General Motors CEO Mary Barra is taking on the added role of chairman at the nation’s largest automaker.
The company’s directors Monday unanimously elected her to lead the board, effective immediately. She replaces former Cummins Inc. Chairman and CEO Theodore Solso as GM’s chairman. He will stay on as the board’s lead independent director, the company said Monday in a statement.
Barra, 54, took over as CEO in January of 2014, becoming the first woman to lead a major global automaker. Her appointment came shortly before GM became embroiled in a scandal over faulty small-car ignition switches. But she led GM through the crisis and a related series of embarrassing safety recalls.
Barra replaced Dan Akerson, a former telecommunications and private equity executive, who also held the chairman and CEO roles before leaving GM.
GM’s leadership consolidation runs counter to the trend in corporate governance, according to the proxy advisory firm Institutional Shareholder Services. About half of the companies in the Standard & Poor’s 500 index have separated their chairman and CEO roles. That’s up from 30 per cent in 2005.
Corporate governance experts often recommend separation of the chairman and CEO roles to keep the board more independent. But Solso said in a statement that the board determined that it’s best to combine the chairman and CEO roles again “at a time of unprecedented industry change.”
He said that under Barra’s leadership, the company consistently has delivered its earnings targets and has led in breakthrough vehicles and technologies. Having Barra in the dual role, he said will “drive the most efficient execution of our plan and vision for the future.”
However, Charles Elson sees the consolidation as “a real step backwards” for GM.
The director of the Weinberg Center for Corporate Governance at the University of Delaware said boards have been separating the chairman and CEO roles because they are now viewed more as monitors of a company, not advisers.
“The board is there to oversee the CEO, and the person who is chairing the board shouldn’t be the person overseen by the board,” he said. “It’s a conflict.”
Barra joined GM at age 18 as a co-op student, working for several months at a time at GM’s Pontiac division while studying for her engineering degree at General Motors Institute, a Flint, Michigan, college then owned by the company.
She graduated from GMI, now Kettering University, in 1985, and GM eventually sent her to Stanford University to earn an MBA. When she returned, she rotated through a number of jobs, including executive assistant to then-CEO Jack Smith, a role often given to rising stars. She headed midsize car engineering and managed GM’s Detroit-Hamtramck plant.
Just after GM’s 2009 bankruptcy, then-CEO Ed Whitacre put her in charge of human resources, a stop that isn’t normally along the CEO track.
In 2011, Akerson plucked Barra from HR to run GM’s huge worldwide product development, an operation he says was in chaos at the time.
This story has been corrected to show the name of Solso’s former company is Cummins Inc., not Cummins Diesel.