Former AT&T CEO Edward Whitacre Jr. to become new GM chairman (Rattner/Obama involved)

DETROIT -- A former CEO and chairman of telecommunications giant AT&T Inc. will lead General Motors Corp.'s board after the automaker emerges from bankruptcy protection, GM said Tuesday.

Edward Whitacre Jr., 67, eventually will replace Kent Kresa, who will remain GM's interim chairman until the reorganized automaker emerges as a new company that's majority-owned by the U.S. government.

Whitacre was chairman and chief executive of AT&T and its predecessor companies from 1990 to 2007. During his tenure, he led the company through several acquisitions and sales.

Whitacre sits on the boards of Exxon Mobil Corp. and the railroad company Burlington Northern Santa Fe Corp.

GM said Whitacre will join the nucleus of a new board that will include Kresa and current members Philip A. Laskawy, Kathryn V. Marinello, Erroll B. Davis Jr., E. Neville Isdell and CEO Fritz Henderson.

The remaining six members of the current GM board will "most likely retire" by the time most of GM's assets are sold to the new GM in bankruptcy court, the company said in a statement. Kresa is leading a selection process to pick four new directors, while the Canadian government, which also is providing financial aid to the company, will pick a board member and a United Auto Workers union retiree health care trust will select another.

That will bring the board of the new company to 13 members, one more than the current board.

Kresa, a GM board member since 2003, was named interim chairman in March when the Obama administration's auto task force forced out Rick Wagoner as chairman and CEO. Henderson, GM's former president and chief operating officer, was named CEO and continues in that role.

GM has been operating under Chapter 11 bankruptcy protection since June 1 as it seeks to reorganize and shed unwanted assets. So far it has received about $20 billion in loans from the U.S. government.

"The appointment of Ed Whitacre as chairman represents a very auspicious beginning for the New GM," Kresa, a former chairman and CEO of Northrop Grumman Corp., said in the statement. "We look forward to working with him to complete the reinvention of GM and maximize the enormous potential of this new enterprise."

Whitacre made his name by building regional phone company Southwestern Bell into the largest telecommunications provider in the country, snapping up the AT&T brand along the way.

Telecom industry analyst Victor Schnee at Probe Financial said Whitacre's appointment to GM was "bizarre."

"The guy accomplished a number of things in telecom and we all thought the book was closed," Schnee said.

Whitacre was "old-school empire builder," Schnee said, and deserves credit for investing early and heavily in wireless.

But in terms of long-term visions for the industry, Whitacre was not much better than GM's management, in Schnee's opinion.

"What happened was that wireless came along and created one of the most amazing growth markets in the world, and therefore bailed out sinking ships like Verizon and AT&T," Schnee said.

Kresa told reporters on a conference call Tuesday that he picked Whitacre with input from Steven Rattner, chairman of the Treasury Department's auto task force.

The government, he said, wants to be very involved in picking GM's board, but after that, does not want to be part of GM's day-to-day operations.

Kresa said he has been searching for candidates who have experienced innovation and corporate cultural change and have seen success.

"We are looking at candidates who have been involved in companies where there has been a dramatic change in the marketplace and the way the company has to address the market," Kresa said. Leadership qualities are above all others, Kresa said.

A second board will be appointed to run the old GM to wind down its remaining assets, Kresa said.

Under terms of a proposed bankruptcy agreement, the U.S. and Canadian governments will own nearly 75 percent of General Motors, with the U.S. holding a 60 percent controlling stake and Canada with 12.5 percent. The UAW would get a 17.5 percent stake and bondholders would end up with the remaining 10 percent. Existing stockholders would be wiped out.

This was the important part, buried way down in the story:

Kresa told reporters on a conference call Tuesday that he picked Whitacre with input from Steven Rattner, chairman of the Treasury Department's auto task force.

The government, he said, wants to be very involved in picking GM's board, but after that, does not want to be part of GM's day-to-day operations.

Whitacre, Kresa said, had experience that was attractive to the government.

From Jim Cramer article “3 CEOs who ought to go” from January 10, 2007 FWIW:

>>AT&T
AT&T (T, news, msgs) CEO Edward Whitacre Jr. is one of the more richly paid CEOs by any standard. He got $57.3 million in 2003-05 in salary, bonuses, options, long-term incentive pay, restricted stock grants and other pay. He earned $85 million during the past five years, an average of about $17 million a year, according to a report from the Corporate Library called “Pay for Failure: The Compensation Committees Responsible.”

Whitacre will continue as a consultant for three years after he retires — at more than $1 million a year. He’ll also get lifetime access to a corporate jet, a car, an office and a support staff. He’s in line for an annual pension of $5.3 million, as well.

Long-term shareholders, meanwhile, have been big losers under Whitacre’s stewardship. True, AT&T stock has advanced 43% in the past year. But it still has a long way to go to make up for terrible performance over the long run. Shareholders who have owned the stock for the past five years have seen returns of just 8.2%. They would have earned about 20% in a Standard & Poor’s 500 Index fund over the same period.

At this year’s annual meeting, AT&T will face several shareholder proposals aimed at reining in Whitacre’s pay, according to Patrick McGurn, a special counsel for Institutional Shareholder Services. A labor union has proposed a vote on whether the company should create greater links between executive pay and company performance. And the United Brotherhood of Carpenters and Joiners of America wants to hear shareholder opinion on whether AT&T shareholders should be able to vote on supplemental executive retirement plans, which are special pension plans for top execs.

“Whitacre deeply misunderstands the current attitudes toward executive compensation,” says one pay expert who asked not to be identified. “They need to sit down and renegotiate his contract. His style of compensation has outstayed its welcome.”

An AT&T spokesman says that Whitacre is “widely recognized for his leadership in the industry and for transforming Southwestern Bell, one of the smallest Bell companies, into AT&T, the world’s largest telecom company.” The spokesman says AT&T is a target of shareholder activists simply because of its size.<<

http://articles.moneycentral.msn.com/Investing/CompanyFocus/3CEOsWhoOughtToGo.aspx

Just another Obama hog at the trough filled with taxpayer dollars.

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