Word: gm
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Dates: during 2000-2009
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More important, Perot demanded much greater autonomy for EDS than Smith was prepared to grant. When Perot became impatient with the pace of change at GM and began carping publicly about the need to "nuke the GM system" and "teach an elephant to tapdance," the clash of personalities and cultures became increasingly intolerable. Ominously for Smith, the dispute threatened to escalate into a battle for control of GM. Says a source close to the conflict: "The question for the board was how it could have good corporate governance with two chief executive officers...
Perot's sudden resignation from the GM board and from the chairmanship of EDS created an instant uproar and raised new uncertainties about the future of the troubled company. Wall Streeters questioned the economic wisdom of GM's paying so much money to jettison an in-house critic. Pundits quipped that Smith had paid a hefty "ransom" to free himself from his adversary?a reference to last week's revelations of Perot's financial support for National Security Council efforts to ransom American hostages held in Lebanon. One of Perot's assistants dubbed the GM payoff "hush-mail." Shareholders, meanwhile...
...heart of the dispute was the relationship between EDS and GM. The two have become closely linked: EDS runs all GM's computerized operations, from processing paychecks to programming robots on assembly lines. But in the original merger agreement Perot had insisted that he and EDS be granted a highly unusual degree of independence. He did not want the parent company to audit EDS. Moreover, he demanded that EDS be allowed to maintain a different pay structure from GM's?one that called for greater variation in salaries and bonuses, to give EDS employees better incentives for good performance...
...Smith fired back with some broadsides of his own. Perot's office, he complained to the Detroit Free Press, "makes mine look like a shanty-town. He has a Gilbert Stuart painting hanging on the wall." Said Smith: "[Perot] is a different type of guy than we are in GM. He is very independent. He is the type of guy that would saddle up his horse and ride to Iran to rescue people...
Some industry experts thought that Smith was justified in driving Perot away. Said Bernard Addo, an auto analyst for Manhattan's Argus Research: Perot may have been a skillful entrepreneur, but entrepreneurship and team management are two different things. Perot was hurting GM's stock by publicly bashing the company's management." Other observers were appalled at the buyout. GM officials got rid of Perot, contended Mary Anne Devanna, director of research at the Columbia Business School Management Institute, "to protect their own hides. Their careers, big bonuses and fancy perks all depend on maintaining the status quo. GM...