GM's Bankrupt Board
There's just one thing dumber than a CEO who watched his company lose $83 billion over a span of four years: A board of directors who leave their dirty work to the president of the United States.
Yes, we're talking about General Motors (Stock Quote: GM) and the ouster—at Obama's behest—of chairman and CEO Rick Wagoner.
Wagoner, the 56-year-old Harvard MBA who spent his entire career at GM until this week, might feel like calling his Ivy League alma mater for a tuition refund. It seems he was unprepared for the mess he got himself into.
GM has not been profitable since 2004 and its bottom line has been sinking for more than half a decade. The axe finally came down on Wagoner this week after he presented a turnaround plan that the Obama administration rejected. GM already received $17 billion in emergency loans from taxpayers and Wagoner was asking for another $16.6 billion.
The Obama administration publicly paraded him down the plank. Or, as Wagoner put it, "requested that I 'step aside,'" as an example of what can happen to executives who run a loose ships, then request tens of billion of dollars in government support.
Wagoner's credibility was already shot after he flaunted his poor judgment by flying to Washington in a corporate jet to make his first plea for government bailout money.
GM's board didn't seem to notice, but then the board members aren't really Mensa material either.
The current roster is comprised of 11 directors who have spent an average of 7.75 years on GM's board. Outside of that, their experience with the auto industry and corporate turnarounds is slim, and provides a shining example of what can happen when directors from healthy blue-chip companies in the food, beverage, drug, photography, computer, payroll-processing and defense contracting industries are charged with overseeing an ailing automaker.
In fact, not only did the board shirk its responsibilities to crack the whip on the CEO, it resisted meaningful change from a major shareholder. GM's board fought tooth and nail to keep former Chrysler CFO and restructuring veteran Jerome York away, despite a push from Kirk Kerkorian - once the No. 3 investor in GM - to add York to the board. While York eventually joined their ranks, he resigned with a fiery letter in October 2006.
"I have not found an environment in the board room that is very receptive to probing much beyond the materials provided by management," York wrote.
Translation: What a bunch of dumb chumps.
By Lauren LaCapra.
Dumb-o-meter score: 95 -- Whether or not GM ends up in bankruptcy, one thing is clear: GM's board is intellectually bankrupt.