Should Frank Stronach Really Run Chrysler?
Now that Magna’s Frank Stronach has made his bid for Chrysler official, the more fundamental question for investors and other stakeholders is whether the assets of this icon of American capitalism will be well-served in the hands of a mercurial figure who claims that money has no heart, “no soul, no conscience, no homeland“, and who has made his disdain for the labor movement no secret. There is a world of difference between operating a profitable but relatively low profile Canadian-headquartered company like Magna and one of America’s corporate giants. It would be unthinkable for a CEO of an historic American company like Chrysler to boast that, with $52 million in compensation, he was underpaid, as Mr. Stronach did a few years back.
Global companies like Chrysler, for all their economic problems, are still complex institutions with enormous power in society. They carry comparable social responsibilities. It is unclear that Mr. Stronach understands that concept to the extent that Chrysler’s leadership would require, or that he would be prepared to adapt to all the constituencies who have a claim on Chrysler’s decisions and, most decidedly, an influence upon its success or lack of it.
One more thing. If you are looking for an example of progressive corporate governance and board structure, you will not find it at Magna. To the contrary, with Magna’s system of dual class shares, its history of related parties and insiders as directors and its all-male board, the Stronach style of governance is not encouraging. He even chairs Magna’s nominating committee, which is a considerable departure from accepted corporate governance standards.
When Frank Stronach is involved, power is concentrated in Frank Stronach. Would his style work at Chrysler? It’s worth thinking about.