Ex-Home Depot boss to lead New Chrysler By DEE-ANN DURBIN, AP Auto Writer

Ex-Home Depot boss to lead New Chrysler By DEE-ANN DURBIN, AP Auto Writer
Mon Aug 6, 4:48 PM ET



AUBURN HILLS, Mich. - Chrysler got a taste of its new owner's swift and decisive style Monday as its chief executive was demoted and the former head of Home Depot was tapped to lead the automaker through a major restructuring.

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Bob Nardelli, who left The Home Depot Inc. in January after a shareholder rebellion over his outsized pay, was named chairman and chief executive of Chrysler LLC, replacing Tom LaSorda, who is taking the No. 2 slot. The changes came just three days after the private equity firm Cerberus Capital Management LP acquired a majority stake in Chrysler.

"The new Chrysler has the opportunity to prove that the private business model can thrive in this industry," Nardelli said. "We have an opportunity to really make a significant change in the auto industry."

LaSorda said Nardelli is a strong manager who has helped companies grow and he is happy to be working with him.

"He's always been a winner, every business," LaSorda said. "Leave the egos at the door. Let's turn around this company."

It marks the second time in less than a year that an auto-industry outsider has come to the rescue of one of Detroit's struggling automakers. Ford Motor Co. named former Boeing Co. executive Alan Mulally as its president and chief executive in September.

Aaron Bragman, an auto industry analyst with the consulting firm Global Insight, said that Detroit needs outside help as it tries to reverse its fortunes. Last month, foreign brands captured more than 50 percent of the U.S. market share for the first time ever.

"Being an outsider in the Detroit world is not really so much a difficulty as it was before as we have seen the Detroit model is in trouble," Bragman said. "This may be the time for fresh eyes."

But Bragman said he's concerned because Nardelli doesn't have product experience, and the most important part of Chrysler's restructuring will be making cars that consumers want to buy.

"Who has become the top product guy at Chrysler? Where is the product guru we had all expected to see?" Bragman said.

Nardelli said he's simply there to offer his expertise to Chrysler as it proceeds with its restructuring plan. Nardelli said he was impressed with the vision and specifics in that plan, which includes cuts of 13,000 hourly and salaried jobs in the U.S. and Canada by 2009.

"It's clear to me that Chrysler has an experienced and talented team," he said. "I'm confident that we'll continue the momentum of Chrysler's recovery.

Some wondered what effect Nardelli's hiring would have on ongoing contract talks with the United Auto Workers. Nardelli helped increase revenue and profits at Home Depot and raised the number of stores the company operates. But he resigned from the company after it came under intense criticism for his hefty pay and slumping stock price. Nardelli left Home Depot with a golden parachute worth $210 million.

Nardelli said Monday UAW President Ron Gettelfinger brought up his pay package during a recent two-hour meeting, but he added that the two established a good relationship. Nardelli said LaSorda will continue to have primary responsibility for the contract negotiations.

A message was left Monday with the UAW seeking comment.

Pete Hastings, an auto industry corporate bonds analyst with Morgan Keegan & Co., said Nardelli's aggressive leadership style may hurt the company as Chrysler and the UAW hammer out a new labor agreement. The old agreement expires Sept. 14.

"He would not have been my first choice if I had been making the decision," Hastings said. "Tact is important to get done what you need to do in transforming the company and working with the unions, and I'm not sure that's his strong suit."

Nardelli said Monday that his compensation at Chrysler would be based on the company's performance, but he wouldn't give any more details. A company official familiar with his agreement said Nardelli would make $1 a year with further compensation based on performance. The official spoke on condition anonymity because Nardelli's agreement isn't public.

Nardelli said he hopes his Home Depot pay package doesn't become an issue.

"The last thing that I would want to be as part of the new Chrysler is a distraction," Nardelli said.

Like other U.S. auto companies, Chrysler has been struggling to make a profit while sales were falling and pension and retiree health costs were rising. Chrysler made $1.8 billion in 2005 but lost $618 million in 2006 and $1.98 billion before interest and taxes in the first quarter of this year.

On Friday, DaimlerChrysler transferred an 80.1 percent stake in Chrysler to New York-based Cerberus, one of the world's largest private equity companies, in a $7.4 billion deal. The German automaker, which is to be renamed Daimler AG, retained a 19.9 percent interest in Chrysler.

Chrysler, which shot off fireworks Monday to celebrate its new status, also announced that it is reviving the company's Pentastar logo. First used in 1962, the five-pointed star is returning with a three-dimensional update. The symbol will be used on buildings, signs and corporate stationery but not on vehicles or in dealerships, LaSorda said.

Besides Nardelli and LaSorda, the 11-member Chrysler board now includes representatives from Cerberus and DaimlerChrysler as well as independent directors. Chrysler's chief operating officer, Eric Ridenour, decided to leave the automaker after 23 years, Chrysler said.

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Chrysler LLC: http://www.chryslerllc.com