Fiat Chrysler announced on Saturday it will replace CEO Sergio Marchionne, 66, who engineered the merger of Fiat and Chrysler and headed the combined company for nearly a decade, due to serious health complications resulting from a recent shoulder surgery. He will be replaced immediately with Mike Manley, the CEO of Fiat’s Jeep and Ram brands which were purchased out of bankruptcy during the financial crisis, and who is behind the extraordinary success of the Jeep brand’s global expansion.
“With reference to the health of Sergio Marchionne, FCA communicates with profound sorrow that during the course of this week unexpected complications arose while Mr Marchionne was recovering from surgery and that these have worsened significantly in recent hours,” and will be unable to return to work, the company said in a statement.
Marchionne underwent an undisclosed surgical procedure earlier this month, said the person familiar with the company’s plans, according to the WSJ which adds that while the nature of Marchionne’s illness hasn’t been specified, he had an operation on his right shoulder. Company officials have said privately that he has been absent from his day-to-day role at the company for weeks.
Marchionne had previously said he planned to step down as CEO early next year but continue to serve as chairman and chief executive of Ferrari NV, which was spun off from Fiat Chrysler and became an independent company in 2016. He said the search for his successor at Fiat Chrysler would be limited to internal candidates.
His accelerated departure comes a month after Mr. Marchionne announced that Fiat Chrysler had paid off its once-crushing debt load and unveiled a strategic plan through 2022 to boost the company’s global sales volume and profitability.
Marchionne, an “outsize presence in the auto industry”, was known as a workaholic who made blunt comments and wore black sweaters instead of formal business attire, Under his leadership, Fiat Chrysler confounded critics on Wall Street and elsewhere by meeting most debt-reduction and profit targets. “I am a fixer. Until something is definitively fixed, I can’t stop,” he has said.
Marchionne was known for seldom taking a break, often sleeping on the couch of his private
jet while traveling overnight among offices in Turin, Detroit and London. Weekend meetings were part of the routine for the executive, who preferred black sweaters to elegant suits so he didn’t have to waste time in the morning deciding what to wear. He drank volumes of espressos daily and was a chain smoker of Muratti cigarettes before quitting both about a year ago. – BBG
The company also delivered on profit goals outlined in its last strategic plan, which dates back to 2014, and in some cases were triple what some analysts projected. As a result, the company’s stock price has nearly quadrupled since then and its healthy 6% profit margin is higher than crosstown rival Ford Motor Co.’s 5.2% margin and approaching General Motors Co.’s 7.2%.
On June 1, Marchionne laid out his last plan for the carmaker. His closing remarks were directed to his successor.
“The origins of FCA are a group of people from Fiat and Chrysler who faced the most difficult situations in the last 10 to 15 years. They confronted the threat of losing their dignity by losing their work,” Marchionne said. “Can Marchionne leave a script or instruction? The answer is that there is no script or instruction. FCA is a culture of leaders and employees that were born out of adversity and who operate without sheet music, that is the only way we know.”
Chairman John Elkann, heir to the founding Agnelli family said that he is “profoundly saddened to learn of Sergio’s state of health. It is a situation that was unthinkable until a few hours ago, and one that leaves us all with a real sense of injustice.”
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Mike Manley, Marchionne’s replacement, joined Chrysler in the U.K. in 2000 when the carmaker was part of Daimler, and was named head of Jeep at the time of Fiat’s acquisition in 2009, leading the transformation of the iconic American brand into a cash machine according to Bloomberg. Analysts estimate that Jeep alone could be worth the entire $30 billion market value of Fiat Chrysler.
In choosing Manley, Fiat’s board passed over two other internal candidates — Alfredo Altavilla, a close aide to Marchionne and a Fiat veteran who’s overseen operations across the globe and now runs the automaker’s European business, and Chief Financial Officer Richard Palmer, who is well known to Wall Street and helped combine the company’s operations after the merger with Chrysler
As Bloomberg also notes, Manley shares with Marchionne a very direct style and and a penchant for casual clothing. He has sidestepped the question of whether he was ready to take the top post, always saying he was fully concentrating on his Jeep job.
Manley takes over the CEO position at a time when Fiat Chrysler enjoys a strong balance sheet but is plagued by a reputation tarnished by regulatory crises involving safety lapses, suspected emissions cheating and bribery allegations.
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