Monday, August 6, 2007

Chrysler's new CEO declines to detail salary package

By Poornima Gupta
Monday, August 6, 2007; 1:54 PM

AUBURN HILLS, Michigan (Reuters) - Robert Nardelli, who was named to head Chrysler LLC on Monday by its new owner Cerberus Capital Management, declined to detail his compensation package, but said it would be tied to the automaker's progress in its turnaround.

Nardelli was widely criticized for a pay and severance package seen as excessive during his term as chief executive of retailer Home Depot Inc. (HD.N). He said he hoped his own compensation would not become an issue in Chrysler's ongoing contract talks with the United Auto Workers union.

"The last thing I would want to be as part of the new Chrysler is a distraction," Nardelli told reporters in a news conference at Chrysler's headquarters. "It certainly is my hope that it doesn't become an issue."

Nardelli said Chrysler's established restructuring plan is adequate but added that as a private company the automaker will look to move quickly to monetize some assets, with a focus on cash flow rather than reported earnings.

As a private company, Chrysler is not required to detail executive pay. Chrysler President and former CEO Tom LaSorda and Cerberus representatives have previously said that private ownership under Cerberus would allow them to focus on longer-term growth.

An 80 percent interest in Chrysler was sold to private equity firm Cerberus Capital Management by parent DaimlerChrysler AG (DCXGn.DE) in a $7.4-billion deal that closed on Friday.

The struggling No. 3 U.S. automaker lost $680 million last year and has said it will remain unprofitable until 2008 as it restructures by cutting 13,000 jobs and closing an assembly plant dedicated to the slow-selling Dodge Durango sport utility vehicle.

Nardelli's appointment, which surprised analysts and many Chrysler workers, comes in the midst of a crucial round of contract negotiations between the United Auto Workers union and U.S. automakers, including Chrysler.

Nardelli said LaSorda, who agreed to stay on as vice-chairman and president, would continue to lead the talks for a new labor contract to replace the four-year deal on wages and benefits expiring September 14.

"Tom has had and will continue to have primary interface, responsibility and authority of working closely with UAW," Nardelli said.

The CEO said he had already met with UAW chief Ron Gettelfinger along with LaSorda. "We established, for the first meeting, a very good relationship," Nardelli said.

Gettelfinger said last month that executive pay is one consideration for the UAW as it faces pressure for concessions on pay and benefits for the blue-collar workers it represents.

Nardelli declined to comment directly when asked if Gettelfinger had brought up the controversy over his compensation at Home Depot, saying that Gettelfinger "does an excellent job in doing his homework."

He added: "He's not interested in refrigerators and snowblowers; he's interested in cars. And that's certainly what I'm interested in, starting today, going forward."

Nardelli said Chrysler would focus on clinching more international alliances to promote growth, and LaSorda added that markets the automaker could target through partnerships include Russia, South America and India.

"We'll look at other regions around the world," LaSorda said.

Chrysler has been reporting daily cash flow to Cerberus since May 14, when the sale was announced, LaSorda said.

Closing of the Cerberus deal to buy Chrysler was delayed after bankers were forced to postpone a $12 billion syndicated loan to finance the transaction.

(Reporting by Poornima Gupta and Kevin Krolicki)

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