By David Welch Given the troubled state of Detroit's automakers over the past few years, Motown has ranked about as high on the destination list for ambitious executives as it does for vacationers. But private equity firm Cerberus Capital Management, the new owner of Chrysler, has turned that notion on its head. After stealing away one young Toyota (TM) marketer, new Chrysler CEO Robert L. Nardelli--himself a surprise hire--on Sept. 6 poached James E. Press, Toyota's top North American executive, to take the No. 2 job. The next day, Nardelli grabbed Philip F. Murtagh, the man who built General Motors' (GM) business in China.
How has Chrysler assembled what many already call a dream team? Executives see the combination of a high-profile turnaround job, managed by a smart-money player, as a way into the private equity boom. They get equity stakes potentially worth millions, and Cerberus can offer titles that carry more authority than jobs at bigger rivals. Says Bradley J. Holden, a partner with executive search firm Heidrick & Struggles in Chicago, which worked with Cerberus: "Private equity firms can offer huge financial upside and the intellectual challenge of turning a company around. What's not to like?"
Nardelli's star search isn't over. Chrysler is on the hunt for a new chief financial officer, BusinessWeek has learned. Sources close to Cerberus who are familiar with its hiring plans say also that Chrysler is scouting a top executive to focus on improving quality and a chief engineer to beef up its product development staff. Murtagh heads growth plans for China and other Asian markets, and Chrysler may add talent to build its presence in Europe.
Cerberus had been scouting talent even before it acquired Chrysler in May. In March, while it was bidding for the carmaker, its managers were talking to Nardelli, and later had headhunters stocking a pool of hot prospects. They approached Press a few months after. He met with Cerberus founder and CEO Stephen Feinberg over the summer, says a source close to the firm, and Feinberg made an impassioned pitch about joining a patriotic mission to save an American icon. Deborah Wahl Meyer, the former vice-president of marketing for Toyota's Lexus division who became Chrysler's chief marketing officer on Aug. 15, was approached by Heidrick in July, met with Cerberus, and negotiated a deal over two months. She couldn't resist the turnaround bid: "You only get a few chances in your career to do this."
Cerberus offers big financial lures. One person with knowledge of how it structured Chrysler's finances estimates that some 5% of Chrysler equity is set aside for the top 75 managers. New managers get a piece of that. Sources close to Chrysler say Press' package is worth at least $50 million and could be worth much more later. It includes a very large signing bonus to cover his Toyota retirement package and stock options granted beginning in 2002. Meyer declined to comment on her pay, but a source familiar with the hire says she also gets performance bonuses and equity. Chrysler declined to comment on pay packages.
The new hires face a giant challenge. Unlike Toyota, Chrysler has brands that need to rebuild respect among consumers, and it must ramp up plans to sell more efficient vehicles. At Toyota, that was all in place for Press and Meyer. "Maybe Press can't do what he did at Toyota because it's a different organization," says John A. Casesa, of New York consulting firm Casesa Shapiro. "But Detroit needs a new business model, and it will only get one with new owners and new management."
Welch is BusinessWeek's Detroit bureau chief