In the past three and a half years, General Motors (GM) has lost more than $67 billion. In the past eight years, the company's market cap has dropped by $37 billion. Add the two numbers together, and GM's shareholders have lost more than $100 billion so far this decade.
GM's CEO Rick Wagoner has presided over all of this value destruction. This is also the only period he has presided over. Before taking the reins as CEO in 2000, Wagoner ran GM's North American division, which did fine when gas was $1.50 a gallon but is now losing more more than $3 billion a quarter thanks to an over-dependency on trucks and SUVs.
Other highlights of Wagoner's 8-year reign, courtesy of George Anders at the WSJ:
* GM stock down 83%
* 50% dividend cut
* Global unit market share down to 12.5% from 25% (vs. Wagoner's pledge to take it to 28%)
* Looming liquidity crisis
And yet, despite all this, GM's board remains in love with the man. Joe Nocera in the NYT:
"Rick has the unified support of the entire board to a person," the company's lead outside director, George M.C. Fisher, told Bill Vlasic of The Times in an interview Wednesday morning. "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."
George Fisher? Who is George Fisher again? Oh, yes, the GM director who has publicly admitted that he doesn't give a damn about the stock price.
George Fisher is also the former CEO of Eastman Kodak -- responsible for the company for four dismal years in which it began to get demolished by the transition to digital photography. Perhaps this explains why Fisher and the rest of GM board remain so steadfast in their support of Wagoner: It's not his fault that the company never diversified its US product line away from gas guzzlers, lost market share, lost most of its market value, and lost more money in three years than just about any company in history. It was an act of God!
The NYT's Nocera thinks Fisher's empathy for Wagoner is the main reason the board is supporting him. And he makes a persuasive case:
So what gives? From what I hear, Wagoner is a very nice man, so that helps. And it is, without question, a difficult environment. But I'm thinking something else is at work too: CEO empathy. Fisher, you see, was once the head of Kodak, a company that, under his tenure, failed to adapt quickly enough to the digital world -- and lost its leadership in cameras and film as a result. When he departed in 1999, after four years on the job, his tenure was widely viewed as a failure, something Kodak's subsequent dismal performance has only confirmed. When Wagoner gives his latest excuse for the company's latest loss to the board, Fisher feels his pain. Which is also why Wagoner will be allowed to continue his record-setting performance, at least for the foreseeable future.
If GM's stock price falls much farther, the company might make an attractive buyout candidate. It would be interesting to see whether, say, Steve Schwarzman's Blackstone would be as enamored of Wagoner's performance as George Fisher is.
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