investment through an initial public offering in a few years' time, as >institutional investors may raise questions over Mr Nardelli's suitability >to lead a listed company. > >He is the latest former GE executive to join private equity. Jack Welch, >who picked Jeffrey Immelt instead of Mr Nardelli as his successor as GE's >chairman and chief executive in 2000, is a senior adviser at Clayton >Dubilier & Rice, while David Calhoun, a former GE's vice-chairman, was >poached by the private equity groups that bought media group VNU, now >Nielsen, last year. > >Copyright The Financial Times Ltd. All rights reserved. Can we trust anybody whose name ends in a vowel? Aside from that, Nardelli comes from a non-automotive background. He knows how to peddle, but, so what? You might as well put my wife in charge of Chrysler being she knows how to cook and clean. Seems I remember Walter Chrysler was a mechanic, wasn't he? Am I to believe there is no one in this company that knows cars inside and out and can't better run Chrysler than a guy who best knows how to push lumber out the door? I was a little surprised. You need to remember that Home Depot just paid him $210 million to LEAVE. Who'd hire somebody like that? How do you motivate a man who just got paid $210 million to quit his old job? > I was a little surprised. You need to remember that Home Depot just paid > him $210 million to LEAVE. Who'd hire somebody like that? How do you > motivate a man who just got paid $210 million to quit his old job? Um, it's not a question of motivating him with compensation. You have to understand what Cerberus is up to. They bought Chrysler with the idea that they will get it profitable then do an IPO and make a killing on all the investors that buy the stock. The problem though is the stock market has got a lot more fragile than it was 6 months ago. Cerberus is afraid that if they don't get Chrysler profitable soon then even if they eventually do get it profitable, they would lose money on making it go public because they are thinking the stock market is going to go down further. So, how do they make it profitable quick? Simple. They squeeze all the suppliers, they threaten the dealers with losing their franchises if they don't get sales up, they cut corners on manufacturing, they cut labor by laying off people. They don't really care if what they do deals mortal blows to the company. To do all this they have to hire someone who is just nasty as all get out, someone who LIKES being the number one a.shole. They want the labor unions facing a CEO who the union thinks might actually go out and do something insanely stupid, like close an entire plant down if a few troublemakers in it manage to vote down a contract. That's Nardelli in a nutshell. Ted >> I was a little surprised. You need to remember that Home Depot just paid >> him $210 million to LEAVE. Who'd hire somebody like that? How do you [quoted text clipped - 27 lines] > > Ted Well, maybe so, but if he can save them 300 million dollars, and they have to pay him 500 million dollars, they're going to be way in the hole. If he can save them $500 million, then they basically haven't done anything. Realistically, there are lots of talented people who would love to run Chrysler for 2 or 3 million bucks, and would do it well. Carlos Goshn is CEO of two car companies now and he makes about $3 million. > Well, maybe so, but if he can save them 300 million dollars, and they have > to pay him 500 million dollars, they're going to be way in the hole. If he [quoted text clipped - 3 lines] > Chrysler for 2 or 3 million bucks, and would do it well. Carlos Goshn is > CEO of two car companies now and he makes about $3 million. Look, I'd be willing to run Chrysler for a month. I wouldn't be able to do *much* damage in that short time, then they can fire me and pay me the same for that month as Nardelli got for each month he was at HD. Perce >> Well, maybe so, but if he can save them 300 million dollars, and they >> have to pay him 500 million dollars, they're going to be way in the hole. [quoted text clipped - 10 lines] > > Perce I've always thought that. Any institution would find it hard to keep me on the job for $10 million a month. After a month I'd be so gone they'd never find me. It just goes to show that American CEO's are all insane, or else I am. > I've always thought that. Any institution would find it hard to keep me on > the job for $10 million a month. After a month I'd be so gone they'd never > find me. It just goes to show that American CEO's are all insane, or else I > am. Why are they insane, when they reap such unjustified rewards. I'd say they are very smart and are taking the company boards to the cleaners. >> I've always thought that. Any institution would find it hard to keep me on >> the job for $10 million a month. After a month I'd be so gone they'd never [quoted text clipped - 4 lines] >I'd say they are very smart and are taking the company boards to the >cleaners. No, they are taking the company stockholders to the cleaners... I'm increasingly surprised that there are not more stockholder revolts at annual meetings. I suppose the only reason why there are not more stockholder revolts is that the majority of shares in many companies are owned by mutual funds or pension trusts. Doug > No, they are taking the company stockholders to the cleaners... > I'm increasingly surprised that there are not more stockholder revolts > at annual meetings. Correct, but after the board approves of the stealing. > I suppose the only reason why there are not more stockholder revolts > is that the majority of shares in many companies are owned by mutual > funds or pension trusts. True and many individual shareholders wouldn't find it an effective use of their time and money to go to the shareholder meetings launching a protest that would be ignored anyway. > > No, they are taking the company stockholders to the cleaners... > > I'm increasingly surprised that there are not more stockholder revolts [quoted text clipped - 7 lines] > of their time and money to go to the shareholder meetings launching a > protest that would be ignored anyway. Unfortunately, very few of the stockholders these days care who the hell is running the company and WTF they are doing, as long as the stock price keeps going up. And equally unfortunately, stock prices on many companies these days have very little relation to the actual health of the company. Since Nardelli is known as a ball-breaker they probably think the market will assume he will gut the company to make the profits look high, and the stock price will rise in anticipation. Then a couple years from now when the current holders have all sold their stock holdings and made a buck, the stockholders then will figure out the company was gutted and the stock price will plummet. That's the time for shareholder protests and the like. Of course it will be too late then. Ted > > In article <h665c319n8eq6o8fap48nnreu5e37ul...@4ax.com>, > [quoted text clipped - 27 lines] > > Ted Of course, Chrysler has no stockholders any more, just investors in a private company. That means we may never hear again how Chrysler is doing financially, as they are under no obligation to make anything public. > > > In article <h665c319n8eq6o8fap48nnreu5e37ul...@4ax.com>, > > [quoted text clipped - 32 lines] > doing financially, as they are under no obligation to make anything > public. The investors in Chrysler bought it to turn it around and sell it. That is how investment houses like them operate. It is on a large scale fundamentally the same thing as when an individual buys a run down home and fixes it up for a quick sale. They call it "flipping houses" in the trade. This is simply "flipping a company" If the Dow hadn't crashed they would be planning the IPO in 2 years I'd bet. But I suspect that right now they are going to hold on to Chrysler for a number of years until the stock market improves. That is a shame as Chrysler will not have any kind of visionary leader until the bankers are gone and out of the picture, and we probably will see a series of boring prefunctory cars from them for a while. Ted > > > > In article <h665c319n8eq6o8fap48nnreu5e37ul...@4ax.com>, > > > [quoted text clipped - 40 lines] > home and fixes it up for a quick sale. They call it "flipping houses" > in the trade. This is simply "flipping a company" I've been wandering around looking at Cerberus, and while I can find a lot of companies they've bought, I can't find any they've sold. While they seem to operate by raising profits through cost-cutting and selling unprofitable assets, they seem to be more long-term than just flipping companies (if you've found a source that points to Cerberus as flipping companies, rather than a generic statement that it's how private investment firms operate, I'd be happy to hear it. Well, not happy, since I'd like Chrysler to succeed, but you know what I mean). > I've been wandering around looking at Cerberus, and while I can find a > lot of companies they've bought, I can't find any they've sold. While [quoted text clipped - 4 lines] > private investment firms operate, I'd be happy to hear it. Well, not > happy, since I'd like Chrysler to succeed, but you know what I mean). It'll be fun to watch what they do. Product-wise, I am concerned. They won't be taking Mercedes old platforms, and I don't suppose there's much chance of Nardelli being a product man. Maybe they'll fool me. > > I've been wandering around looking at Cerberus, and while I can find a > > lot of companies they've bought, I can't find any they've sold. While [quoted text clipped - 8 lines] > won't be taking Mercedes old platforms, and I don't suppose there's much > chance of Nardelli being a product man. Maybe they'll fool me. There's a good article in Fortune magazine about Cerberus, on-line here: http://money.cnn.com/2007/08/03/news/companies/cerberus.fortune/index.htm?postve rsion=2007080523 > There's a good article in Fortune magazine about Cerberus, on-line > here: > > http://money.cnn.com/2007/08/03/news/companies/cerberus.fortune/index.htm?postve rsion=2007080523 Interesting article, particularly on Steinberg's style. But it doesn't seem to address my question, which is to what extent Cerberus had chopped up companies and sold the remains (so far, I haven't seen any reports that they have behaved that way, which is really unusual given their love of buying companies on the verge of failure). >> No, they are taking the company stockholders to the cleaners... >> I'm increasingly surprised that there are not more stockholder revolts [quoted text clipped - 4 lines] >> is that the majority of shares in many companies are owned by mutual >> funds or pension trusts. . That's no explanation. Wouldn't pension trusts and mutual fund companies be well organized, and able to control a comany effectively? I can tell you that at my company, our big investors can easily get what they want when they stand their ground. If the board wants to do something stupid, the board gets a talking to from these people, and the board has to give in. I've seen them do it. Yet these "accountability sessions" don't seem to extend to the issue of executive giveaways. >>> No, they are taking the company stockholders to the cleaners... >>> I'm increasingly surprised that there are not more stockholder revolts [quoted text clipped - 8 lines] >That's no explanation. Wouldn't pension trusts and mutual fund companies be >well organized, and able to control a comany effectively? Yes and no. They tend to be run by analysts who simply look at the bottom line. Plus they may well have a certain sympathetic relationship to executives who wine and dine them. The fund managers own huge bonuses often depend more on marketing to new fund shareholders than minimizing cost for their current fund shareholders. The mutual funds with 7.5% loads are testaments to that. >I can tell you that at my company, our big investors can easily get what >they want when they stand their ground. If the board wants to do something >stupid, the board gets a talking to from these people, and the board has to >give in. I've seen them do it. Yet these "accountability sessions" don't >seem to extend to the issue of executive giveaways. Sure that's certainly true for the large investors like Kerkorian. However, I'm sure that investors like him, used to making many millions per year, are also sympathetic to multimillion dollar executive bonuses. Doug >> I've always thought that. Any institution would find it hard to keep me >> on [quoted text clipped - 7 lines] > I'd say they are very smart and are taking the company boards to the > cleaners. Well, if you say so, I must be the insane one. I can tell you if I had 100 million dollars, you wouldn't catch me going to work every day trying to get a 2nd 100 million. They have to set an alarm clock just like I do. > >> I've always thought that. Any institution would find it hard to keep me > >> on [quoted text clipped - 11 lines] > million dollars, you wouldn't catch me going to work every day trying to get > a 2nd 100 million. They have to set an alarm clock just like I do. The problem is that in order to get the job that pays 100 million you have to be the type that would NEVER be satisfied just sitting back and living off the money. It's one of those cruel jokes the Universe plays on us poor humans. The poor people like us aren't content unless we had the 100 million and the rich people who have the 100 million aren't content unless they have 200 million. Ted Look what he did to home depot, used to be you went in for something & an expert that did these things helped you now you get a slaes person that knows nothing about what might be needed. He got rid of all the good ones & hired at less salary. >I was a little surprised. You need to remember that Home Depot just paid >him $210 million to LEAVE. Who'd hire somebody like that? How do you >motivate a man who just got paid $210 million to quit his old job? Meaning? DAS For direct replies replace nospam with schmetterling --- [...] > Can we trust anybody whose name ends in a vowel? [...] |
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