Bob Nardelli Will Run Chrysler

Cerberus passes over both LaSorda and Bernhard to bring in an auto industry outsider

By Brendan Moore

08.05 2007

In a surprising move, Cerberus has appointed Bob Nardelli, formerly CEO of Home Depot, as Chairman and CEO of Chrysler.

It was widely expected that Wolfgang Bernhard, an advisor to Cerberus, would be given the Chairman and CEO positions, but not only did that not happen, Ceberus released a a cryptic statement saying that Bernhard is no longer with Cerberus due to “family reasons”.

The current CEO, Tom LaSorda, will remain on as president of Chrysler and report to Nardelli. LaSorda was also given a position as a vice chairman of Cerberus Operating & Advisory Co. LLC, an operations advisory affiliate of Cerberus. Mr. LaSorda will assist in development of the advisory company, which works with all of Cerberus’s companies. The addition of LaSorda gives Cerberus more talent to lean on should they decide to go after any other auto companies in the future, i.e., Jaguar/Land Rover.

Mr. Nardelli was a long-time senior executive at General Electric for 29 years before he went to Home Depot in 2000. After initially joining the company in 1971 as an entry-level manufacturing engineer, Nardelli experienced tremendous success at General Electric and was expected to succeed Jack Welch as CEO of GE. When that didn’t happen, he went to Home Depot in 2000, where he stayed until January 2007. Nardelli’s tenure at Home Depot was marked by intense unhappiness with his leadership by the rank-and-file employees, and mixed financial results. Home Depot’s share price fell by 8% during Nardelli’s time as CEO while its arch-rival in the segment, Lowe’s Cos, more than doubled it’s stock price. And Nardelli was paid $124 million USD during this period, and that wasn’t counting the equity awards Home Depot gave him.

Nardelli’s aggressive, in-your-face style of leadership was not endearing him to either the senior executives that reported to him at Home Depot or the board of the company. Many key people left the company as a result of his brusque manner and prickly personal style, and in an incident that is still talked about at Home Depot, Mr. Nardelli chaired the 2006 annual Home Depot shareholder’s meeting, and successfully kept the entire once-a year meeting to 30 minutes duration by limiting each shareholder’s public comments to exactly one minute. Which, by the way, he monitored by use of a time clock.

Home Depot gave Mr. Nardelli his walking papers(although the official stance was that he had resigned) in 2007, and gave him a huge parting gift of $210 million in severance on the way out. Cerberus says that they are not concerned about the controversy surrounding Nardelli’s time at Home Depot, or the severance payment. They point out that Nardelli will receive no compensation whatsoever until Chrysler starts making money.

By choosing Nardelli, someone who is both a hard-nosed executive and an auto industry outsider, Cerberus has signaled that they intend for Chrysler to approach the auto business much differently than it has in the past. What effect this will have on Chrysler’s business is unknown at this point, and if the different approach is successful, what effect this will have on the other two domestic auto manufacturers, Ford and GM, is also unknown.

Cerberus has scheduled a press conference in Auburn Hills, Michigan (Chrysler headquarters) Monday, August 6, in order to announce the appointment of Nardelli to the Chairman and CEO positions.

COPYRIGHT Autosavant.net – All Rights Reserved.

Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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9 Comments

  1. I guess Cerberus must have liked the BANG-UP JOB he did at Home Depot. One thing’s for sure, the UAW is probably NOT going to be happy in the future. Maybe the Chrysler dealers won’t so happy, either, at least AT FIRST, anyway.

  2. I wish I could totally flame out at my company, get handed a huge severance package, and then convince someone to hire me for a job I know nothing about. How does this man get a job, PERIOD, much less get one running Chrysler? Someone tell me how that works!

  3. It’s all part of the GE/Jack Welch mystique. Welch was a CEO’s CEO and many of his senior management team went on to successful CEO careers elsewhere. I think Nardelli’s elevation to this role is a result of his brand name and not his success at Home Depot, because he was not the right guy for that job. Interesting that he will not draw a salary, but will be paid solely if Chrysler’s equity value increases. I’m sure Cerberus is interested in his cost cutting ideas first and foremost, however. Plus, he’s a real numbers-oriented guy, which the Cerberus folks probably like as well.

  4. Maybe someone at Cerberus should have picked up a phone and called GM to ask them how that whole thing with Ron Zarella worked out.

  5. Cerberus is really, really rolling the dice on this one. Huge difference between Nardelli and Bernhard in terms of how Chrysler gets run in the future, I’m sure.

  6. I agree. Mulally at least had manufacturing experience. Nardelli, I don’t know what he brings to the table other than being kind of a lightning rod for employee unhappiness.

  7. Mr. Nardelli and Cerberus need to understand the meaning of employee morale. Discard the overpaid, useless management. In terms of style, Chrysler has it. When it comes to quality, fire Walukas.

  8. They are off to a great start! The department I worked inuntil Thursday wastold on Tuesday we saved Chrysler $20,000,000 in 11 months but there wouldnt be any funding for our dept next year> Please tell me my math isnt that bad. They paid 4 of us on a average $40,000 a year. What happened to the Millions we just gave him? Goodluck getting any warranty claims paid from now on. Employee morale just went out the window. We were the best dept in our suite and we got the boot. How does that add up to bringing the company back? Goodluck

  9. Is Chrysler crazy, or just plain stupid? Bob Nardelli already ran 2 great companies into the ground, oh yes, let’s hire him!!! By the way, Mr. Nardelli already said that since women are stupid, he’s going to redesign the interior of cars to be “prettier” to appeal to women. So much for the engines and drivetrains. Way to go, Nardelli, for screwing every American company possible, and shame on you, Chrysler, for hiring Satan to run your company into the ground!

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