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GM, Ford, Chrysler chiefs' jobs may hinge on bailout plan
By Jeff Green
Bloomberg News
Published on Tuesday, Dec 02, 2008
General Motors Chief Executive Rick Wagoner and his counterparts at Ford and Chrysler will put their jobs on the line this week when they try to convince Congress they can save their companies.
U.S. House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid on Nov. 21 criticized Wagoner, Ford Chief Executive Alan Mulally and Chrysler Chief Executive Robert Nardelli for being unprepared after two days of congressional hearings failed to convince lawmakers that the automakers should get $25 billion from the government to avoid an industry collapse. Congress ordered that new plans be presented today.
Reid and Pelosi outlined what they expect, and the industry's focus should be on coming in with a solid plan and looking contrite, said Clint Currie, a Washington-based transportation analyst at Stanford Group. ''If I had to guess, I'd say top management is gone. I don't think they can survive this situation.''
GM's board met in Detroit to consider the rescue plan that could determine Wagoner's fate. The directors started reviewing the automaker's proposals Sunday in a 10-hour meeting and continued Monday, people familiar with the plans said.
Board members are keeping open the option of filing for Chapter 11 bankruptcy protection if Congress refuses funding, the Wall Street Journal reported. In such a move, Wagoner would probably lose his job, the newspaper said.
While Republican detractors such as Sen. Richard Shelby from Alabama have said the auto chiefs were arrogant and that management changes might be needed, neither the government nor GM's board has yet signaled that Wagoner will need to leave to get an agreement, people familiar with those discussions said.
So far, the public pressure for changing management, as the government did in the bailout of mortgage lenders Fannie Mae and Freddie Mac and insurer American International Group Inc., has come mostly from outside critics and Republican lawmakers who oppose the automaker bailout. The auto chiefs weren't directly threatened with removal during the hearings two weeks ago.
Still, Democratic Sen. Christopher Dodd, chairman of the Senate Banking Committee, said Nov. 28 that Congress might demand executive changes from auto companies as part of the bailout.
The U.S. didn't require management changes in the bailout last week of Citigroup Inc. and other banks executives have kept jobs after getting bailout money.
A GM spokesman, Steve Harris, declined to comment on what might be included in the Detroit automaker's plan or the board discussions. Ford and Chrysler said last week that they also would present plans to prove their future viability and detail their use of the loans.
The Senate is scheduled to conduct a hearing Thursday and the House will follow on Friday before a possible vote next week.
GM wants to cut debt — probably through an exchange with current debt holders for either debt, equity or a combination — and change union rules that pay workers when their plants are closed as part of an effort to ensure its future viability, people familiar with the plan said last week. The largest U.S. automaker also might ask to delay a $7 billion payment to a union retiree health-care fund and drop more brands, the sources said.
Pelosi and Reid told the automakers in a Nov. 21 letter that they must provide a forthright, documented assessment of their operating cash positions, short-term liquidity needs and how they will meet the financing needs associated with the plan to ensure the companies' long-term viability.
General Motors Chief Executive Rick Wagoner and his counterparts at Ford and Chrysler will put their jobs on the line this week when they try to convince Congress they can save their companies.
Get the full article here.
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