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Seeking The Trophy CEO

Men of a certain age (mine) have an unfortunate tendency to toss aside faithful partners in favor of someone new and exciting. You’re not truly a big shot until you have that trophy wife hanging on your arm.

I suppose you must be an even bigger shot if you can bag a trophy CEO.

It is not my place to judge how people live their personal lives. I don’t want to see people stuck in loveless relationships. But I sympathize with discarded spouses who are not treated with the respect we ought to give someone after we spend half a lifetime under the same roof.

So I feel absolutely terrible for Frederick “Fritz” Henderson, who took over as head of Government Motors (formerly and still officially General Motors) in March when the Obama administration tossed its failed former CEO Rick Wagoner over the side in exchange for a $50 billion bailout.

Henderson held the top job for only eight months — eight excruciatingly humiliating months — before he, too, was made to walk the plank by the automaker’s board of directors. Chairman Edward Whitacre Jr. and the rest of the board decided GM needed new leadership from outside the company so it could quickly adapt and survive.

You mean it took them eight months to discover that Henderson had been at GM since 1984?

Wagoner piloted GM straight into the ground. The board should have fired him long before the government finally did the deed. It was equally clear, long before now, that the company’s hidebound, inbred executive suite needed some major housecleaning.

There would have been nothing wrong with naming Henderson as an interim CEO pending a full search for new leadership. That, however, is not what GM did. Instead, Whitacre and his board conducted an eight-month charade in which they pretended to let Henderson run the company while second-guessing him at every turn.

Board members reportedly were shocked when Henderson filled key positions internally. It is amazing that anyone could be surprised; Henderson has worked at GM since he got out of school. He does not know anybody else to promote.

The board let Henderson take the heat for closing dealerships and shuttering brands. This permits the Obama administration to blame these necessary but unpopular cost cuts on someone who is no longer at the company.

But when Henderson organized a sale of GM’s European operations, the board nixed the idea. Somehow, in the board’s view, GM must maintain an entirely separate subsidiary built around its Opel nameplate if it wishes to compete in Europe. Strangely, more successful companies like Toyota, Volkswagen and even Ford manage to compete worldwide using a single set of brands.

Henderson talked about taking GM public and beginning to repay the government bailouts as early as 2010. This may have been an overly rosy view, which was characteristic of the company’s poor planning under Wagoner. But Henderson hardly needed to be pushed out over an initial public offering that was only a gleam in the CEO’s eye.

Henderson never really had a chance to run GM, let alone fix it. Nobody could possibly have fixed the company in just eight months. Even the board agreed that the company was making progress. Henderson was fired in the hopes that somebody else could get the job done faster. Or, as The New York Times quoted one unidentified source as saying, “The board wants a world-class CEO and now they have enough breathing room to find one.

Oh, that trophy CEO. The guy who ditches his first wife for the midlife bride usually has taken the trouble to first find his trophy mate. Not so Whitacre and company. They fired Henderson, then launched a search for a new CEO, and named Whitacre the interim chief in the meantime.

Which means GM’s board has just wasted eight months — the entire Henderson term — that could have been spent arranging new leadership while Henderson actually had no chance of keeping the job long-term. The company now says the search for its “world class CEO” may take another year. That’s nearly two years between Wagoner’s ouster and the presumed arrival of a more able successor.

Only a company that is into the U.S. Treasury for $50 billion, and whose unionized work force is heavily favored by the administration, could possibly think this is a sensible way to conduct business.

In the meantime, Whitacre’s leadership may be tantamount to no leadership at all. How can he hire A-list executives if he cannot tell them who will be their boss, or what will be their company’s strategy, in a year’s time? And let’s not forget that as long as GM remains under government control — the Treasury owns 60 percent in exchange for the bailout — its managers are subject to federal controls on their pay.

Oops. The guy who gets the trophy typically has plenty of money to spend, and it doesn’t hurt to be reasonably good-looking, too. GM is just out of bankruptcy court, and only a masochist would want to work for Whitacre and his board after what they did to Henderson. Add federal pay czar Ken Feinberg to the mix, and those world-class CEOs are likely to run in the opposite direction when GM approaches with bouquet in hand.

And that, boys and girls, is why we aspire to get hitched ‘til death do us part. If we must part sooner, it is a good idea to try to go our separate ways as friends.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book, Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us,” and Chapter 4, “The Family Business.” Larry was also among the authors of the firm’s book The High Achiever’s Guide To Wealth.

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