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GM Chief to Resign at White House's Behest
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In recognition of the damage that the declining U.S. auto industry is having on many of the nation's communities, Obama will announce tomorrow that he is creating a new initiative to revive them. It will be led by Ed Montgomery, a dean at the University of Maryland and a former deputy labor secretary.
The administration is also seeking to address the fear that the news of the companies' woes will scare away car buyers. Obama plans to announce today that the administration is creating a program to guarantee the warranties of new vehicles issued by participating manufacturers.
Exactly how much more money the government will lend to the automakers is unknown.
The government is willing to pump more working capital into Chrysler over the 30 days during which it is supposed to reach an agreement with Fiat. It will lend another $6 billion to Chrysler if that agreement is reached. Under the terms of the ongoing negotiations between the two companies, Fiat would take a minority stake in Chrysler that is less than 35 percent, but which could grow to as much as 49 percent. The administration is not calling for Chrysler chief executive Robert L. Nardelli to resign, in part because he is negotiating the Fiat deal.
The amount that GM may borrow from the government will depend upon the government's ongoing review of the company, administration officials said.
Wagoner's resignation does not mean that he will leave the company immediately. He will continue to draw his $1 annual salary, because if he leaves the company he is entitled to a multimillion-dollar pension that the government does not want to pay, a source familiar with the matter said.
On an interim basis, Kent Kresa, a board member will serve as GM's chairman; current company president Fritz Henderson will serve as chief executive.
A GM spokesman declined to comment on Wagoner's departure.
Wagoner, 56, began his GM career as a financial analyst after graduating from Harvard Business School in 1977. He worked his way up the management ladder and after stints overseas he was named GM's chief executive in 2000.
His critics say that under his watch, GM focused too much on trucks and sport-utility vehicles even as foreign rivals introduced smaller, more fuel-efficient vehicles. The company eventually pushed development of its plug-in Chevrolet Volt, but that was after gas prices skyrocketed, they say.
Between 2005 and last year, Wagoner oversaw more than $73 billion in losses.
His defenders, however, have noted that during Wagoner's reign GM has led the industry in renegotiating key contracts with the United Auto Workers. Those revised contracts allow automakers to pay new hires much lower wages and permit the company to shift billions in retiree health-care costs to a union-run trust. Both of those moves put the company in far better financial position for the future.
