Bob Nardelli Will Run Chrysler
By Brendan Moore
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.
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