Earlier today, it was announced that General Motors Chairman Rick Wagoner is out after a 31-year career. This of course comes in the midst of the severe difficulties that the Big Three (or at least GM and Chrysler) continue to experience. Removing the head of the company during a time where plans for long-term restructuring and sustainability of a company are being finalized seems to me to be a fairly reasonable step to take.
What I do have great concerns about, however, is the fact that Wagoner didn't step down at the behest of shareholders, customers, or even the heads of automotive industry-related labor unions. He stepped down - read "was removed" - when the President demanded his head on a silver platter. Has the day really arrived where the Administration can now dictate the personnel decisions made by a business or privately-owned entity?
The more Congress and the Administration throw money at problems, the more conditions they are attaching to that aid - and the more strings they are attaching to these puppets that they can pull at a later time. No one wants to use the word nationalization, and in recent weeks the amount of bailout money given to certain institutions - primarily banks - has fallen just short of the percentage needed to give the government controlling interest. However, I think that nationalization has arrived when the White House can pick up the phone and say, "You're out!"
I would like to think that the President's team called and simply asked Wagoner to resign, and he graciously and - for the good of GM and its future survival - accepted. But in this day and age where government gets itself into these situations more and more deeply, I'm not so sure...
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Possibly taxpayers becomes shareholders in a company when that company grovels for a federal bailout? Wagoner has no one to blame but himself. When he asked the friendly neighborhood federal loan shark for money he submitted himself to its tyranny.
ReplyDeleteOh, I agree that Wagoner needed to go (as I read this morning, he oversaw $73 billion in losses last year). However, my concerns are the way it was done; I would have been much more comfortable with the government saying that their leadership issues needed to be worked out a.s.a.p. and let the board take the hint and move. What I'm not comfortable with is the government playing the role (for better or worse) of kingmaker; they did it with Liddy at AIG, they've now done it with Wagoner, and I've got concerns that they'll just start targeting bank CEOs and the heads of other businesses and financial institutions as they so desire.
ReplyDeleteI pretty much agree with you Matt. IMO all a CEO needs to do is make a profit and not take money from govt loan sharks.. seems simple to me.. it is in their power to make it happen.. it is the way that a free market works.
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