Chrysler's New 'Tough-as-Nails' CEO

(page 2 of 2)

UAW President Ron Gettelfinger did not offer comment. Nardelli said Monday that he spoke with Gettelfinger, and that the union chief did query him about his "executive pay" at Home Depot. He told the new CEO: "I don't care about washing machines and snow blowers. I care about cars."

Strong Support

Cerberus founder Stephen Feinberg has not granted an interview but an executive who has spoken with Feinberg says the financier "worships" General Electric's management, and has been an admirer of Nardelli's. Feinberg, says the executive, believes that Nardelli's true "genius" will come out when he can manage out of the glare of "quarterly earnings reports, shareholder meetings, and daily share prices." The same executive says he expects that Nardelli and Feinberg will recruit more former GE executives "who think like they do" to Chrysler.

Another Nardelli fan is Kenneth Langone, the man who brought him in to head Home Depot in 2000. Langone also has taken a lot of heat for his support of Nardelli. "If right now I was a Chrysler investor, I'd be very happy," Langone said at the Academy of Management's annual conference in Philadelphia, where he took part in a panel discussion about private equity.

Langone credited Nardelli with bailing Home Depot out of its failed South American excursion, stabilizing the business, and raising profits, even if the stock price was lackluster. "He's probably the best operating executive I've ever known," Langone said. Nardelli's work ethic, detail-oriented philosophy, and his knack for deciphering costs and benefits are traits that will serve him well at the struggling automaker, Langone continued.

"If anyone can save Chysler, Nardelli can," Langone said.

"Not a Time to Play Nice"

So now Nardelli replaces the panoramic view of downtown Atlanta at his Home Depot office with one of the suburban strip malls of Detroit's northern suburbs. But the wounds inflicted in his battles with shareholders and employees at the home-improvement retailer still haven't healed for some. For the last year, as Nardelli's fate remained a mystery, there was much speculation around the Peach State about what his next job would be.

The news that he would run privately held Chrysler for a hedge fund such as Cerberus came as little surprise to some of his sharpest critics. "His only future was with the asset boys, the private equity firms," says A. Leigh Baier, an Atlanta attorney and Home Depot shareholder who challenged Nardelli's allegedly poor treatment of employees during his tenure. "I don't think any public company would have touched him. I'm glad there are no shareholders who are going to get hurt if these guys are wrong."

Nardelli has been the poster boy in the ongoing debate over whether CEOs are paid too much. Nardelli ran Home Depot for almost six years until he parted ways with the retailer's board last January. In addition to being one of the best-paid CEOs at the same time the company's share price was stagnating, Nardelli received $210 million as he was headed out the door. At Cerberus and Chrysler, Nardelli's compensation agreement is being kept confidential and out of the headlines.

But if Chrysler can turn itself around then Nardelli will have earned his payday, whatever it might be. And auto insiders such as Mike Jackson, CEO of AutoNation (AN), Chrysler's biggest dealer network, says he could be the right choice. "Chrysler has to reinvent the way it has been doing business for the last 100 years, from a push-production model to one that is a consumer-pull business," says Jackson. "And you are going to need a tough-as-nails executive who will move quickly and decisively, and Nardelli is that kind of guy," says Jackson. "This is not a time to play nice."

Kiley is a senior correspondent in BusinessWeek's Detroit bureau.

With David Welch and Brian Grow