Media frenzy around investor's alliance move prompts GM's comms staff to rein in rumors
Few events test the mettle of a corporate communications staff like an action in its senior leadership that suggests a power struggle. General Motors has been dealing with that since last year, when investor Kirk Kerkorian raised his stake in the company and began making his views on GM's board known through his proxy, Jerry York.
Meanwhile, embattled CEO Rick Wagoner has been trying to turn the company around, a restructuring that has included the divesting of its stake in Subaru.
Impatient to address GM's historical loss of market share, now at 24.1%, Kerkorian's Tracinda Corp. in June proposed Nissan Motor Co. and its parent, Renault SA, take a 20% stake in GM. GM had to hustle up a response, especially after the press jumped on the news, quoting a note from Tracinda to Wagoner that Nissan and Renault, featuring turnaround wizard Carlos Ghosn as their president and CEO, were interested.
Where was Wagoner? For GM's communications staff, that question and others came to the fore as the carmaker countered media queries.
Says Toni Simonetti, GM executive director of financial, media, and government relations, "Having a board member act on his own and then put the proposal into the public spotlight makes for a terrific challenge for corporate and investor communications."
The company had to act fast. "The phones lit up from the media and, from a lesser extent, from the investment community," she says. "We immediately put a comment out."
GM's late-June release was terse and to the point: The company had received no offer or proposal from Renault/Nissan with respect to an alliance mentioned in Tracinda's filing. "The Tracinda request will be taken under advisement by the GM board of directors. At this time, we have no further comment," states the release.
But speed wasn't enough because news of the unilateral Tracinda action fed speculation about Wagoner's tenure as CEO. As Gerald Meyers, who previously ran American Motors and now teaches at the University of Michigan, said in a June 30 interview with the Associated Press, "Ghosn has a reputation of being a very strong CEO... I can't imagine him taking a back seat to Wagoner."
Todd Turner, president of auto consultancy Car Concepts in LA, says the subtext has been Wagoner himself. "You have a dynamic leader like Ghosn inviting you to a dance, and you have to wonder," he notes, adding that Wagoner may have "looked like he was dismissing the idea out of fear for his job."
But Simonetti points out that, at least initially, the message needed to be simply that GM hadn't had talks with Renault/ Nissan at all. "We wanted to make sure everyone was aware that [the proposal] was an idea from a shareholder, and the board would take it under advisement," she notes.
Early July board meetings only made for "insane media and investor speculation," Simonetti says. "We put out what I felt was a very fulsome press release with a statement from the board and Wagoner that we would pursue these discussions."
The statement, noting that the board and senior management agreed to exploratory discussions with Renault and Nissan, also pointedly counters any notion that Wagoner was balking at talking with Ghosn. "Wagoner will lead the company's effort to conduct exploratory talks with the managements of Renault and Nissan," it states.
"There was a lot of speculation we were resisting this idea," explains Simonetti. "In fact, Wagoner had already put the wheels in motion to have the conversation to see if there was an opportunity worth pursuing."
If GM communications has breathing space, it may be starting about now.
After Ghosn and Wagoner met July 14, the companies agreed "to cooperate in an expeditious, confidential review of the potential benefits of such an alliance." A joint release also makes note of a 90-day review period.
"We're hoping it takes the frenzy out of public coverage of this, which I think is going to be help," Simonetti shares.
Assisting is Kekst & Co., which GM has retained for many years on the corporate side. Other counsel includes the Brunswick Group and McGinn Group for GM's North American turnaround strategy.