GM’s CEO forced out by White House
At the urging of the White House, which is preparing to announce additional plans to rescue U.S. automakers, General Motors Chairman and CEO Rick Wagoner is resigning.
3.30.09 / Peter Whoriskey / Washington Post
WASHINGTON — Rick Wagoner, General Motors’ chairman and chief executive, is resigning at the request of the White House, clearing the way for the Obama administration to offer the company more federal aid.
President Barack Obama is expected to announce a plan Monday to prop up General Motors and Chrysler, offering them more money if the companies agree to shrink and refocus their businesses. Wagoner’s resignation was one of the White House’s conditions for more federal aid.
”He agreed and will do that,” a senior administration official said Sunday evening.
It was not clear who would replace Wagoner; Chief Operating Officer Fritz Henderson would appear to be the most likely candidate, The Detroit Free Press reported Sunday. GM declined to comment.
The White House’s insistence that Wagoner step down represents an extraordinary intervention of the federal government into the management of a private company. It also reflects that the president and his auto task force have taken a skeptical view of the companies’ plans to restructure, which were submitted last month.
Before the federal government extends more financial aid to automakers, the industry must offer a plan that makes it ”much more lean, mean and competitive than it currently is,” Obama said Sunday on CBS’ Face the Nation.
In February, GM and Chrysler, which had received $17.4 billion in loans in December, requested up to $21.6 billion in additional federal assistance. Both companies have submitted business plans to the government that promise to shrink their workforces and product lines in response to the vast falloff of U.S. auto sales.
Wagoner’s resignation does not mean he will leave the company immediately. He will continue to draw his $1 a year annual salary, because if he leaves the company he is entitled to a multimillion-dollar pension that the government does not want to pay, a source familiar with the matter said.
Marc Cannon, senior vice president with AutoNation, the country’s largest GM dealership, said the move demonstrates there is a path to a viable GM, albeit one with new management.
”What it clearly says to us is the administration believes that General Motors will come out of this stronger, but they needed to make changes moving forward,” Cannon said.
A GM spokesman declined to comment.
Wagoner, a graduate of Harvard Business School, came to GM as its chief financial officer in 1992, when he was 38, and he became chairman in 2000.
His critics say that under his watch, GM focused too much on trucks and sport-utility vehicles even as foreign rivals introduced smaller, more fuel-efficient vehicles. The company eventually pushed its plug-in Chevrolet Volt, but that was after gas prices skyrocketed.
Between 2005 and last year, Wagoner oversaw more than $73 billion in losses. In 1994, when he took charge of North America, GM held 33.2 percent of the American car market. Last month, GM held only 18.8 percent of American auto sales, according to Motorintelligence.com.
His defenders, however, have noted that during Wagoner’s reign GM has led the industry in renegotiating key contracts with the United Auto Workers.
But then came the economic downturn and a 40 percent plunge in U.S. auto sales.
”He was restructuring the company and he got caught by the economy,” said Jeremy Anwyl, chief executive of Edmunds.com, a consumer automotive website.
Ultimately, however, what led to Wagoner’s ouster may be that his proposal to restructure GM did not pass muster with the Obama administration.
On Face the Nation, Obama said GM and Chrysler had not yet met the conditions of their existing loans, and sacrifices would be necessary for them to become viable businesses.
“That’s going to mean a set of sacrifices from all parties involved — management, labor, shareholders, creditors, suppliers, dealers.”

