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Last week the answer came: an explosion that hurled Perot off the GM board of directors and into the headlines. At a session that Perot agreed to skip, the other members of the GM board voted unanimously to buy back his 11.3 million shares of company stock for $700 million. In effect, they told the brash Texan that he could take his money and his loud mouth and go away...
...partnership had once seemed so promising. Both men shared the same vision and goal: to use technology to thrust General Motors boldly into the 21st century. When GM in 1984 bought Dallas-based Electronic Data Systems, the computer-services firm that Perot had founded, Smith was trying to inject high-tech know-how and a can-do spirit into a stodgy company. But the job of grafting an entrepreneurial operation onto a highly departmentalized, regimented and unionized organization proved to be more troublesome than anticipated...
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...