Cerberus Capital Management has taken its first steps in restructuring Chrysler, with the selection of ex-Home Depot head Bob Nardelli to become the troubled automaker’s chairman and chief executive officer. The US private equity firm’s $7.4 billion (€5.4 billion) acquisition of the company closed Friday.
Nardelli was previously chairman, president and chief executive of Home Depot from 2000 until this January, when he was replaced by Frank Blake amid shareholder criticism of his compensation package and management style. Near the end of Nardelli’s tenure at Home Depot, the home improvement retailer’s stock price had slumped and its retail stores’ sales were falling.
Its wholesale division, which Nardelli had assured shareholders should be further developed and strengthened, was recently sold to The Carlyle Group, Clayton Dubilier & Rice and Bain Capital for $10.3 billion.
During the course of Nardelli’s employment at Home Depot, however, he doubled sales and the number of store operations, expanded into Mexico and China, and grew earnings-per-share more than 20 percent per annum for four consecutive years, while increasing dividends from 16 cent to 90 cents per share, according to a statement released by Chrysler.
“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,” said Tom LaSorda, currently chief executive of Chrysler. “His background in operations will provide valuable knowledge as we continue Chrysler’s turnaround.”
Nardelli will succeed LaSorda, who was previously expected to retain his position, but instead will serve as Chrysler’s vice chairman and president.
Cerberus and Chrysler had first hoped to appoint Cerberus advisor and former Chrysler CEO Wolfgang Bernhard to the role of chairman, but Bernhard declined “due to personal and family reasons”.
Before his tenure at Home Depot, Nardelli held various high-level positions at General Electric, including senior vice president and president and chief executive of GE Power Systems. He left the company after losing a succession battle for the roles of chairman and chief executive to Jack Immelt. Nardelli has no previous experience in the automotive industry.
Nardelli’s compensation at Chrysler will be tied to the company’s performance, according to Cerberus spokesman Peter Duda; he will not be paid unless the company’s earnings improve. The company has not specified how Nardelli will be paid if its earnings do improve.