Dan Akerson Takes the Wheel at GM

The former Nextel boss replaces Ed Whitacre. He's no-nonsense and has some car experience at Carlyle. But what makes him the right guy for the job?

Illustration by David Parkins

By David Welch

For the directors of General Motors, this should have been a summer to savor. The carmaker has been preparing an initial public offering expected to sell up to $16 billion worth of stock, an impressive sum for an enterprise that was close to dead—filing for bankruptcy protection in June 2009, ceding majority ownership to the U.S. government, cutting 60,000 jobs since 2007, and shedding tens of billions in debt. When GM emerged from Chapter 11 in July 2009, it toughened up its board, replacing most directors and adding private equity star David Bonderman, a founding partner of TPG Capital, as well as three members chosen by the U.S. Treasury's Auto Task Force as possible chief executive officers: former telecom CEOs Edward E. Whitacre Jr. AT&T (T), Patricia Russo (Alcatel-Lucent), and Daniel F. Akerson (Nextel), who in recent years had run the largest private equity fund at the Carlyle Group. In December the new board set about remaking GM management, ousting CEO Fritz Henderson and installing Whitacre, who'd been chairman. He soon chalked up two successive quarters of profitability, a sign GM had regained the stability it needed to return to the public markets.

Then the triumphant summer turned weird. In June and July, investment bankers preparing for GM's IPO road show asked Whitacre the question every institutional investor would want to know: How long did he plan to stay on as CEO? Whitacre didn't answer, and some of GM's directors became concerned. Those who knew him best suspected the 68-year-old Texan, impatient with federal oversight, wanted to leave by yearend—a timetable that wouldn't work at a company going public. Before GM's Aug. 2 board meeting, Whitacre's attorneys told him he would have to disclose his plans in the IPO filing. At the meeting, board members wanted a decision—either stay into next year, they said, or leave now, according to three people with direct knowledge of the talks. To the surprise and irritation of some directors, Whitacre bowed out.

That plunged the board into a leadership crisis at the worst possible moment. Just seven months before, the directors had given Whitacre the job after a search turned up few qualified outsiders willing to accept federally imposed pay constraints. (Whitacre earned a base salary of $1.7 million.) Now several directors suggested launching a new search, but the majority rejected the idea—it would be time-consuming and possibly fruitless, it would disrupt continuity, and it would blow up the autumn IPO schedule. Instead, the discussion soon turned to another of those tough new board members: Dan Akerson, 61, who was already certified as CEO-worthy by the Treasury Dept. and fully immersed in the company's issues. At first the idea gave him pause, say two people with knowledge of the conversation, because it meant moving from his Washington (D.C.) home to Detroit. Within three days, however, he had agreed.

What did the GM board get by promoting another insider? Akerson may have been the board's only option, yet he is not an obvious choice to run GM. Like Whitacre before him, Akerson has never run a heavy-industrial company, let alone one with GM's global reach. "It's a revolving-door CEO," says Charles M. Elson, chairman of the John L. Weinberg Center for Corporate Governance at the University of Delaware. "The job keeps going to people who have no industrial experience." Telecom experts commend Akerson for his turns as president and chief operating officer of MCI in the early '90s, and as CEO of Nextel in the '90s. He turned two upstarts into major players. Nextel never made money on his watch, though that was common in that rapidly expanding, capital-intensive sector. He later had a hand in two debt-laden ventures that went bust, XO Communications and Hawaii Telecom. "He tends to think big," says former telecom analyst Jack B. Grubman, now an adviser with Magee Group, a New York-based consulting firm. "He is definitely a growth guy. He can also be stubborn to a fault."

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