Bad review brings end for GM boss

MICHIGAN - General Motors chief executive Fritz Henderson resigned after directors concluded he hadn't done enough to fix the finances and culture of the biggest US carmaker, a person familiar with the matter said.

The board gave Henderson, 51, a 100-day review yesterday on his performance since GM's bankruptcy exit, said the person, who asked not to be identified because the discussions were private.

While Henderson made progress, it wasn't enough, said the person, who didn't have specifics about the evaluation.

Chairman Ed Whitacre took over on an interim basis, giving the former AT&T chief a chance to put his stamp on GM and pick a permanent chief.

Henderson, a 25-year GM employee, became chief executive in March when President Barack Obama's car task force asked Rick Wagoner to leave as part of a US rescue.

"They're looking to rebuild the company in a completely different form," Maryann Keller, president of consultant Maryann Keller & Associates, said. "They're looking to bring in someone who has a completely different perspective."

The search for a new CEO "begins immediately", Whitacre said in a statement released by GM after yesterday's board meeting in Detroit.

Whitacre, 68, was selected by the car task force to run a revamped board when Detroit-based GM left Chapter 11 with the US Government as the majority owner.

Yesterday's personnel decisions were made by the board, not the administration, a US official said.

Henderson's tenure spanned GM's slide into bankruptcy on June 1 and a July 10 exit backed by US$50 billion ($68.7 billion) in federal aid.

He surprised analysts last month when GM reported generating US$3.3 billion in cash in the third quarter and said it would begin repaying federal loans early. At the same time, he said GM lost US$1.15 billion and would consume cash again this quarter.

Whitacre said yesterday in Detroit that Henderson "has done a remarkable job leading the company through a time of challenge, and momentum has been building over the past several months, but we all agreed changes needed to be made".

He didn't take questions or elaborate on the executive shake-up.

That assessment differed from the one he gave in a November 10 interview at his office in Texas, when Whitacre said directors backed Henderson, whose posts at GM included serving as chief operating officer and chief financial officer under Wagoner.

"We have some momentum now, there's a lot of enthusiasm," Whitacre said then. "We're all cautiously optimistic. The board is fully behind Fritz; he's working hard."

Henderson was under pressure to return GM to profit after more than US$88 billion in losses since the end of 2004 and change the carmaker's culture to prepare GM to start repaying loans and hold a public stock sale by the second half of 2010.

With Henderson in charge, GM has had deals to sell its Saturn and Saab brands fall apart. The carmaker also decided last month to keep the Opel brand rather than sell it as planned.

GM is cutting its US brands from eight to four, keeping the Chevrolet, Cadillac, Buick and GMC brands.

In addition to ending its affiliation with Saab, GM is winding down Saturn and Pontiac and has a deal to sell Hummer to China-based Sichuan Tengzhong Heavy Industrial Machinery.

- BLOOMBERG