Chrysler Names Nardelli CEO in Executive Shake Up
Cerberus Capital Management on Monday named former Home DepotChief Executive Robert Nardelli as chairman and chief executive of Chrysler in an executive shake-up just after the private equity firm completed a deal to acquire the struggling No. 3 U.S. automaker.
Chrysler's current chief executive, Tom LaSorda, will stay on as president and vice-chairman and continue to lead ongoing talks with the United Auto Workers union as the automaker's No. 2 executive and a consultant to Cerberus.
In a further shake-up, Chrysler's current chief operating officer, Eric Ridenour, will leave and his post responsible for production and product planning will not be filled.
"Chrysler has many deeply talented and dedicated people, and I am confident that together we can continue the momentum of Chrysler's recovery and return this great American icon to a path for global growth and competitiveness," Nardelli said in a statement.
The leadership reshuffle comes after Cerberus closed its $7.4-billion acquisition of an 80.1% stake in Chrysler from former parent Daimler on Friday and underscored both the speed at which the private equity firm was moving to rescue the loss-making automaker and the risks it faces.
But the changes also come at a sensitive time for Chrysler, which is locked in negotiations with the UAW aimed at bringing its hourly labor costs down sharply to make the automaker competitive with Japanese rivals led by Toyota Motor.
LaSorda had been widely expected to stay on as Chrysler's CEO through negotiations on replacing a four-year deal on wages and benefits for UAW-represented workers that expires on Sept. 14.
In Nardelli, Chrysler is getting a former senior General Electricexecutive, who was both credited with overhauling purchasing and technology systems at Home Depot and widely criticized for pay and severance packages seen as excessive.
Nardelli received a severance package valued at $210 million, including a $20 million cash payment, when he left Home Depot in January.
He has agreed to take the senior post at Chrysler for a $1 per year salary, with further compensation tied to the success of the automaker's turnaround, according to the person with knowledge of the situation.
The details of the remainder of Nardelli's compensation package at Chrysler were not immediately available.
Chrysler lost $680 million last year and has said it will remain unprofitable until 2008 as it restructures by cutting 13,000 job cuts and closing an assembly plant dedicated to the slow-selling Dodge Durango sport utility vehicle.
Cerberus had offered Wolfgang Bernhard the position of non-executive chairman for Chrysler, but the veteran Chrysler executive who advised the private equity fund during the acquisition process was unable to accept that role for personal reasons, the person familiar with the matter said.
Under Cerberus, many observers and Chrysler executives had expected Bernhard to end up in a senior role at the newly private automaker.