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GM’s Henderson Takes Wheel from Wagoner

At the behest of the White House, another company seeking government bailout money calls on a former CFO to lead — and restructure — its business. ...
Marie Leone and Roy HarrisMarch 30, 2009

Frederick “Fritz” Henderson gave up the second-toughest job at General Motors Corp. for the toughest — as the Obama administration asked that CEO Rick Wagoner step down, and former CFO Henderson got the nod.

The change at the driver’s seat at GM came amid elevated talk of potential bankruptcy in the company’s future, precipitated by the findings of an administration task force that a “quick and surgical” filing might be needed as part of a plan for the recovery of both GM and Chrysler LLC. The two companies have been managing lately on a combined $17.4 billion in U.S. funding, with Chrysler getting $4 billion of that. Chrysler is being told today that to keep getting U.S. aid, the company must complete within one month the current negotiations for an alliance with Fiat SpA that involves Chrysler sharing the Italian carmaker’s small-car technology. At Chrysler, the administration decided for the time being to leave CEO Robert Nardelli at the wheel.

GM’s appointment of the 50-year-old Henderson, which took effect immediately, elevated him from the post of president and chief operating officer, which he assumed in March 2008 after just over two years in the finance chief’s role. Wagoner had plucked the CFO for the presidency in part because of his familiarity with labor negotiations, and the two had been working side-by-side since then.

“On Friday I was in Washington for a meeting with Administration officials. In the course of that meeting, they requested that I ‘step aside’ as CEO of GM, and so I have,” noted Wagnoner in a statement.

The administration had threatened to withhold bailout money from the ailing carmaker if Wagoner did not resign. The administration task force charged with analyzing the viability of GM’s restructuring plan — and making recommendations to fix the sputtering U.S. auto industry — called for a change at the top. It is likely the Obama administration also will call for the resignation of GM board members, several news reports noted.

The current CFO at GM is Ray Young, its former group vice president-finance, who succeeded Henderson when he became GM’s president a year ago.

GM’s move today is the latest in a string of bailout-related appointments in which executives with significant corporate finance expertise have been tapped to run and restructure beleaguered companies.  In September Edward Liddy, a former CFO at Sears, Roebuck & Co. and pharmaceutical company G. D. Searle, took over as CEO of embattled American International Group, after then-Treasury secretary Henry Paulson asked Robert Willumstad to resign. Then in October, after Paulson arranged for the government takeovers of Fannie Mae and Freddie Mac, he named two former CFOs to lead the struggling mortgage lenders. Herbert Allison, a former Merrill Lynch CFO and retired chairman, president, and CEO of pension giant TIAA-CREF, took the reins at Fannie Mae. Meanwhile, David Moffett, the retired vice chairman and CFO of U.S. Bancorp, was tapped to head Freddie Mac.

This week, Henderson received a big vote of confidence from the 56-year-old Wagoner, who noted that “[Fritz] is the ideal person to lead the company through the completion of our restructuring efforts. His knowledge of the global industry and the company are exceptional, and he has the intellect, energy, and support among GM’ers worldwide to succeed … I stand ready to support him … in every possible way.”

Known for the fondness he feels for his red Corvette, Henderson has earned an unusual reputation for fairness with the United Auto Workers in recent years spent as the main company representative in difficult talks. He was promoted to CFO in January 2006. At the time, his elevation was seen as an attempt to help the company recover from severe losses.

Before that, Henderson was chairman of GM Europe and a group vice president. Prior to going to Europe, Henderson was involved with the company’s China expansion, which also had been roundly heralded as successful.

Henderson joined the treasurer’s office in 1984. And after holding a variety of management positions there — at the company’s former Delphi unit and at finance division GMAC — he served as president and managing director of GM Brazil from 1997 to 2000. His term as president of GM Latin America, Africa, and Mideast followed from 2000 to 2002, when he became president of GM Asia Pacific. He was shifted to GM Europe in June 2004.

Henderson’s global operating experience, and his successes related to cost controls and labor unions, may give GM what it needs to restructure successfully — whether that is in or outside of bankruptcy. Indeed, the Obama task force also noted that GM may not be able to restructure its global operation without the cover of bankrutpcy protection.