Cerberus Plays Executive Musical Chairs At Chrysler; Bob Nardelli New CEO

For the second time in little less than a year, an auto industry outsider has been appointed to head one of the 'Big Three' U.S. auto companies. Cerberus Capital Management LP, which recently purchased 80% of Chrysler from German carmaker Daimler (Daimler retained ownership of the remaining 20% of the company) appointed ousted Home Depot CEO Robert Nardelli to head up Chrysler. (Another industry outsider, Alan Mulally, was appointed CEO of Ford last September, after serving at Boeing.) The move means a demotion for current Chief Tom LaSorda, who will now become Chrysler's President. Chief Operating Officer Eric Ridenour will leave the company entirely as a result of Nardelli's appointment. Nardelli was ousted over outrage regarding his pay package at Home Depot, which culminated in a $210 million, one-time, severance package. While Nardelli profited heftily off Home Depot during his years there, its stock remained essentially flat. Lasorda said of Nardelli's addition to the Chrysler team, "Bob has a proven track record of success and an unwavering focus on performance, and brings deep operational experience and a broad industry background to Chrysler. His background in operations will provide valuable knowledge as we continue Chrysler's turnaround." Chrysler posted a $680 million net loss for 2006 prompting owner Daimler to sell to Cerberus.

Sources: Press Release, Wall Street Journal, The New York Times, Bloomberg
Commentary: Cerberus' Acquisition Makes Chrysler Circle The Wagons • Home Depot CEO Bob Nardelli Resigns, Shares Up Strongly • Home Depot's Board Is to Blame for The Nardelli Affair
Stocks/ETFs to watch: DCX. Competitors: GM, F, TM, HMC, NSANY
Earnings call transcripts: DaimlerChrysler Q2 2007

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