CEO Akerson Led GM From IPO to End of ‘Government Motors’
Dan Akerson became the accidental car guy. He took the job of chief executive officer of General Motors Co. by default, out of a sense of duty.
Now the former telecommunications executive with no previous auto experience will be remembered as the man who took GM (GM) from the wake of its bailout and bankruptcy to profitability and independence.
Less than five years from GM’s government rescue, Akerson says the automaker’s biggest danger now is complacency. No one could have imagined that such a short time ago.
While the company had signaled earlier this year that it was changing his pay to allow him to retire within three years, yesterday’s announcement that he will step down Jan. 15 comes as a surprise to some. Privately, he’d been dealing with news that his wife of more than 40 years had been diagnosed with advanced cancer, the Detroit-based company said yesterday.
“This personal situation kind of overtook us, overtook me,” Akerson said yesterday on a conference call with reporters. He had previously thought about retiring in the second half of 2014, he said. “I need to spend all of my time and energy in fighting this disease with my wife,” he said.
In interviews over the years, Akerson, 65, often mentioned his wife, Karin. Last year, for instance, he told a story about the early years of his marriage, when he and his wife had such a bad experience with a Chevy salesman that they left the dealership and bought a Japanese car.
“We were going to buy a Chevrolet, and the guy called her ‘the little woman,’” he recalled. “She got so angry, she was almost in tears and said, ‘I’m not buying a car at this place.’ It was the first Toyota I bought.”
Akerson, who became GM CEO just before its initial public offering three years ago, helped shepherd the fragile automaker through its final years under U.S. government ownership and leaves with the stock trading near a record high. He’ll be succeeded by Mary Barra, the product-development chief.
“I always knew I’d be viewed somewhat as a transition CEO. We had to right the ship, get it under way, not take it across the ocean,” Akerson told employees yesterday during a meeting that was posted on the Internet.
He has spent the past three years working to complete a reorganization that was begun in bankruptcy. He often said it would take more than a six-week court action to make the company globally competitive.
“Being CEO of General Motors is arguably the toughest auto job in the world just given the size, the complexity,” Adam Jonas, an industry analyst with Morgan Stanley, said in an interview in October. “Akerson has done a fine job of righting the ship.”
Akerson, GM’s third CEO since President Barack Obama’s auto task force ousted Rick Wagoner in 2009, did more than preside over the company’s return to public stock markets and the end of U.S. government ownership. The automaker was profitable for every quarter he was in charge and it won back an investment-grade credit rating from Moody’s Investors Service for the first time in eight years.
He also ushered in a new period of optimism among investors, including Warren Buffett’s Berkshire Hathaway Inc., State Street Corp. and J. Kyle Bass’s Hayman Capital Management LP.
Under Akerson and Barra, GM is bringing out 18 new or updated vehicles in the U.S. this year and 14 next year as the company transforms its lineup into one of the freshest in the industry from one of the oldest while also boosting quality to record levels, according to influential third parties, such as J.D. Power & Associates and Consumer Reports magazine.
“Post-bankruptcy GM has just gotten its stuff together,” Jake Fisher, Consumer Reports’ director of automotive testing, said in an October interview. “The vehicles that have been produced and designed” after bankruptcy have shown “marked change in terms of performance.”
His tenure included disappointing sales of the Chevrolet Volt plug-in hybrid and having to defend the vehicle before Congress after one caught fire three weeks after a side-impact crash test was conducted and the car was left in a field by the National Highway Traffic Safety Administration. While NHTSA eventually ruled that the Volt posed no more of a fire risk than a conventional car, the damage to sales was done.
Akerson’s darkest days came about 18 months ago. The stock reach a closing low price of $18.80 in July 2012 and that month he ousted his top marketing officer, Joel Ewanick, a high-profile executive seen as a change agent, over a disagreement about a Chevrolet sponsorship.
Akerson, a former telecommunications industry executive who later worked at private-equity giant Carlyle Group, remained unsatisfied with GM’s performance, pushing several mid-decade goals that include boosting North America operating margins to match Ford Motor Co. (F)’s, stemming losses in Europe after losing more than $18 billion since 1999 and almost doubling sales in China.
On his watch, he oversaw decisions to pull Chevrolet out of Europe and to close the first assembly plant in Germany since World War II. He’s pushed for internal changes that include overhauling the company’s information technology system and updating its financial reporting capabilities.
He was also grooming possible successors. Akerson, who will also step down as GM’s chairman, has said he preferred that his successor comes from within the company because it would be less disruptive.
Along with Barra, other potential successors included Steve Girsky, 51, vice chairman; Mark Reuss, 50, North America operations president; and Dan Ammann, 41, chief financial officer.
It was a several-month process working with the contenders, Akerson said. Once it was narrowed to the finalists, GM brought in coaches to work them on their weaknesses, he said.
“We wanted to make sure that the board had a perspective independent of mine,” he said. “We had a process and, quite frankly, in my mind it would kind of come to a head, a culmination in the mid-spring and summertime of next year.”
The board has been concerned about keeping the progress made under Akerson going, noting that it takes time to change a complex company’s culture, two people familiar with their thinking said. Akerson had been working closely with the senior leadership team to develop them and expose them to the board, one of the people said.
GM had signaled earlier this year in a regulatory filing that Akerson may be moving closer to retirement when his compensation mix was changed in 2012 to accommodate the possibility that he may leave before his long-term restricted stock vests in three years.
The issue of CEO succession is thorny at GM. Akerson, who became part of the automaker’s board in 2009 as the company emerged from bankruptcy, took over as GM’s top executive just in time to lead the road show for the company’s November 2010 IPO. His predecessor, Ed Whitacre, surprised the board by telling them that he didn’t want to remain for the long term and the directors, unprepared, turned to one of their own.
As a board member, Akerson “said he thought GM was one of the worst companies he’d come across in his entire life,” Whitacre wrote in his book “American Turnaround.” “And he was not a fan of GM cars -- he made that crystal clear.”
Akerson bristled at the notion that his lack of auto-industry experience meant he wasn’t a car guy. He’s said that he had a history of changing his own oil, and he was always quick with a story about his personal experience with a car. He’s was especially excited about the redesigned Chevrolet Corvette Stingray.
Call of Duty
Friends say that Akerson, a U.S. Navy veteran, was motivated to be CEO by a sense of duty to the country to help restore GM as an American icon.
Akerson’s vision for GM involved strengthening GM’s Chevrolet and Cadillac brands with improved customer service and consistent quality. At an employee event in June, after GM won J.D. Power’s top quality award, he told workers that it was his most memorable day at GM, followed by the day of IPO.
He recounted a meeting shortly after joining the board four years ago and being told GM’s vehicles were as good as everyone else, “which represented to me that we were average,” Akerson told the crowd.
“I don’t want to be as good as anyone else,” he said. “We’re here to be the best. I knew this team could do it. Quite frankly, you have surprised not only your critics but your supporters -- me -- that we’ve done it in four years.”
He went on to warn them about growing overconfident.
“This honor will mean very little if we do not build on it,” he said. His speech followed an appearance by Detroit Tigers star pitcher Max Scherzer and a performance by an employee rock band. “I thought this was a good idea but I didn’t realize it was going to be this over-the-top,” he said.
It reminded him of a saying, he said, “When you’re in the end zone, you don’t want to hot-dog it too much because people will think you’ve never been there. So next year, we’ll have to tone it down a little bit because we have been there.”
While Akerson, a former boxer from his days at the Naval Academy, can have a competitive exterior, he’s known as a family man to those who work closely with him. He and Karin celebrated their 40th wedding anniversary last year with a $1 million donation to Habitat for Humanity in Detroit. The organization also benefited from the donation of his 1958 Corvette, which was auctioned off at the Detroit auto show charity gala.
They have three grown children and three grandchildren, who have spent summer days staying with their grandfather in Detroit, according to a person who knows his situation. At a speech in Washington in October, Akerson mentioned his and his wife’s dream for them.
“Now we have three grandchildren and we want them to inherit a better world than we did,” Akerson said. “When we were just getting started, my wife and I rented our home. We promised our landlord to leave the house in better shape than we found it. You know what? At the end of the day, we are all renters on this earth.”
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