Turns out, I have something in common with General Motors' new CEO: neither of us knows much about cars.
Funny, I don't think I even made the short list when President Obama was looking for an industry outsider to bring new leadership to the troubled automaker. Maybe the president and Steven Rattner, Obama's top advisor on the auto industry bailout and the man credited with picking Edward E. Whitacre, Jr. to run GM, caught wind that I know how to replace the wiper blades on my truck. Maybe they figured I was just another "car guy."
Whitacre definitely isn't a car guy, and, to be fair, his resume is dazzling in ways that mine is not. The 67-year-old Texan, nicknamed "Big Ed," is the retired chairman of AT&T, the telecom giant that, as CEO of SBC Communications (formerly Southwestern Bell), he acquired in 2005. Whitacre had been with Southwestern Bell since 1964, becoming CEO in 1990 and leading the company on a spree of mergers and acquisitions during telecom's boom years.
Upon his retirement from AT&T in 2007, he received a compensation package worth $158 million—a nice pay day, more than twice the $61 million in compensation he received in 2006, according to SEC filings. Though his compensation was widely criticized by activist shareholder groups, many of his friends and colleagues in telecom and on Wall Street say he earned every penny. Even the New York Times describes Whitacre as "the architect of AT&T's rebirth as the nation's largest telecommunications company."
Still, Whitacre, who is known to speak freely, raised more than a few eyebrows when he told Bloomberg News last week, "I don't know anything about cars. A business is a business, and I think I can learn about cars. I'm not that old, and I think the business principles are the same."
As Chris Cooper at CBS's online Econwatch put it, "That kind of sound bite is the equivalent of killer catnip for the blogosphere." Indeed, the Internet is still vibrating with reaction to Whitacre's remark—reaction that is far more pointed and less polite than you'll hear from politicians or see in the traditional media. Conservative blogger Tom Blumer at NewsBusters.com damned Whitacre with faint praise: "At least it's refreshing that this guy has experience running a business, which is more than you can say about the other two architects of the company as it currently subsists." The "other two architects" are Rattner and Brian Deese, the two senior advisors to the president on car issues; neither man has a background in the auto industry.
Marc J. Rauch, executive vice president and co-publisher of The Auto Channel, criticized not only Whitacre's lack of industry experience, but his connection to Big Oil: "[The Obama team] did the worst thing they could do; they brought in a guy who sits on the board of ExxonMobil. This is almost as bad as asking Iranian President Mahmoud Ahmadinejad to fill in as the new security person at the National Holocaust Museum& [Whitacre] appears to have none of the aptitudes needed for the job, based on his job history. And worst of all, coming from the camp of the gasoline-enemy, how is he to lead GM away from its gasoline-guzzling, Oldsmobile-like-stodgy legacy?" Whitacre sits on the boards of several big corporations, including ExxonMobil, for which he is paid nearly $60,000 per year.
The carping over Whitacre's appointment may have little lasting consequence. At this stage of GM's history, even Whitacre's critics agree that the company needs to be shaken up, preferably by someone without ties to the old GM culture. There is some reason to hope that Whitacre can transfer what he learned in an industry that prizes innovation and risk-taking to the slow-moving, change-resistant domestic car industry. With a big stake in GM thanks to the bailout, American taxpayers should be rooting for Whitacre.
Still, it is hard to imagine what professional skills and leadership talents Whitacre has to justify not only his staggering earnings at AT&T, but the faith his supporters have in his ability to compensate for his lack of industry experience at GM. The Whitacre appointment pokes at every kind of populist resentment toward the executive class within publicly traded companies, whose compensation seems far out of step with the value they bring or the results they produce. In this age of specialization, it is jarring to see that the big winners in the capitalist game pride themselves on being generalists. "Business is business," says Whitacre. We'll see if he's right.
