U.S. selects new Chrysler chief for post-bankruptcy automaker

5/21/2009

NEW YORK - Robert Kidder will become chairman of a restructured Chrysler LLC after the automaker emerges from bankruptcy as a new company allied with Italy's Fiat SpA.

Mr. Kidder will be the first government-appointed director of the new automaker, which will be called Chrysler Group LLC.

He will replace Robert Nardelli as chairman but will not assume Mr. Nardelli's role as chief executive officer. That job is expected to go to Fiat CEO Sergio Marchionne. Mr. Nardelli has said he will step down when Chrysler comes out of bankruptcy.

Chrysler found Mr. Kidder through Spencer Stuart, a New York executive recruiting firm the automaker hired at the request of the Obama Administration's auto task force, a person familiar with the matter said.

"I am confident that Chrysler will emerge from Chapter 11 a lean and powerful competitor, combining its own rich history of innovation with Fiat's technology and expertise to invigorate the American car market and to challenge other car companies around the globe," Mr. Kidder said.

He could not be reached for further comment.

Mr. Kidder grew up in Michigan and Toronto and received a degree in industrial engineering from the University of Michigan. He lives in Columbus. It is not known whether he plans to move to the Detroit area.

Mr. Kidder does not come from an automotive background, but the 64-year-old has a lengthy corporate resume and was identified early on by the U.S. Treasury Department to become one of the new Chrysler's board members. The auto task force approved his appointment to the board and as chairman.

Under the terms of the proposed Chrysler-Fiat partnership, the U.S. government will select four of the nine members of the Chrysler board; the remaining five will be chosen by other Chrysler stakeholders.

Mr. Kidder began his career at the Chicago office of consulting firm McKinsey & Co., where his clients included Ford.

He became chief executive of Duracell in 1989, when the battery maker was taken over by Kohlberg Kravis Roberts in one of the largest leveraged buyouts of the 1980s.

Mr. Kidder was credited as the architect of Duracell's "copper top" battery marketing that helped the company close the gap on market leader Eveready. At Duracell, Mr. Kidder was also part of the management team that became 30 percent owners of the firm in the KKR buyout.

After a brief retirement, he returned to KKR to become chief executive of Borden where he oversaw efforts to split up and sell off business units such as Borden Dairy and Borden Food.

Mr. Kidder serves as the chief executive of Columbus-based 3Stone Advisors, which manages a private equity fund focused on investment in water testing and quality monitoring.

Mr. Kidder also is the lead director on the board of Morgan Stanley, one of the creditors that agreed to swap nearly $6.9 billion in Chrysler debt for $2 billion in cash. And he is on the boards of drug manufacturer Schering-Plough Corp. and Microvi Biotech Inc.

"He is a very blue-chip candidate with an appropriate resume," said John Casesa of Casesa Shapiro Group LLC in New York. "His job is to be an agent for the stakeholders and he is certainly equipped to do that."

In related news, a top executive said Chrysler's Chapter 11 filing so far doesn't appear to be affecting May sales. Early sales data show the company is on pace to sell 60,000 to 70,000 vehicles to individuals this month, better than expected considering its April 30 bankruptcy filing, said Steven Landry, executive vice president for sales and marketing.

Part of its effort to reduce its inventory of unsold cars, the firm is offering six-year, no-interest loans on some 2008 model-year vehicles. The program runs through June 1 and is being run by Chrysler Financial. The incentives cover Jeep Grand Cherokee and Commander sport-utility vehicles, Dodge Ram pickups, and Chrysler 300C sedans, a spokesman said.

However, if Chrysler's bankruptcy plan is approved, current owners of Chrysler, Dodge, and Jeep vehicles may find that their right to sue the automaker for injury-causing defects is a matter of debate.

Under the proposed plan, which details how the automaker plans to restructure and emerge as a new company in a partnership with Fiat SpA and the United Auto Workers, the new Chrysler would honor existing new-car warranties, but there is no promise that it will be responsible for future product-liability suits brought by owners of vehicles sold before the automaker filed for bankruptcy.

The proposal, made late last month, is before the bankruptcy judge overseeing the company's reorganization effort.

Separately yesterday, the judge, Arthur Gonzalez, ruled that Chrysler can use $4.96 billion in government loans to keep operating and create a bridge to the sale of its most valuable assets to Italy's Fiat.

The action permitted the firm to use $600 million from the government to cover losses GMAC Financial Services incurs related to Chrysler loans and $260 million related to Canadian government financing.

Judge Gonzalez also ruled that the automaker can pay its dealers and essential suppliers for prebankruptcy obligations and denied a motion from a pair of Indiana state pension funds and a state construction fund to delay the proposed sale of most of Chrysler's assets.

The company plans to sell the vast majority of its assets to a group led by Fiat and form a new company, leaving behind many of the liabilities and costs that had sent it into bankruptcy protection. A sale hearing is scheduled for Wednesday.