Directors affirm support for GM chief

Huge loss prompts talk of Wagoner's job in jeopardy

August 07, 2008|By New York Times News Service

DETROIT - The chairman of General Motors Corp., G. Richard Wagoner Jr., has the full support of the board and will continue to lead the troubled automaker, GM's lead outside director said yesterday.

"Rick has the unified support of the entire board to a person," said George M.C. Fisher, who serves as presiding outside director. "We are absolutely convinced we have the right team under Rick Wagoner's leadership to get us through these difficult times and to a brighter future."

GM's 13 outside directors reaffirmed their support of Wagoner in a regular board meeting Monday and Tuesday, Fisher said.

The meeting came after GM reported a $15.5 billion loss Aug. 1, the third-largest quarterly loss in the company's 100-year history.

Speculation had been growing on Wall Street and in the auto industry that Wagoner, who has been chief executive since 2000, might be in jeopardy of losing his job.

But in a rare interview, Fisher expressed nothing but support for Wagoner and his management team.

"In yesterday's board session, there was unanimity in respect to our unequivocal support of Rick and our team," Fisher said. "There has been a lot of rabble-rousing in the media, and it's not true."

Fisher, the retired chairman of Eastman Kodak Co., has been a GM director since 1996. As presiding director, he is chairman of executive sessions of nonmanagement directors and serves as chief liaison between the outside board members and Wagoner.

While GM has lost more than $18 billion this year, Fisher said he saw no chance that the largest American automaker would seek bankruptcy protection.

"The answer is no, absolutely not," he said. "We wouldn't be doing our job if we allowed that to happen."

Last month, Wagoner outlined a broad plan of cost cuts, asset sales and debt offerings to improve GM's liquidity by $15 billion by next year.

The automaker has about $21 billion in cash on hand and another $5 billion in credit lines. Analysts have warned that GM is burning through $1 billion in cash a month and could run short of operating funds.

But Fisher said the GM board felt confident that Wagoner's plan would provide adequate liquidity to ride out the downturn in U.S. auto sales.

"I feel that management has authorized a series of actions that needed to be taken to make sure there is adequate liquidity." he said. "Rick and his team are taking some really significant actions."

GM's vehicle sales in the U.S. have dropped 18 percent this year, compared with an overall drop in the market of 10 percent.

The company, along with its Detroit rivals, Ford Motor Co. and Chrysler LLC, has been particularly hard hit by the collapse in the market for big pickups and sport utility vehicles.

Fisher said GM was not alone in failing to anticipate weak economic conditions and high gas prices that have driven auto sales to their lowest levels in more than a decade.

"In retrospect, did we anticipate the problems in the housing market and the rise in gas prices?" he said. "No, we didn't, and others didn't either."

However, he expressed confidence that GM was on the right track by putting more investment into more fuel-efficient cars and crossover vehicles.

"I believe that 11 of the last 13 vehicles we have brought out have been cars or crossovers, and those weren't dreamed up in March of this year because of gas prices," Fisher said.

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