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GM chief will step down

LOS ANGELES — Edward E. Whitacre Jr., the chief executive who led the turnaround of General Motors is stepping down at the end of the month. The surprise announcement came as the nation's largest automaker reported $1.3 billion in quarterly profit.

The earnings were a stark contrast to the $12.9 billion loss the company recorded in the second quarter a year ago, as it was emerging from bankruptcy after receiving more than $52 billion in federal bailout funds.

Whitacre, a former AT&T executive who came out of retirement to run GM, will be leaving on a high note. Just a year ago, the nation's iconic automaker was on a verge of collapse, weighed down by huge debt and sagging sales.

Whitacre, 68, will be succeeded by Daniel F. Akerson, a GM board member and a top executive at the Carlyle Group, the buyout giant that owns Dunkin' Donuts and Hertz rental cars. Like Whitacre, the 61-year-old Minnesota native had no auto industry experience before joining GM's board a little more than a year ago.

Akerson will be inheriting a company that appears to be in an upswing despite questions about the slow pace of the nation's economic recovery.

On Thursday, GM said it had its second straight earnings gain and its highest quarterly profit in six years after a string of 10 consecutive money-losing quarters. Sales rose to $33.2 billion from $23 billion a year ago, bolstered by the improving economy and a massive restructuring that allowed the automaker to shed vehicle brands, factories and workers.

Analysts said the results were a positive step toward an initial public stock offering that would help the federal government recoup some of its investment in the automaker. The public offering is expected later this year or early in 2011.

"It was my plan all along, and the board was aware, that it was my public duty to restore this company to greatness, and I didn't want to stay a day beyond that," Whitacre said. "There is a good foundation in place, and I see no reason to delay."

Some viewed the announcement as a proactive step by the automaker to reassure Wall Street before the stock offering that it had a succession plan in place.

Whitacre has said the company is eager to float the stock offering and shed the "Government Motors" label that comes with the government's financial support. GM could file documents required for such an offering as early as today.

"This IPO is pending and one obvious question is who takes over for Whitacre. GM wanted to take that right off the table by dealing with the issue now," said Jeremy Anwyl, chief executive of Edmunds.com, the auto industry information company.

Such an offering would pay off $43.3 billion in federal bailout funds that were converted into a majority stake in the company. The bailout made the government GM's biggest shareholder, with 61 percent of the automaker's stock. GM exited a bankruptcy reorganization in July 2009 and has paid back over $8 billion to the government.

The U.S. Treasury Department did not participate in the new CEO decision.

"We are very grateful to Ed Whitacre, whose leadership and vision . . . helped protect the taxpayers' considerable investment in the company," it said in a statement. "We remain focused on protecting the taxpayers' interest and exiting our investment as soon as practicable."

FAST FACTS

Daniel F. Akerson, 61

. Will take over Sept. 1 from CEO Ed Whitacre, who will remain chairman until the end of the year, when Akerson will also take over that job

. Joined the GM board in July 2009, when GM exited its government-sponsored bankruptcy

. Managing director at the Carlyle Group private equity company; was chairman and CEO of XO Communications from 1999 to 2003; was chairman of Nextel Communications from 1996 to 2001 and was also Nextel's CEO from 1996 to 1999

Detroit Free Press

GM chief will step down 08/12/10 [Last modified: Thursday, August 12, 2010 11:37pm]
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