GM vows to repay $6.7 billion in bailout money by June
GM said Monday that interim CEO Ed Whitacre will stay on permanently, and Whitacre laid out a plan to pay back federal bailout money. Both announcements were viewed as positive signs.
General Motors chairman and interim chief executive, Edward Whitacre, announces he will become the permanent CEO of the automaker during a news conference in Detroit Monday.
Paul Sancya/AP
General Motors pledged Monday to repay a US Treasury loan that has helped the company survive, and named interim CEO Edward Whitacre as its permanent chief executive.
The move to repay $6.7 billion debt by June signals that America's largest carmaker may be turning a corner out of crisis faster than analysts had expected, even though many challenges remain. The selection of Mr. Whitacre, meanwhile, means that the carmaker now has certainty about top management.
"This move tells the troops that Whitacre is the boss, and everybody should put on their helmets and march forward," says Joe Phillippi, president of AutoTrends Consulting in Short Hills, N.J.
Whitacre, a former telecommunications executive who has moved to Detroit from Texas, made the same point in his own down-home way.
"This place needs some stability. I guess that's me," told reporters at GM's headquarters in downtown Detroit.
The Obama administration and some analysts cast the GM moves as positive. Still, Monday's news reflects a mixed picture for the firm and for US taxpayers. The Treasury has dished out nearly $50 billion in aid to keep the automaker from possible liquidation in bankruptcy. Most of that money has been converted into an investment stake in GM, and some industry analysts doubt whether the Treasury will recoup the full amount.
Hard to lure to CEOs
Meanwhile, the GM board's choice of Whitacre – just weeks after launching a search for a new CEO – may hint at the difficulty of luring top talent to a company that remains majority-owned by the government.
It's not that Whitacre is a second-rate choice. His track record in telecom made him one of the nation's star CEOs. But he had planned to be only an interim leader. As with other companies that are recipients of extraordinary bailouts, executive pay at GM is subject to the review and approval of an Obama administration "pay czar," Kenneth Feinberg.
