GM Names Wagoner CEO, Smith Remains
DETROIT (AP) _ After seven years behind the wheel of the world’s largest business, General Motors Corp. chairman Jack Smith is handing over control and the title of chief executive officer to his trusted lieutenant, G. Richard Wagoner.
The move announced Wednesday, which takes effect June 1, portends no major shifts in GM strategies; Wagoner, Smith and vice chairman Harry Pearce will remain the ruling powers of the company. But it does mark the end of Smith’s tenure, which saw GM return to healthy profits but struggle to stay competitive.
Smith, who turns 62 in April, said he will become a liaison between the company’s management and its dealers and international partners. Harry Pearce will stay on as vice chairman of the world’s No. 1 automaker.
``Rick will have responsibility for the strategic and operational leadership for General Motors. He is in charge,″ Smith said at a news conference Wednesday.
While Wagoner’s promotion was expected, the timing was a surprise.
GM’s stock fell nearly 5 percent in trading at 5:15 p.m. on the New York Stock Exchange, declining $3.87 1/2 to $81.37 1/2 a share. Analysts said the selling represented profit-taking from gains before Tuesday’s announcement of an offer by GM to swap its shares for those in its Hughes Electronics unit, a major player in satellite television service.
Wagoner _ at 46 one of the youngest top leaders ever at GM _ becomes a strong candidate to succeed Smith as chairman. Wagoner will keep the titles of president and chief operating officer, overseeing GM’s automotive business.
He said there would be ``no huge change in strategies, but that doesn’t mean there won’t be changes in the company.″
Wagoner has followed in Smith’s footsteps for much of his 22-year career with GM and has wide experience in finance and overseas operations. He was named president and chief operating officer of GM in October 1998. Before that, Wagoner headed GM’s automotive operations, the company’s largest and most profitable unit.
Wagoner was credited with streamlining management while cutting the number of GM models and reducing design and manufacturing time.
``Rick Wagoner is well-respected among auto industry analysts. He’s viewed as someone who gets the job done, someone who has a great degree of experience throughout GM,″ said Richard Hilgert with Fahnestock & Co. of Detroit.
Wagoner said Wednesday he prefers to stay close to the details of the business rather than manage from a distance.
``I like to get in the game,″ he said. ``I don’t like to sit on the sidelines and coach.″
Smith was named CEO in November 1992 and has been GM chairman since November 1996. He succeeded John G. Smale, a longtime Procter & Gamble Co. executive who led a 1992 coup that forced out then-chairman and chief executive Robert Stempel after billions of dollars in losses from GM’s North American operations.
During Smith’s term, GM has brought itself back from near bankruptcy, increasing profits and going to great lengths to please shareholders, spinning off its Delphi parts operations and cutting costs.
While relations with the United Auto Workers union have been mixed, especially after strikes in 1998 that cost the company $1.5 billion, Smith has tried to make peace. Earlier this week, he was hailed for his efforts by UAW President Stephen Yokich.
But while Smith has made strides in improving GM’s balance sheet, Wall Street has not always been satisfied with the results, complaining that GM has not moved fast enough to reduce its staff and close unprofitable plants.
And Smith has not been able to stem the slow erosion of GM’s U.S. market share, which dropped from 33 percent in 1993 to 29.3 percent in 1999. GM’s sales were up 9 percent in 1999, but the automaker’s share of the U.S. market for cars, minivans, pickups and sport utility vehicles was unchanged from 1998, when production was crippled by lengthy strikes at two Flint parts plants. It was the first time since the 1920s that GM held less than 30 percent of the market in a year without a strike.
Some of the results from 1999 were blamed on sour relations with dealers unhappy with GM’s plans to buy up to 10 percent of its franchises, mostly in large urban areas where the automaker’s market share collapsed. Smith killed the plan in October.
Smith said Wednesday he would spend much of his time from now on meeting with dealers and GM’s international partners, allowing Wagoner to focus on the automotive business.
``It’s a logical split,″ Smith said. ``There’s a lot of other things that go with the CEO job that mentally get in the way of running the automotive operations.″
Pearce, who oversees the Hughes electronics unit and GM’s research work, had been seen as a successor to Smith until he was diagnosed with leukemia in 1998. Pearce returned to work in 1999, and said his health was not a consideration in the decision.
He said the three executives work well together, and praised Wagoner as a gifted executive with the experience necessary to run GM.
``Had I been an outside director, I would have selected Rick Wagoner as CEO of this company,″ Pearce said.