Who Will Run GM? Board Expected to Decide Monday
DETROIT (AP) _ The most sensitive question facing General Motors Corp. directors at their meeting Monday is deciding who will run the world’s largest automaker. But that’s not the only question facing them.
Some of the directors own positions might be at stake. And GM’s dividend could be reduced.
The big question, though, is whether command of the troubled giant will go to John Smale, the former Procter & Gamble Co. chairman who helped force the resignation of Chairman Robert Stempel last week.
Smale, 65, is said to have been calling the shots at GM since an April shakeup of top management that made him chairman of the executive committee.
The man who popularized Crest toothpaste in the 1960s has kept a low profile, limiting comment on GM matters to brief but ambiguous statements.
Will the board split the chairman and chief executive officer jobs? Stempel remains caretaker of both titles since his resignation.
If the titles are separated, will president and chief operating officer John F. Smith Jr., 54, be named CEO? Or will the board pick chief financial officer William Hoglund?
Analysts believe Hoglund, who has international and domestic experience, would make an effective outside counterbalance to Smith’s inside work reorganizing GM’s money-losing North American auto operations. It was sluggish U.S. car and truck sales that led to a $752.9 million third-quarter loss.
Hoglund, 58, elevated along with Jack Smith in April, is an articulate and respected executive with deep roots in GM. His father, Elis, was a vice president and group executive for Canadian and overseas operations. His brother, Peter, was a vice president and general manager of Electro-Motive Division.
″What they call somebody is not as important in this as the game plan they’re going to use,″ said David Cole, director of the Office for the Study of Automotive Transportation at the University of Michigan and himself the son of a former GM president.
Among other issues that may be resolved at Monday’s meeting in New York or at other meetings in coming months is the board itself.
If Smale takes over, he reportedly will seek resignations of several directors, specifically former Chairman Roger Smith and Vice Chairman Robert Schultz, who is also chief executive of GM Hughes Electronics. Stempel already has indicated he won’t retain his board seat.
The goal, according to a source close to board members, is to remake GM’s board into a smaller, more knowledgeable group of business experts that includes only one GM manager.
And what about an executive purge? The first hints of an executive bloodletting came with sudden demotions of some key executives in April, particularly then-President Lloyd Reuss, a key Stempel protege.
Other executives, whose allegiances to Roger Smith and Stempel label them as part of the old guard, also are expected to go.
Wall Street analysts predict the board will also halve GM’s annual dividend.
That would meet with some shareholder grumbling, but it would save GM $500 million a year, money that could be used to accelerate vehicle development, strengthen underfunded pension accounts or pay for early retirements that are key to GM’s stated goal of cutting 74,000 jobs by 1995.
And those job cuts could be even deeper. Time magazine, quoting an unnamed GM director, reports in its Nov. 9 issue that directors want to cut a total of 120,000 jobs during the decade.
GM last cut its dividend in February 1991, from $3 a year to the current $1.60.