William J. Holstein

Pushing Out Wagoner: A Bad Move, and a Taste of What’s to Come?
March 30, 2009--The Obama administration's decision to force Rick Wagoner out as chairman and chief executive officer of General Motors is sheer political theater. It does not reflect an understanding of what GM has been doing in an attempt to transform itself and it certainly does not reflect an understanding of how hard Wagoner has worked to push GM into becoming a globally competitive company.

The fact that Steve Rattner, a New York investment banker and politically aspirational celebrity figure, pulled the trigger on Wagoner in a face-to-face meeting was in shockingly bad taste. Rattner is head of the Obama administration's task force on the automotive industry. Wagoner should have been allowed the dignity of retreating to become chairman of the board, while Fritz Henderson moves up from president and chief operating officer to become CEO. That's what the company had been planning.

If Wagoner is, in fact, being forced out as chairman and CEO, that means all his knowledge and experience is going to be simply flushed down the drain, unless he retains some sort of consulting relationship. But even that would not be very convincing or powerful. It appears that he is simply gone.

The only positive element of Rattner's decision is that he allowed Fritz Henderson to move into the CEO's job, at least on an interim basis, according to today's Wall Street Journal. Henderson should get the job full-time. If Rattner now insists on installing one of his buddies from Wall Street as CEO, he will have crippled the very company that he is supposed to be helping.

This decision reflects badly on Barack Obama, the man. If Obama felt that American rage toward CEOs obliged him to push Wagoner out, he personally should have spoken to Wagoner to explain it and to thank Wagoner for all that he achieved in his eight years as CEO.

The real risk, looking forward, is that Rattner and other members of the Obama administration will dramatically overplay their hand by intervening too aggressively and too deeply into the auto industry. The decision to fire Rick Wagoner seems to reflect an arrogance that people in New York and Washington know how to manage GM better than GM people themselves. The next thing we may hear is that Nancy Pelosi is calling Fritz Henderson to tell him not to put so much chrome on new Cadillacs!