Sergio Shakes Up The Chrysler Board: Brings In Longtime Allies

Today’s resignation of Chrysler’s chairman and two other government-assigned directors was hardly a surprise, as now-Chairman and CEO Sergio Marchionne had signaled that changes were coming in the wake of Chrysler’s “payback” of government loans. In fact, Rebecca Lindland of IHS Automotive predicted that chairman Robert Kidder, as well as the other two departing directors would be the ones leaving, telling the Freep

Three of the five Chrysler board members who are government appointees — Kidder, Stuart Scott and George Gosbee — are members of investment advisory firms.

“Now, you kind of need to have people that have distinctive automotive industry experience verses financial expertise,” Lindland said.

But Lindland was only half-right. She picked the departing directors perfectly, but Marchionne didn’t replace them with even a hint of “distinctive automotive industry experience.” But not being a dyed-in-the-wool “automotive guy” himself, he apparently had some slightly different qualifications in mind…

The two new board members, Léo W. Houle and John B. Lanaway both come from communications firms (Bell Canada and McCann Erickson respectively), and they’re both Canadians… and there isn’t a day of automotive experience on either of the press-release-provided bios. And yet both show existing ties to Fiat Industrial, namely:

In 2006, Houle was elected a director of CNH, a world leader in the agricultural and construction equipment businesses that is a majority-owned subsidiary of Fiat Industrial S.p.A.

In 2006, Lanaway was elected a director of CNH, a world leader in the agricultural and construction equipment businesses that is a majority-owned subsidiary of Fiat Industrial S.p.A.

And that’s not all… these are guys Sergio trusts personally. Lanaway had been working at Deloitte and Touche for 12 years, working his way up to Client Services Manager, when a young (31) Sergio Marchionne showed up there in 1983 and began work as an accountant. Two years later, both men jumped to packaging firm Lawson Mardon Group, where Lanaway was VP for Financial Reporting and Control, and Marchionne was his Group Controller. Houle joined them in 1987, as Group VP for Human Resources, and within two years Lanaway had become Group VP and CFO. At that point (1989), Marchionne left Lawson Mardon for brief EVP and CFO stints at Glenex and Ackland, but was back at “The Lawson Group” as CFO by 1992. Two years later, Algroup bought Lawson, giving Houle and Marchionne a new ladder to climb up. Though Lanaway left for a tour of corporate America that included stints at several tech firms before landing at Ogilvy and then McCann, Houle became Algroup’s HR honcho, and Marchionne’s official resume from the 1994-2000 period reads

• 1994, Various positions of increasing responsibility until becoming Chief Executive Officer, Algroup

When the biopharmaceutical arm, known as Lonza Group was split off from the rest of the Group, Marchionne took it as his own while also running the inspection firm SGS. In 2003, Marchionne was elected to Fiat’s board, in 2004 he became CEO of Fiat SpA and in 2005 he became CEO of Fiat Group Automobiles. In 2006 he got the band back together by electing both Houle and Lanaway to the board of the Fiat subsidiary CNH, which he had just been named Chairman of.

You might be asking yourself what this all adds up to, and if you’ve been waiting for some dastardly theory or sinister implication, you’re going to be disappointed. Clearly Marchionne trusts these two men whom he worked with at a definitive stage of his career, both of whom he likely considers mentors as well as allies. What’s most interesting is that trust was clearly the overriding motivation for Marchionne’s decision. After all, Lindland picked exactly who would be leaving the board, but she got the reasons all wrong. Marchionne didn’t want the money men out or even the government out per se (two government appointees remain on the board)… he wanted his people in. And that’s just what he got. Now we get to find out if building an empire on personal trust will be as good for Chrysler as it is for Marchionne.