Chrysler LLC Chairman and CEO Robert Nardelli announced Thursday he will step down as head of the automaker, which is filing for bankruptcy protection.
“I announced to Chrysler’s Board of Management and our senior leadership as well as the U.S. Treasury that I plan to leave the company and return to Cerberus Capital Management as an adviser,” Nardelli said in a letter to employees.
Cerberus, which has been the majority owner of Chrysler since 2007, appointed Nardelli to the top post at the carmaker.
When a new and restructured company emerges from bankruptcy, which senior government officials say can be accomplished within 60 days, it will be an alliance of the former Chrysler and Fiat SpA. The two signed a partnership agreement Thursday.
The company will be run by a new nine-person board, Nardelli said on CNBC.
The government will appoint six independent board members and Fiat will appoint the remaining three, one of which will be a Fiat employee.
The board will elect a chairperson and select the chief executive officer. The new CEO will be chosen “with the concurrence of Fiat,” Nardelli said.
The post could be held by Fiat CEO Sergio Marchionne or one of his top executives.
Nardelli said the U.S. Treasury Department did not ask him to step down; it was his decision. “I felt it was an appropriate time,” he said.
“I will work closely with all of our stakeholders to complete the restructuring and see that this new company swiftly emerges with a successful closing of the alliance,” Nardelli said. The government asked Rick Wagoner, chairman of General Motors Corp., to step down last month.
Fiat has reached an alliance agreement with Chrysler in which the Italian automaker will supply small vehicle and engine technology, as well as distribution of Chrysler vehicles in Europe and other parts of the world, in return for an initial 20 percent equity stake in Chrysler. Fiat’s share will grow by 5 percent increments. The first will be granted when Fiat starts distributing Dodge, Chrysler and Jeep products outside North America; it will reach 30 percent when Fiat starts building a small and fuel-efficient engine in the U.S. and a 35 percent stake will be awarded when Fiat starts building, in a U.S. plant, a vehicle that gets 40 mpg.
Fiat cannot achieve a majority stake in Chrysler until all government loans are repaid.
“Bringing together Fiat’s world-class technology, platforms and powertrains for small and medium sized cars, and its extensive distribution network in Latin America and Europe with Chrysler’s rich heritage, strong North American presence and talented and dedicated workforce will create a powerful new automotive company, while helping preserve jobs and a manufacturing industry that is critically important to the U.S. and Canadian economies,” Fiat chief Marchionne said in a statement.
Nardelli said the preference would have been to avoid a bankruptcy filing, but “it ended up being the only solution.” The outgoing chairman said he believes the move will “breath new life into Chrysler” and the new company will emerge as a leaner operation.
As a part of the restructuring, Chrysler said most of its manufacturing operations will be temporarily idled effective May 4. Normal production schedules will resume when the transaction is completed, which is anticipated within the next 30 to 60 days. Hourly employees will receive unemployment benefits, as well as supplemental pay that will amount to most of their base wages.