GM, Chrysler cleared executive decks in 2009
When 2009 began, both General Motors and Chrysler were sliding toward bankruptcy. As the year ends, both companies have survived to fight another day.
The same can’t be said for their senior executives.
Of the top 10 executives at GM’s glass-towered Detroit headquarters in January, only one — Bob Lutz — remains. At Chrysler, only two of the 10 highest-ranking executives are still in Auburn Hills.
At GM, the churn took a dramatic toll at the vice president level. Of the 55 top executives, including vice presidents and divisional leaders, who were at GM at the start of the year, 26 have left the automaker. Of the remainder, few remain in the same positions they held, according to a Reuters tally.
The sweep was made near complete on Dec. 1 when the board at General Motors Co parted company with former chief executive Fritz Henderson after he had the post for only eight months.
Only at Ford did any of the former Big Three — now called the Detroit Three — automakers kept the slate of top executives pretty much intact. Only two of Ford’s top 10 executives have left; both retired.
Of course, Ford did not declare bankruptcy to save itself as GM and Chrysler did this year with funding from the Obama administration.
Still, the massive management makeovers at GM and Chrysler can’t be fully explained by their U.S.-government sponsored bankruptcies, said Jeff Werbalowsky, co-CEO of Houlihan Lokey, an investment banking firm that advises restructuring companies.
“I don’t think it’s necessarily related to bankruptcies per se,” said Werbalowsky. “It’s related to what’s going on with the organization and what’s going on with the new board of directors and how they react.”
Werbalowsky said that such high executive turnover at major companies going through bankruptcy is unusual.
“There’s nothing inherent about the bankruptcy process that creates these dramatic management changes. It’s more a response by the new boards of directors and what they perceive,” he said.