Auto outsider to lead GM board

Former AT&T chief Whitacre, blunt and demanding, to drive GM post-bankruptcy

Robert Snell / The Detroit News

The new General Motors Corp. will have a new, blunt-talking industry outsider overseeing the automaker's management later this summer who has experience transforming heavily regulated companies.

Edward Whitacre Jr., the former chairman and CEO of AT&T Corp., whose experience transforming SBC Communications, the smallest of seven "Baby Bells," into the industry's largest telecommunications company could lend itself to his new role as chairman of GM, which is trying to evolve from bankrupt automaker into a viable, profitable enterprise.

The cowboy boots-wearing, big-thinking Whitacre was named Tuesday to head the "New GM" once it emerges from bankruptcy court, which is expected later this summer. The new company will be majority owned by the federal government. The appointment is expected to give GM credibility on Wall Street, where Whitacre is respected for leading a series of mergers and acquisitions that ultimately saw SBC gobble up former parent company AT&T.

"He is superman," said Gerald Meyers, a University of Michigan professor and former chairman of American Motors Corp. "He isn't a loveable guy. He's not going to be your friend. He is blunt, but he's so often right that you accept the abuse."

The move comes eight days after GM filed Chapter 11 bankruptcy and starts to fulfill the Obama administration's mandate to replace a majority of the automaker's board as a condition of the more than $19.4 billion in loans given to the company.

"I am honored to be able to serve GM at this critical juncture and take part in its reinvention," Whitacre said in a prepared statement.

Until the new GM emerges, interim Chairman Kent Kresa will continue in that role.

Whitacre and Kresa will lead the New GM board along with current directors Philip Laskawy, Kathryn Marinello, Erroll Davis Jr., E. Neville Isdell and President and Chief Executive Officer Fritz Henderson.

The six remaining members will "most likely" retire by the time a bankruptcy judge approves the sale of GM assets to a new entity, the automaker said Tuesday. Kresa is searching for four more directors, and the Canadian government and the United Auto Workers health care trust will each nominate one director. That means GM's new board will have 13 directors.

The appointment was a surprise choice, considering Whitacre's status as an auto industry outsider and that many telecom industry observers expected they would never hear from Whitacre after he retired in 2007 as chairman and CEO of AT&T.

It was an appointment that sends a message, industry experts said.

"If you bring in people who have been in the industry, you're not going to get new thinking," said wireless and telecom industry analyst Jeff Kagan. "Maybe he has that magic needed to bring General Motors back to life."

The appointment sets up an interesting dynamic between Whitacre and Henderson.

"Assuming the chemistries mix, it will be great, but we don't know whether the chemistries will mix," Meyers said. "Fritz is a nuts and bolts automobile hardware and finance guy. Whitacre is not. He is a broad thinker and as demanding as you can be."

Kresa acknowledged the relationship will be key.

"That's something that is in front of us, but I really don't know. I see no reason why they won't get along," Kresa told The Detroit News. "They are both open to the ideas and opinions of others. I think there will be a good dialogue."

Whitacre, 67, served at AT&T and its predecessor companies for 17 years before retiring in 2007 with a $158 million payout, having built AT&T into the largest telecommunications company in the country.

That feat began as an audacious dream. He started at Southwestern Bell in 1963 as a facility engineer. The firm later became SBC Communications, a "Baby Bell" spun-off in 1984 during the government breakup of AT&T. SBC was a regional, though profitable, local phone service provider when Whitacre took over in 1990.

In 1996, the Telecommunications Act prompted a flurry of mergers and acquisitions.

Whitacre made at the time an outlandish boast: he wanted to merge with AT&T.

"We all laughed," Kagan said.

But Baby Bells started merging and SBC quickly grew into a global communications provider by acquiring three companies between 1997 and 1999.

By 2005, AT&T was an "injured company," Kagan said, after the long-distance industry crumbled.

Whitacre made another bid, succeeded, kept AT&T's iconic corporate name and grew the company into a wireless, Internet and television service provider.

There are similarities between the transformation of AT&T and GM today, said Stephen Spivey, senior auto industry analyst with Frost & Sullivan.

"Whitacre basically took Southwestern Bell and reassembled the old AT&T," Spivey said. "GM is being taken apart, it's losing brands and factories and dealers, and once the company gets scaled properly for the market, Whitacre is going to basically put it back together again."

But his tenure at AT&T was not without controversy.

The privacy group Electronic Frontier Foundation sued AT&T in 2006, claiming the telecommunications giant gave the National Security Agency access to the records of domestic and international calls and Internet data traffic following the Sept. 11 attacks.

"He faces the facts, he looks for the truth and he is a person who takes responsibility for his decisions," said Haskell Monroe, a former member of AT&T's board when Whitacre was named CEO. "I think he will make a real impact on (GM's) road back to the main highway."

rsnell@detnews.com (313) 222-2028