GM Names Former AT&T Chief
Whitacre as New Chairman

Bloomberg.com

General Motors Corp. said Edward E. Whitacre Jr., who built AT&T Inc. into the largest U.S. provider of telephone services, will become chairman when the nation’s biggest automaker leaves bankruptcy.

Whitacre, 67, will lead a 13-member board that keeps 6 incumbents as GM completes its Chapter 11 reorganization. Staying on will be interim Chairman Kent Kresa, Chief Executive Officer Fritz Henderson and directors Philip A. Laskawy, Kathryn V. Marinello, Erroll B. Davis Jr. and E. Neville Isdell.

Today’s selections move GM closer to its goal of completing a restructuring by the end of August after filing for bankruptcy on June 1. Whitacre was chairman and CEO at Dallas-based AT&T and predecessor SBC Communications Inc. from 1990 until 2007.

“He took it for the challenge,” said James Kahan, a former AT&T executive who worked with Whitacre for 20 years and talked to him about the job late yesterday. “He did it out of patriotism, not wanting to have an American icon go down without a great fight.”

The Obama administration, which is propping up Detroit- based GM during its reorganization, had final responsibility for the choice, Kresa told reporters today. GM said Whitacre wasn’t available for an interview.

Obama asked former CEO Rick Wagoner to cede his job to Henderson and named Kresa interim chairman in March after rejecting GM’s plan to return to profit. Kresa was also told to replace a majority of the board.

‘Resistant to Change’
“GM has been so stuck in its ways and has screwed up in so many ways for so long that they need to change their mind-set and their strategy drastically,” said Robert Sutton, a professor of management science and engineering at Stanford University in Stanford, California. Existing directors were “resistant to change until the very brink of their death,” he said.

GM said the rest of its board probably will retire “no later than the approval of the sale of GM assets” to a reorganized automaker. The company is recruiting four new directors, while Canada’s government will pick one and the United Auto Workers’ retiree medical fund will get another.

Not named to the new board were Armando Codina, John Bryan, George Fisher, Eckhard Pfeiffer, Karen Katen and Erskine Bowles. Codina and Bowles both became directors this decade, while the others began their tenure in the 1990s.

‘Still Important’
“It’s still important who is on the board of GM,” said Paul Lapides, director of the Corporate Governance Center at Kennesaw State University in Kennesaw, Georgia. “Making good decisions, with credibility, may keep Congress and the administration from feeling the need to get involved.”

Kahan, the former AT&T executive, said Whitacre will probably be heavily involved in GM’s restructuring.
“He’s not one to sit idly by,” he said. “He’s a man of action, great integrity. He really wanted input from the lowest worker, the newest, lowest worker, to our most senior people. I can’t say enough positive things. He earns loyalty and respect.”

GM, the world’s largest automaker for 77 years until being topped by Toyota Motor Corp. in 2008 sales, filed for protection from creditors after losing almost $88 billion since 2004, its last profitable year.

New GM
The company is proposing to sell its best assets to create a so-called New GM built around its Chevrolet, Cadillac, GMC and Buick brands within 60 to 90 days with the support of about $65 billion in taxpayer funds. The remaining assets will be liquidated in bankruptcy to help pay off creditors.
The U.S. Treasury also is supporting the Chapter 11 reorganization of Chrysler LLC, the third-largest U.S. automaker. The U.S. Supreme Court is considering an appeal by creditors challenging Chrysler’s asset sale to a group led by Turin, Italy-based Fiat SpA.

Whitacre’s appointment means that when GM and Chrysler leave bankruptcy, two of the three Detroit automakers will have chairmen from outside the industry. Chrysler’s new chairman will be Robert Kidder, the former chairman and CEO of Borden Chemical Inc. and Duracell International Inc. Ford Motor Co.’s chairman is Bill Ford, a former CEO and great-grandson of the company’s founder. Ford CEO Alan Mulally came from Boeing Co.
Choosing a chairman from outside the company also bucks GM tradition. Kresa was GM’s first non-executive chairman since John Smale, who held the post from 1992 through 1995. Before Smale, GM hadn’t had an outsider in the job since 1937, when Lammot du Pont resigned, according to GM’s history Web site.

Whitacre at AT&T
Whitacre retired from AT&T in 2007 as the longest-tenured CEO of a major telephone company. He delayed his departure in 2006 when AT&T agreed to buy BellSouth Corp. for $86 billion.

After becoming CEO of SBC Communications in 1990, Whitacre spent the next 17 years rejoining companies that were formed when regulators split up AT&T Corp. in 1984. SBC, the smallest of the eight Baby Bells, changed its name to AT&T Inc. after the purchase of AT&T Corp. in 2005.

In 2006, AT&T posted its first annual share price increase in eight years. The stock advanced 46 percent, outpacing the gains of the second-largest U.S. phone company, Verizon Communications Inc., whose shares increased 28 percent.
Whitacre is “a guy who was very innovative, took a company that had a lot of advanced technology, merged it with a company that didn’t have quite the same and created a different culture and was able to be very successful in the marketplace,” Kresa said.