General Motors Co.’s board and bankers pressed Chief Executive Officer Ed Whitacre to either leave the automaker or commit to stay for years more to help them sell investors on the company’s initial public offering, three people with direct knowledge of the talks said.
Whitacre didn’t want to remain for an extended period and agreed to let director Daniel Akerson, 61, take his place, said the people, who asked not to be identified because the discussions were private. Akerson will succeed Whitacre as CEO on Sept. 1 and as chairman at the end of the year.
“Whitacre is 68 and sooner or later you would have to address that in the road show for the IPO,” said Joe Phillippi, principal of AutoTrends Inc., a consulting firm in Short Hills, New Jersey. “Investors would ask, ‘What’s the succession plan?’”
Selim Bingol, a GM spokesman, declined to comment.
Akerson, a managing director of the Carlyle Group, will give GM a longer-term executive to lead the company as it works to free itself from the U.S. government’s 61 percent ownership after last year’s $50 billion taxpayer bailout. The company is seeking to raise $12 billion to $16 billion this year in an initial public offering, said a person familiar with the plan.
GM’s underwriting banks and the U.S. Treasury raised the issue of Whitacre’s departure plans at one of the first IPO due-diligence meetings in Detroit in late June, said two of the people familiar with the talks.
Among the first questions the bankers asked Whitacre were how long he’d stay and what transition plan was in place, said the two people. Whitacre told them he didn’t know how long he planned to remain CEO, said the people, who had direct knowledge of the discussions.
Whitacre also avoided answering the question when asked by bankers at JPMorgan Chase & Co. and Morgan Stanley, which are leading the offering, in subsequent IPO meetings held through July, said the people.
Whitacre told the board at a meeting last week that he only planned to stay through the end of the year and didn’t want to remain chairman after that time, the people said. The board selected Akerson because there wasn’t time for an outside search, the people said.
The final decision to appoint Akerson to both positions was made Aug. 10, and the Treasury was informed the same day, said one of the people. GM may say Akerson will stay on at least three years, the people said.
One of his key jobs will be to groom a successor and build a strong management team, said two other people familiar with the matter. Chief Financial Officer Chris Liddell, 52, and North America President Mark Reuss, 46, are both viewed as potential CEOs, those people said.
Whitacre declined to comment when asked by reporters about the length of his tenure during an industry conference on Aug. 5 in Traverse City, Michigan.
“I think everybody knows at my age I’m not a real long-timer,” he said. “But am I having a good time? Yes. Do I enjoy working with people? Yes? Do they like me? Most of them, I think.”
Jeffrey Sonnenfeld, associate dean of the Yale School of Management and head of the Chief Executive Leadership Institute, questioned GM’s explanation for the departure.
“This is not a planned succession as it’s being spun,” he said. “This is not the way it’s done with an IPO. The IPO should be delayed until GM gives the full story behind the leadership change.”
Akerson has been on GM’s board since July 2009 and previously served as chairman and CEO of XO Communications, Nextel Communications and General Instrument Corp. He currently is on the board of American Express Co.
Whitacre, known for building AT&T Inc. into the biggest U.S. provider of telephone service, had described steering the nation’s largest automaker after bankruptcy as a “public service.”
“Ed’s vision of simplifying the business, of giving people the authority and accountability to do their jobs and keeping them focused on designing, building and selling the world’s best vehicles has served a new GM extremely well,” Akerson said yesterday on a conference call.
GM reported second-quarter net income of $1.54 billion yesterday as vehicle sales and production increased. Profit rose 44 percent from $1.07 billion in the first three months of the year. Revenue increased 44 percent from a year ago to $33.2 billion on growing sales of the Buick Excelle in China and Chevrolet Equinox in the U.S., the company said yesterday in a statement.
“Results like these make it clear that the new GM is on the right track with good momentum behind us and a bright future ahead of us,” Whitacre said yesterday. “And also it gives me a lot of confidence to begin transitioning in new leadership at General Motors.”
Whitacre said GM’s board had been aware that he planned to leave after turning the company around and that he has accomplished what he set out to do.
GM probably will file an IPO registration statement with the U.S. Securities and Exchange Commission today or possibly on Aug. 16, said a person familiar with the plan who asked not to be named because the discussions are private.
GM’s IPO would be the second-largest in U.S. history, behind Visa Inc.’s $19.7 billion initial offering in March 2008. The automaker aims to sell a fifth of the Treasury’s stake, reducing the U.S. to a minority owner, two people familiar with the plan said in June.