After joining the GM Board following its 2009 bankruptcy, Dan Akerson takes over, today, as its new CEO.
Those who work on the 38th floor of Detroit’s Renaissance Center can be forgiven for feeling like the revolving door has been stuck in overdrive. The senior management offices for General Motors have seen a steady stream of new faces since the beginning of 2009, virtually every top position having changed – at least once – since the giant automaker began sliding towards bankruptcy.
But nowhere has that change been more apparent – or frequent – than in the top spot, where long-time chief executive Rick Wagoner was fired by the Obama Administration, in March 2009, as part of its $50 billion bailout of the troubled carmaker. Today, the fourth CEO in barely two years takes the reigns from Ed Whitacre, the lanky Texan and former AT&T Chairman, who announced his sudden departure last month after laying out the plans for GM’s upcoming IPO.
The new CEO is, to some, an unlikely figure to be running the car company. A graduate of the U.S. Naval Academy, Dan Akerson is not your classic car guy. In fact, he’s had no experience at all with the auto industry other than overseeing several companies linked to the car business when Akerson served as managing director of the powerful private equity firm, The Carlyle Group.
But those who know the 61-year-old Akerson, or who have at least watched him work, say he is probably the best man for the job – at least for now. As GM gets ready to launch the first sale of stock since its rush through Chapter 11, Akerson’s fans and friends say he will bring both the drive and credibility needed to stabilize the automaker, improve its financial operations – and give it some much-needed credibility with the big investors and institutions who will make or break the planned IPO.
“He’ll be a force to be reckoned with,” contends analyst Joe Phillippi, of AutoTrends Consulting.
But Phillippi and others stress that Akerson also will be a very different sort of manager from the “aw, shucks,” folksy Whitacre, who came out of retirement at the request of the White House’s auto task force, signing on as GM chairman and then, late last year adding the CEO title.
Whitacre was, according to those who worked with him, a largely hands-off executive. He had a very clear vision of the changes needed in upper management and flattened out GM’s bloated org chart. But where Whitacre emphasized empowerment – telling executives they could do their job as long as they delivered results – Akerson is seen as a much more hands-on boss, someone who personally reviewed the list of personnel cuts being made while he served as a top executive at MCI.
The second of three children and a native of Mankato, Minn., Akerson’s 1970 Naval Academy yearbook suggests he “made a quick change from high school playboy to a leader.” He certainly proved that true once his five-year stint in the armed forces was completed.
A baseball player and, later, boxer during his school years, Akerson quickly rose in the full-contact business world. Though trained as an engineer, he quickly exhibited a knack for finance. Joining MCI, the fledgling telecommunications company then challenging giant AT&T, Akerson rose to the post of Chief Financial Officer, and then, in 1992 was named president and COO.
After leaving MCI, in 1993, Akerson would go on to become a CEO three times. His primary field of expertise echoes Whitacre’s, and is concentrated in the telecomm world – where he served with equipment supplier General Instrument, then Nextel Communications and, from 1999 to 2003, XO Communications.
XO was one of Akerson’s few setbacks. The firm, which bundles telecomm and Web services, was highly leveraged when the former Navy officer arrived, and it was pummeled by the economic downturn that followed the 9/11 terror attacks. Akerson remained with XO through its seven-month bankruptcy, but left in early 2003 for The Carlyle Group.
A once shady firm that was heavily leveraged in the world of military suppliers, Carlyle had begun to shift its business strategy, acquiring companies like Dunkin’ Donuts and Baskin-Robbins – as well as AxleTech, a suburban Detroit firm that produced drivetrain components, and Hertz Rent-a-Car. Still, it wasn’t exactly the car business, but Akerson’s interest in automotive was clearly whetted. And, when GM went into bankruptcy, in May 2009, and went looking for a new board of directors, the executive raised his hand.
He was an unlikely prospect; Akerson was an active Republican, for one thing, who supported President Barak Obama’s former opponent, Sen. John McCain. The GOP had, in fact, blocked a proposed Congressional bailout of both GM and Chrysler, forcing the White House to tap the TARP fund originally approved to save the nation’s banks.
But Akerson’s Carlyle associate, David Marchick pitched him to the auto task force chief, Ron Bloom, and he was quickly given the job.
“They put him in place because of his relationship with Wall Street,” suggests George Peterson, chief analyst with AutoPacific, Inc.
For decades, critics decried the old General Motors board as little more than an old boys club quick to use the rubber stamp. On the new board, Akerson has maintained a reputation for doing the homework and asking the tough questions. It’s earning both Akerson and the new GM management some much-needed credibility, and may be the major reason why Whitacre was so quick to step down after the automaker submitted the necessary paperwork for an IPO to the Securities and Exchange Commission.
The argument that GM should have a “car guy” as its chief executive is “nonsense,” argues Jim Hall, a long-time industry insider and now head of 2953 Analytics. The company has plenty of good senior executives who are straightening out car development and automotive marketing operations. Where GM still has trouble is on the financial side, where management was “so inbred as to become the automotive equivalent of a hemophiliac,” Hall insists.
Adding discipline and more of a worldview is a critical task for Akerson, as well as stability. Observers stress that those who’ll be asked to invest tens of billions into GM’s IPO want to be sure that the revolving door won’t keep spinning. The word on the “street” is that the new chief executive will be in his post for at least several years.
His personal worth estimated, in 2009, to be north of $130 million, the 61-year-old doesn’t have to worry about either making money or being popular. “I’m not running for class president,” Akerson has been known to say. But there’s no question Dan Akerson is a driven man. If he can deliver, his telecomm background will matter little. The first big test will come as he sells the world – and its biggest investors – on the merits of the GM IPO.