DETROIT -- Amid the rumbles on Wall Street questioning the ability of General Motors Chairman and CEO Rick Wagoner to do the job, GM's board of directors made an unusual move Sunday. The board granted him a vote of confidence during a special board meeting.
But the board did not shout its support from a mountaintop. In fact, news of the vote was buried five paragraphs into a press release about GM's agreement to sell a controlling stake in its financing unit, General Motors Acceptance Corp., to a consortium led by Cerberus Capital Management.
"While there is still much work to be done, the GM Board has great confidence in Rick Wagoner, his management team and the plan they are implementing to restore the company to profitability," said George Fisher, presiding board director, in the statement.
Until recently, it appeared that Wagoner had the full backing of GM's board members. But new revelations in the past few weeks of GM's accounting irregularities, coupled with the other problems GM faces in North America, prompted buzz about Wagoner's ability.
Wall Street analysts and the media began questioning Wagoner's leadership after GM's poor sales performance last year. GM initially reported a net loss of $8.6 billion in 2005 and then added another $2 billion in red ink when it restated earnings.
The heat on Wagoner intensified when GM announced last month that it was delaying its 10K filing with the Securities and Exchange Commission because of accounting adjustments. Those included increasing the amount it would spend to help its largest supplier, Delphi Corp., emerge from bankruptcy. It also had underestimated its own restructuring costs.
GM also determined that it erroneously classified cash flows from the residential mortgage subsidiary of its financing arm, GMAC. That unit is called Residential Capital Corp., or ResCap.
Amid these restatements, documents filed with the SEC show that GM is the subject of at least six accounting investigations.
All this is especially embarrassing for Wagoner because he rose through GM's finance ranks and served as GM's CFO. Wagoner took over the CEO post in 2000. GM's board named him chairman in 2003.
Wagoner says that after speculation about his job security last week, "that vote seemed appropriate."
"I appreciate the support," he says.
The board did not attach any goals or timetables for Wagoner to meet with their vote of confidence, he says.
"People are not checking numbers every month," Wagoner says. "That's not how we work."
Wagoner declined to speculate on whether he would have resigned had the board not given him a thumbs-up.
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