GM CEO put in charge of exploring deal

[Flybrian]

GM CEO put in charge of exploring deal

Link to original article @ San Jose Mercury News

San Jose Mercury News

By Michael Ellis

July 08, 2006

General Motors' board of directors Friday issued Chief Executive Rick Wagoner a vote of confidence by putting him in charge of talks with Renault and Nissan Motor on possibly joining the French and Japanese automakers' alliance.

After an unusually short meeting lasting about 80 minutes, the board did not follow the suggestion that billionaire investor Kirk Kerkorian first aired publicly last week that GM directors form a committee to study the benefits of a three-way alliance.

The board instead gave Wagoner the OK to meet with Carlos Ghosn, CEO of both Renault and Nissan, to discuss a partnership and ordered the GM CEO to keep the board informed of management's assessment.

The board's statement is a clear sign that directors aren't ready to ditch Wagoner, analysts said.

'In the back of my mind, I'm hearing a little Tammy Wynette. This news today reinforces a theme of `Stand by Your Man,' ' said David Sowerby, a Bloomfield Hills, Mich., portfolio manager with Loomis Sayles, a firm that manages $80 billion in assets. 'They're showing faith in his integrity to do what's right for the company.'

Although analysts view Kerkorian's proposal as an effort to oust the GM CEO and replace him with Ghosn, Wagoner said in a statement that he will enter the talks with Renault and Nissan with an 'open mind.'

'Given the complexity of any potential relationship, it has to be carefully considered on its merits before coming to any conclusion,' Wagoner said. 'We are committed to an objective and thorough review of that potential.'

Wagoner and Ghosn are scheduled to meet Friday [7.14], a person familiar with the schedule said. Ghosn will fly to Detroit from New York that day to visit Nissan's technical center in Farmington Hills, Mich., Nissan said. Neither GM nor Nissan officials could confirm the meeting date.

Both Nissan and Renault issued statements saying that they look forward to starting the talks soon.

The board's decision is an apparent setback for Kerkorian, who owns 9.9 percent of GM's shares and is the automaker's single largest investor.

However, a statement from his investment company, Tracinda, indicates that he will continue to push his agenda.

'We believe that the upcoming meeting between Mr. Wagoner and Mr. Ghosn is a good first step, but a full and objective evaluation of this unique opportunity will require establishment of a board committee that receives independent financial and legal advice,' Tracinda said.

GM shares closed up 28 cents, or nearly 1 percent, at $29.48 Friday on the New York Stock Exchange.

Copyright © 2006 San Jose Mercury News, All Rights Reserved.

-------------------

Friday will be interesting indeed.

[GTO 6.0]

I think Wagoner is all GM and will seek the best for the company, I just hope he is INDEED the right man to handle these negotiations.

[FAPTurbo]

The board's decision is an apparent setback for Kerkorian, who owns 9.9 percent of GM's shares and is the automaker's single largest investor.

So Kirky wins and loses. He gets to see talks between the three automakers, but he doesn't see someone he really likes do the discussing.

This will be interesting.

[4gm]

If this deal doesn't go through, I'll bet Kirk will find some reason to sue GM somewhere down the road.

Edited July 10, 2006 by 4gm

[SimonDavid]

They're meeting - that means it's serious. It is not just speculation and it is not just Mr K talking up the stock. And the whole board approved the discussion taking place.

But I agree with Tracinda - it's a conflict of interest - Wagonner will want to keep his job

[evok]

They're meeting - that means it's serious.  It is not just speculation and it is not just Mr K talking up the stock.  And the whole board approved the discussion taking place.

But I agree with Tracinda - it's a conflict of interest - Wagonner will want to keep his job

164797[/snapback]

It is Wagoner's job as Chairman of the BOD and CEO to represent the company.

[SimonDavid]

It is Wagoner's job as Chairman of the BOD and CEO to represent the company.

164821[/snapback]

It's his job as CEO to represent the company

It's his job as Chairman to represent the shareholders

In some situations the two can be in conflict, which is why it's considered best practice for the roles to be split. The interests of the shareholders are not identical to those of the company's current management team.

[evok]

It's his job as CEO to represent the company

It's his job as Chairman to represent the shareholders

In some situations the two can be in conflict, which is why it's considered best practice for the roles to be split.  The interests of the shareholders are not identical to those of the company's current management team.

164822[/snapback]

And don't forget that RW in his capacity as Chairman has to represent the other 90% of GM shareholders!

[Guest buickman]

It's his job as CEO to represent the company

It's his job as Chairman to represent the shareholders

In some situations the two can be in conflict, which is why it's considered best practice for the roles to be split.  The interests of the shareholders are not identical to those of the company's current management team.

164822[/snapback]

Very true. Separation of Chairman and CEO is a sign of good corporate governance.

[SingleStylish]

If the CEO and the shareholders have differing objectives... it is time to find a new CEO. When would you not have a CEO seeking an increase in profitability and stock price? You wouldn't. Now, views how either party thinks that may be achieved could differ greatly.

[FUTURE_OF_GM]

I still don't understand what Kerkorian HAD to gain by investing in GM in the first place...

Surely he didn't have the foresight to see this potential "Merger of Equals" (YEAH RIGHT!) coming. I mean, obviously if DCX is to serve as the example, GM stock will shoot up and he'll probably gain a significant amount of money by selling. But, my question is; why did he invest in a badly failing GM anyway? Maybe he invested in the company to try to open the door and ALLOW foreign control of GM, kinda like Chrysler, which pisses me off. That someone would sellout and sell off one of our industrial giants/history like that shows why I have a problem with this country and the people who comprise it.

Even still though, I wouldn't necessarily be against and actual alliance. I just don't want to see this headline: "General Motors becomes a division of Nissan/Renault" I do NOT want foreign control of GM.