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Reporting from Washington and Los Angeles — Pilloried and vilified, Rick Wagoner has agreed to step down as General Motors Corp.’s chairman and chief executive at the behest of the White House as part of a plan to provide more aid to U.S. automakers, administration officials said today.
Wagoner, who has been the company’s top executive since 2000, has come under increasing fire over the last year as GM’s financial condition has deteriorated. In his eight years at the helm, GM has lost $68 billion and the company’s stock value has declined 95%.
Wagoner was asked to depart GM as part of that plan, said an administration official who spoke on the condition of anonymity because the official was not authorized to talk publicly. No indication was given that similar leadership changes would be asked of Chrysler.
GM spokesmen would not confirm Wagoner’s departure.
“But it’s got to be one that’s realistically designed to weather this storm and to emerge at the other end much more lean, mean and competitive than it currently is,” he said, noting that that would “mean a set of sacrifices from all parties involved.”
With sales collapsing last fall, GM warned it would run out of money by year’s end without federal support. The Bush administration gave it $13.4 billion in federal loans. Chrysler, which also requested help, received $4 billion.
On Feb. 17, both companies submitted restructuring plans, including further loan requests. GM asked for as much as $16.6 billion in further aid, while Chrysler requested $5 billion.
In nearly six weeks since then, an auto industry task force headed by Treasury Secretary Timothy F. Geithner has been meeting with key stakeholders, including auto executives, the United Auto Workers union leadership and representatives for bondholders owed billions of dollars by the two companies.
“We are anticipating an announcement soon from the administration regarding the restructuring of the U.S. auto industry,” GM spokesman Dan Flores said Sunday. “We continue to work closely with members of the task force and it would not be appropriate for us to speculate on the content of any announcement.”
A source familiar with internal discussions at GM said it was likely that company President Fritz Henderson would succeed Wagoner as chief executive.
Wagoner, whose compensation last year was valued at $14.9 million, had agreed to accept a 2009 salary of $1 under the terms of the first round of federal support.
Under the terms of the U.S. bailout of GM, the tax deduction the company received for any severance payment to Wagoner is limited to $1 million. The deduction limit might be reduced to $500,000, depending on how Wagoner’s severance is structured.
GM’s board of directors, which Wagoner had chaired since 2003, has repeatedly stood behind him, publicly reaffirming its support of him several times in the last year. Wagoner, a Duke University graduate with a master’s degree in business administration from Harvard, has spent his entire career at GM, also working for the company in Canada, Brazil and Europe.
In the last four years, the company has lost billions of dollars as sales have declined, accelerated last year by the spike in gas prices that highlighted the automaker’s over-dependence on profit from sales of full-size pickups and sport-utility vehicles.
Last year, GM’s U.S. sales declined 23%, while it ceded its position as the world’s highest-volume seller of autos to Toyota Motor Corp. for the first time. In the first two months of the year, GM’s sales of cars and trucks in the U.S. have fallen 51%, and last month the company said it lost $30.8 billion last year, its second-largest in history.
Shares in GM, which have traded as low as $1.27 this year, closed at $3.62 on Friday.