Chrysler becomes Home Depot!

[Dreamcast18]

http://money.cnn.com/2007/08/05/news/companies/chryslernardelli.fortune/index.htm?postversion=2007080523

Robert Nardelli named CEO of Chrysler

Under the terms of the deal for Cerberus to buy Chrysler, the ex-Home Depot chief took the helm at the struggling carmaker.


By Katie Benner, Fortune reporter
August 6 2007: 12:37 AM EDT
(Fortune) -- As the deal to sell Chrysler to Cerberus Capital Management finally came to a close on Friday (http://money.cnn.com/2007/08/03/news/companies/chrysler_purchase/index.htm?postversion=2007080314), there was one rather salient fact that slipped under the radar. Robert Nardelli was appointed Chrysler's chairman and chief executive officer upon the deal's completion.

That's right. Ceberus has confirmed that the disgraced former CEO of Home Depot (http://money.cnn.com/quote/quote.html?symb=HD&source=story_quote_link) (Charts (http://money.cnn.com/quote/chart/chart.html?symb=HD&source=story_charts_link), Fortune 500 (http://money.cnn.com/magazines/fortune/fortune500/2007/snapshots/1366.html?source=story_f500_link)), who became the poster child for excessive CEO compensation, has taken the reigns at Chrysler. On the day the deal was finalized, August 3, Nardelli was elected to the Chrysler board. Soon after, the directors appointed him chairman and chief executive.

However, a source inside Cerberus says that Nardelli will receive only $1 a year in base salary. This person would not go into detail regarding the rest of Nardelli's pay package, and would only add that Nardelli's pay will be directly tied to the success of Chrysler's turnaround.

Tom LaSorda, who has been CEO of the Chrysler Group since September 1, 2005, will be vice-chairman and remain president of Chrysler, reporting to Nardelli. The carmaker's chief operating officer, Eric Ridenour, has elected to leave the new company, and the COO position will not be filled. So far, no one will say why Ridenour chose to leave.

"We are excited to welcome Bob to the Chrysler family," said LaSorda in a statement. "Bob has a proven track record of success and an unwavering focus on performance, and brings deep operational experience and a broad industry background to Chrysler. His background in operations will provide valuable knowledge as we continue Chrysler's turnaround."

"I am very excited to be part of a team focused on re-establishing Chrysler as a standalone industry leader, with a renewed focus on meeting the needs of customers," said Nardelli

Rumors have swirled since March that Cerberus was thinking of hiring Nardelli, who also worked at General Electric (http://money.cnn.com/quote/quote.html?symb=GE&source=story_quote_link) (Charts (http://money.cnn.com/quote/chart/chart.html?symb=GE&source=story_charts_link), Fortune 500 (http://money.cnn.com/magazines/fortune/fortune500/2007/snapshots/561.html?source=story_f500_link)), when CNBC reported that the private investment firm had offered him a spot as a so-called operations specialist.

Cerberus has collected a huge bench of former executives to act as advisors on deals and serve on the boards of its portfolio companies. Former GE employees who now work for Cerberus include Paul Bossidy, Michael Williams and Jeffrey Fenton. A person within Cerberus says Nardelli never officially worked for the firm.

Nardelli angered Home Depot shareholders when he refused to take questions during a shareholder meeting in May 2006 as the stock was floundering. His rich pay package drew fire; he earned $38.1 million last year. Ultimately he was forced out of the company in January 2007, but left with a $210 million golden parachute in cash and stock options that included a $20 million severance payment and retirement benefits of $32 million.

To be sure, plenty of executives before Nardelli have gotten away with big paychecks and imperious behavior. In the end, it was the stock price that got him. As Bernie Marcus, co-founder of Home Depot, told Fortune after Nardelli's departure, "if the stock had doubled, who would have cared? Instead it went nowhere, and that's what this is all about."

By the time Nardelli left the retail chain, its shares were trading at about the same price as when he arrived in 2000. Moreover, analysts said that the stock had actually lost about 40% of its value because a series of stock buybacks had reduced the amount of shares available.

But Nardelli argued that share price was just one metric used to judge the success of a corporate leader.

And it's true that other metrics improved during his tenure. Home Depot's return on capital grew to almost 20 percent, about ten percentage points above the firm's cost of capital; and sales soared from $46 billion when he arrived in 2000 to $81.5 billion in 2005. Over the same period, profits more than doubled to nearly $6 billion.

Before his rise and fall at Home Depot, Nardelli had also been a success at GE, the company where he worked for 27 years before losing the CEO spot to Jeff Immelt. Nardelli was the head of GE's Canadian appliance unit, then he moved on to the transportation systems division. He later transformed the GE Power Systems unit into one of the conglomerate's most profitable divisions.

Now that the private investment firm Cerberus owns 80.1% of Chrysler, the company will be able to implement its turnaround plan without the pressure of quarterly earnings that dogged Nardelli. Even so, his reputation as an effective leader was tarnished by his stint at Home Depot.

The recent Chrysler sale to Cerberus is high profile and risky, as is putting Nardelli in the top spot. The turnaround is considered a bellwether for both the future of U.S. auto manufacturing and the fate of labor unions. Additionally, some contend that the problems that investment banks had securitizing the loans Ceberus made to Chrysler are evidence that the heady days of private equity dealmaking are coming to a close.

Even so, a source at Cerberus says his firm is confident that Nardelli has what it takes to fix the ailing company that is weighed down by nearly $19 billion in pension and retiree healthcare costs.

[Dixie Cat]

Why does he even need a job?? :eek2:

[Bad Cat]

After having considerable experience with Home Depot before, during and after Nardelli's run there I would quickly sell all of my Chrysler stock if I owned any. They could not have chosen a worst or more self centered individual. His personal worth will again skyrocket while Chrysler's will suffer.
What a shame. Just my opinion.

[Diny]

In other news, Black&Decker tools will now be offered with Hemis.

Hemi power screwdriver!

[Dreamcast18]

Do you think he's a member on POA or PTalk? :statiictongue:

http://www.nytimes.com/2007/08/07/business/07auto.html?bl&ex=1186632000&en=a68438ed864ddc54&ei=5087%0A

Once Tainted, Nardelli Now Has Chrysler’s Keys
By MICHELINE MAYNARD (http://topics.nytimes.com/top/reference/timestopics/people/m/micheline_maynard/index.html?inline=nyt-per)

AUBURN HILLS, Mich., Aug. 6 — When Robert L. Nardelli (http://topics.nytimes.com/top/reference/timestopics/people/n/robert_l_nardelli/index.html?inline=nyt-per) was sent packing from Home Depot (http://topics.nytimes.com/top/news/business/companies/home_depot_inc/index.html?inline=nyt-org) in January with a $210 million exit package and a reputation as an imperious chief executive who had made strategic blunders, he seemed tarnished forever.

But that’s not the way some big investors see him. To them, he is a former operations whiz at General Electric (http://topics.nytimes.com/top/news/business/companies/general_electric_company/index.html?inline=nyt-org) who can bring new managerial discipline to Chrysler, and make the struggling Detroit automaker hum again.

And so, in being named chief executive Monday at Chrysler by its new owners — the private equity firm Cerberus Capital Management — Mr. Nardelli, 59, is being given the chance to try to bring off two comebacks: Chrysler’s, and his own.

“It’s an amazing redemption,” said Michael Useem, professor of management at the Wharton School of the University of Pennsylvania.
His challenges are enormous. Chrysler is in the midst of its fourth turnaround effort in three decades. And Mr. Nardelli is an outsider entering a complicated industry at a time when Japanese companies like Toyota (http://topics.nytimes.com/top/news/business/companies/toyota_motor_corporation/index.html?inline=nyt-org) and Honda (http://www.nytimes.com/mem/MWredirect.html?MW=http://custom.marketwatch.com/custom/nyt-com/html-companyprofile.asp&symb=HMC) are surging.

But his managerial style will be less of an issue at Chrysler than at Home Depot. With Chrysler now a private company, he will not have to answer to individual shareholders, whom he angered at a 2006 annual meeting by refusing to answer any questions and by strictly limiting their time to speak, using two large digital timers.

And many of Mr. Nardelli’s new bosses already know him well, since several executives at the private equity firm once worked at G.E.
If he succeeds, Mr. Nardelli may be this century’s version of Lee A. Iacocca, who took charge at Chrysler after an embarrassing demotion at Ford Motor (http://topics.nytimes.com/top/news/business/companies/ford_motor_company/index.html?inline=nyt-org) by Henry Ford II, and effectively turned around the company with a hard-charging style (and some help from Congress.)

Mr. Iacocca, in fact, praised the hiring of another outsider, Ford’s Alan R. Mulally, in his latest book. Commending Ford’s chairman, William Clay Ford Jr. (http://topics.nytimes.com/top/reference/timestopics/people/f/william_clay_jr_ford/index.html?inline=nyt-per), for the move last year, Mr. Iacocca wrote, “Sometimes an outsider’s perspective can re-energize a tired business plan.” (Mr. Iacocca could not be reached for comment on Chrysler’s news).

If Mr. Nardelli succeeds, he may earn himself another fortune. Although the details of his compensation will not be made public, he will be paid handsomely if Chrysler, whose separation from DaimlerChrysler (http://topics.nytimes.com/top/news/business/companies/daimlerchrysler_ag/index.html?inline=nyt-org) occurred Friday, can reverse its losses. If it doesn’t, he will earn very little, according to people familiar with his contract.

His task, he said at a news conference here Monday, is to prove that manufacturing, and the automobile industry, “is part of America’s future, not its past.”

At the outset, at least, Mr. Nardelli said he planned no big changes to Chrysler’s latest turnaround program.

“They got it,” he said of Chrysler management, which plans to cut 13,000 jobs. “If we can do it faster, if we can do it more efficiently, that’s what we want to do.”

Mr. Nardelli acknowledged that he did not have automotive expertise, but noted his experience in dealing with industrial issues at G.E., where he had risen to run a division making power systems such as generators and turbines before leaving to join Home Depot in 2000.

“While I’m new to Chrysler, and new to the car industry, manufacturing and transportation is a business I know, I like and I grew up in,” said Mr. Nardelli.

Many workers at Chrysler, where the DaimlerChrysler signs have already been taken down and the traditional five-pointed star logo has been restored, seemed to reserve judgment about their new boss.

Jim Samuel, an employee since 1971, said he has some of the same worries now that he remembers having when Mr. Iaccoca came to Chrysler from Ford. “You had that eerie feeling about a newcomer,” Mr. Samuel said.

David E. Davis, a veteran automotive journalist and founder of the Winding Road, a Web-based car magazine, said he feared for Chrysler under Mr. Nardelli, whom he predicted would bring “slash and burn cost-cutting” to Auburn Hills.

“You hate to see what this creature is going to look like when they finally get through dismembering it and putting it back together,” Mr. Davis said.
Though Mr. Nardelli won’t have stockholders to worry about, he will have to win the support of dealers, parts suppliers and the United Automobile Workers (http://topics.nytimes.com/top/reference/timestopics/organizations/u/united_automobile_workers/index.html?inline=nyt-org) union, with which Chrysler and the other Detroit companies just opened talks on a critical new contract.

On Monday, Mr. Nardelli said he would leave responsibility for the talks to Thomas W. LaSorda, the son and grandson of Canadian labor leaders, who was Chrysler’s chief executive until Mr. Nardelli’s appointment, and will now be vice chairman and president.

Mr. Nardelli has already reached out, literally, to the union’s president, Ron Gettelfinger.

The pair met for several hours before Mr. Nardelli’s appointment was announced, with Mr. Nardelli declaring him to be “a wonderful individual, very engaging.” Later on, Mr. Nardelli stood next to Mr. Gettelfinger before Chrysler employees, an arm slung casually around his shoulders, a rare gesture for a Detroit chief executive.

Mr. Gettelfinger told workers that the U.A.W. realizes “that our future is tied to the future of the new Chrysler.” He added: “Welcome home, Chrysler.”

Noel Tichy, a University of Michigan (http://topics.nytimes.com/top/reference/timestopics/organizations/u/university_of_michigan/index.html?inline=nyt-org) professor and expert on G.E., who has known Mr. Nardelli since 1985, called him “an incredible selection.” Mr. Nardelli, he said, would “take a hard look at bureaucracy and redundancy.”
And David M. Fernelius, a dealer in Cheboygan, Mich., said he was optimistic about the company’s prospects.

“We have good products, world-class from Chrysler now, and we’re hoping this new management will give us some good marketing and get the word out to the public,” he said. “We can tout Chrysler as an American company now.”

But any honeymoon could be short unless Mr. Nardelli adopts a more agreeable management approach. Critics say his style at Home Depot was heavy-handed and unforgiving: he pelted employees with constant e-mail messages at all hours, focusing on problems as minor as poor lighting in a store.

He drew fire for diverting Home Depot’s attention from its basic home supply business in stores and creating a separate $12 billion wholesale division that failed to meet expectations and was sold soon after his ouster.

Further, Mr. Nardelli became accustomed to lavish catered lunches, in
contrast to Chrysler, where Mr. LaSorda frequently picks up a cafeteria tray.

Mr. Nardelli, however, was hired not for his people skills but for his operational expertise, which helped Home Depot double its sales and the number of stores worldwide. At G.E., moreover, he was among three executives considered as successors for John F. Welch Jr. (http://topics.nytimes.com/top/reference/timestopics/people/w/john_f_jr_welch/index.html?inline=nyt-per), leaving when he failed to get the job.

Mr. Nardelli’s lack of automotive expertise will be his biggest hindrance, said Gerald Meyers, the former president of the American Motors Corporation and an expert on crisis management. “There’s nothing in his background that says he lives, breathes and loves cars,” Mr. Meyers said.

But Mr. Nardelli tried his best Monday to present himself as a car guy. He said he owns a PT Cruiser, a Plymouth Prowler (http://autos.nytimes.com/newOverview.aspx?year=2001&makes=275&models=3204&styleId=6704&makeNames=Plymouth&modelNames=Prowler&inline=nyt-classifier) and a Jeep, and said his love for the company dates back to high school, when his first car after graduation in 1966 was a Dodge Dart.

Mr. Nardelli said Monday that his wife, Susan, sent him an e-mail message upon learning he was being courted by Cerberus for the job. “It must have been fate,” he said she wrote him. “Our first date was in the Dodge Dart.”
Michael Barbaro reported from New York, Nick Bunkley from Auburn Hills and Mary M. Chapman from Detroit

[Dixie Cat]

I can guarantee you someone will say they know him! :biggrin:

[BLEW BUYOU]

Nancy,

Are you kidding...he used to carry my books home from school!!!

Denise :devil

P.S. Too tired to sign in as Orange Peeler

[Dreamcast18]

http://www.freep.com/apps/pbcs.dll/article?AID=/20070807/COL06/708070405/1002

It's no shock outsider is in

Nardelli's hiring reflects push for new views at top of Detroit auto industry

August 7, 2007
BY TOM WALSH
FREE PRESS COLUMNIST

TRAVERSE CITY -- Is hands-on automotive experience now irrelevant in the top executive ranks of Detroit automakers?
Or worse yet, is a long history with those companies more a liability than an asset for an aspiring chief executive officer, now that the last two CEOs have come from outside the industry?


Questions like these are stirring a lively buzz this week among automotive designers, engineers and pundits attending the annual Management Briefing Seminars staged by the Center for Automotive Research.
Robert Nardelli's surprise appointment Monday as chairman and CEO of Chrysler LLC, in the wake of former Boeing Co. executive Alan Mulally's move to the CEO job at Ford Motor Co., means that two of the traditional Detroit Three are now run by industry outsiders. And even Rick Wagoner, chairman and CEO of General Motors Corp. and a GM lifer, spent much of 2006 under intense pressure from Las Vegas billionaire investor Kirk Kerkorian.

Given the erratic profitability and the massive loss of U.S. market share by the Detroit Three during the past 25 years, it's easy to see why lengthy service at those companies could be viewed as more harmful than helpful.

Think about it.

GM, Ford and Chrysler sold 77.5% of all new cars and trucks in the United States as recently as 1984. Last month, their share fell below 50% for the first time in history.

In raw unit sales numbers, a 50% share means the Detroit Three will sell nearly 4.7 million fewer vehicles this year than if they still had 77.5% of the market as they did in 1984, assuming total U.S. sales of nearly 17 million vehicles.

In dollars, the shrinkage is even more staggering. Based on an average sale price of about $28,000 per vehicle, GM, Ford and Chrysler will miss out on $130 billion in sales this year because of all the market share they've lost, mostly to Japanese and Korean competitors.

That's why John Waraniak, vice president of vehicle technology for the Special Equipment Market Association, wasn't surprised that Cerberus Capital Management would name Nardelli, a longtime General Electric Co. executive and former CEO of Home Depot, to head Chrysler.

"Keep doing what you been doing and you get more of what you've got," Waraniak said with a shrug.

More big losses. Declining market share. A shaky credit rating. Not exactly what Chrysler's new owners are hoping for.

Indeed, Chrysler's failure to sell $12 billion of new debt on Wall Street two weeks ago "raised the tension dramatically" at Chrysler and Cerberus, said David Cole, chairman of the Center for Automotive Research.

It's natural, Cole added, for a company in need of dramatic changes to install an outsider. "A new face can attack bad habits aggressively," Cole said. "It's harder to attack something that you've been a direct part of over the years."

Joe Hinrichs, vice president of North American manufacturing for Ford, said there's no need to apologize for the past in making changes to address new challenges in the global market.

"For decades we have gone to work each day with reasonable confidence that we were going about things the right way," he said. "It worked for decades. It works no more."

Sandy Ring, a Detroit attorney and former chief operating officer of the Michigan Economic Development Corp., agreed. "I don't think turning to outsiders as CEOs is so much a condemnation of industry insiders so much as an industry in global economic change," he said.

Ralph Gilles, a design vice president at Chrysler, said he posed the "car guy" issue to Nardelli at a Chrysler management meeting Monday.

"I was surprised to hear that he owns a Prowler, and I think a minivan. Anybody who understands the Prowler and what a unique, funky vehicle that is, is all right," Gilles said.

Pretty smart guy, that Gilles. No matter how the global auto business changes, no matter whether the Big Cheese has any automotive chops or not, it's always wise to say nice things about the new boss.