Cerberus Capital Management on Monday named former Home Depot chief executive Robert Nardelli chairman and chief executive of Chrysler LLC in an executive shake-up soon after the private equity firm completed a deal to acquire the struggling US automaker.
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Chrysler also named chief executive Tom LaSorda vice chairman and president, reporting to Nardelli. Chief operating officer Eric Ridenour “has elected to leave the new company to pursue other opportunities” and will not be replaced.
“Eric gave this company 23 years of great service and leadership,” said LaSorda. “We wish him well in his new pursuits.”
And former CEO Wolfgang Bernhard, expected to take a key leadership role under the new owners? Bowing out.
“Cerberus and Chrysler thank Wolfgang Bernhard for his contributions leading to the closing of this transaction. Both Cerberus and Chrysler had looked forward to his continuing contributions as non-executive chairman of Chrysler, however due to personal and family reasons he was not able to accept that role,” the companies said.
The new Chrysler LLC board has 11 members, including Nardelli, LaSorda, representatives of Cerberus and Daimler, and independent directors.
LaSorda will also serve as vice chairman of Cerberus Operating and Advisory Company (COAC), Cerberus’ proprietary operations advisory affiliate. In that role, LaSorda will assist in the continuing development of COAC, which works closely with the portfolio companies in which the funds and accounts managed by Cerberus are invested.
Atlanta resident Nardelli was chairman, president and CEO of The Home Depot from 2000 and doubled sales as well as the number of store operations; moved globally into Mexico and China; and delivered more than 20% earnings-per-share growth for four consecutive years while growing dividends from 16 cents to 90 cents per share. Nardelli also has extensive senior operations experience in manufacturing and transportation systems.
Reuters noted that Nardelli is a former senior General Electric executive, who was both credited with overhauling purchasing and technology systems at Home Depot and widely criticised for pay and severance packages seen as excessive.
“This is an interesting choice, and I’m somewhat perplexed by it,” Erich Merkle, an auto industry analyst with IRN, told the news agency. “There are still things that Chrysler needs long term and I’m not sure Nardelli can provide them.”
Nardelli is the second outsider to head a US automaker in the past year after Ford poached Alan Mulally as chief executive from aircraft maker Boeing.
Reuters said LaSorda had been widely expected to stay on as Chrysler’s chief executive through negotiations on replacing a four-year deal on wages and benefits for UAW-represented workers that expires on 14 September.
Nardelli received a severance package valued at $210m, including a $20m cash payment, when he left Home Depot in January and has agreed to head Chrysler for a $1 per year salary with further compensation tied to the success of the automaker’s turnaround, a person with knowledge of the situation told Reuters.
The new agency said details of the remainder of Nardelli’s compensation package at Chrysler were not immediately available, but could become a question in talks with the UAW, which endorsed the Cerberus deal to buy Chrysler, which was delayed after bankers were forced to postpone a $12bn syndicated loan to finance the transaction.
Reuters said UAW president Ron Gettelfinger has indicated that executive compensation is one issue for the union as it faces calls to surrender hard-won pay and benefits for the more than 180,000 workers it represents.
As the first private equity firm to acquire a major US automaker, Cerberus has been widely expected to shake up established practices in Detroit, the report noted.
Even before the Cerberus deal was complete, Chrysler was considering whether it could leapfrog Ford and General Motors with a deal to cut retiree health care costs by establishing a union-aligned trust fund, a person familiar with the matter told the news agency.
Cerberus is also expected to force a review of Chrysler’s product development plans for less fuel-efficient rear-wheel drive cars, people familiar with that process have said.
