When Mary Barra was appointed the CEO of General Motors on Jan 15, 2014, she became the first woman-CEO in a U.S. auto manufacturing company. According to Catalyst, women hold just under 17% of the seats on boards of directors and fewer than 15% of senior executive positions in Fortune 500 companies. Only 23 women head the 500 largest corporations in the U.S.
By the end of 2013, GM was losing money in Europe and the big bet on Chevrolet Volt electric car was yet to pay off. Ms. Barra survived a harrowing first year facing revelations about faulty ignition switches which allegedly resulted in 74 deaths and 126 injuries, a 30-million car recall and pressure from investors to return more cash to shareholders. She was forced to testify at a hearing by a House panel into the delayed response by GM in recalling 1.6 million small GM cars.
Since then. Ms. Barra has been widely praised for her handling of the crisis. The company recently had its best quarter since emerging from bankruptcy in 2009. She was praised for tackling the faulty ignition switches head on. She issued a corporate mea culpa and set up a victims’ compensation fund. GM also agreed to pay $900 million to settle criminal charges levied by the Justice Department.
Under her leadership, GM has increased its sales dramatically and has delivered its strongest earnings since 2009. Ms. Barra considers India, China, and the U.S. luxury car business as the prime potential growth markets. In recent years, GM has benefited from a sharp increase in U.S. demand for trucks and sport-utility vehicles, which is helping fund future projects. She took major decision to discontinue manufacturing operations in Southeast Asia, close a factory in Australia, and end GM’s sales and manufacturing operations in Russia.
GM’s stock price, however, has declined during her tenure from around $40 to $29, which is below the company’s $33 initial public offering (IPO) price in 2010. Ms. Barra said the company needs to deliver on what it promises if it hopes to get Wall Street to give it more credit.
While market valuation of a stock may be an appropriate, and parsimonious, yardstick to evaluate the performance of a CEO in many circumstances, the unusual circumstances at GM would require a more nuanced lens to judge the CEOs handling of the crisis, tackling challenges from lack of growth in the emerging economies where GM has a strong presence, and confronting investor-fascination with electric car manufacturers like Tesla.
Most Powerful Woman on Wall Street
The encouraging news is that the financial pundits are giving Ms. Barra a resounding endorsement for her efforts and initiatives. Forbes ranks her as the most powerful woman on Wall Street in 2015 and the 5th most powerful woman in the World. No Bar is High Enough for Barra.
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Jan 27, 2016; 10.57Pby