New Fiat CEO Morchio Is Ex-Pirelli Exec
MILAN February 27, 2003; Jane Barrett writing for Reuters reported that Fiat is due to get a new set of top managers on Friday, after its core owners said former Pirelli executive Giuseppe Morchio would be named as Fiat's fourth CEO in nine months at a board meeting.
In a statement released on Wednesday, Ifi and Ifil said their chief executive Umberto Agnelli --due to take over as Fiat chairman on Friday -- would propose Morchio as CEO "to accelerate the group's industrial relaunch."
Agnelli -- whose older brother, Fiat patriarch Gianni, died last month -- will take Fiat's helm from Paolo Fresco, who on Tuesday said he would retire early to help smooth out a restructuring at the loss-mired Italian energy-to-insurance group.
The shake-up comes amid the worst crisis in Fiat's 104-year history. Agnelli and Morchio will have to steer Fiat through asset sales, a possible capital increase and tense negotiations with partner General Motors Corp. over its struggling car arm.
A Fiat source said Fresco would stay at the group as a consultant on its talks with GM.
"The speed with which Umberto Agnelli has made these decisions is commendable. Every day Fiat is burning cash, so speed is of the essence," said Paolo Banfi, head of investment at Euroconsult Sim in Milan.
"Morchio is an interesting choice but I don't see a great change of direction," he added.
Morchio worked at tire-to-cables group Pirelli for 21 years, gaining a reputation as a top-class manager as he oversaw the acquisition and integration of several power cable assets.
The 55-year-old sailing enthusiast would replace Alessandro Barberis, who took over as Fiat CEO late last year after a boardroom battle. Barberis would stay on as deputy chairman working alongside top management, Ifi-Ifil said.
Former Deputy Chairman Franco Grande Stevens, who is also lawyer to Fiat and the Agnelli family, would stay on Fiat's board, said Ifi-Ifil, which own about 30 percent of Fiat.
BOARD SHAKE-UP
In a separate statement, Fiat said Fresco and two nonexecutive board members considered close to him -- his former boss at General Electric Co. Jack Welch and Felix Rohatyn -- would leave the board on Friday.
That would make space for Agnelli, Morchio and Luca di Montezemolo, the head of Fiat's sportscar unit Ferrari, who Ifi-Ifil said would be called to the board table.
The new commanders in chief will have to make some tough decisions as to how to revive Fiat Auto, which is expected to announce a record 1.35 billion-euro operating loss for 2002 on Friday, thanks to a slump in sales and continued high cash burn.
GM owns 20 percent of Fiat Auto and Fiat has a "put" option -- negotiated by Fresco -- to sell its 80-percent stake to the world's largest carmaker from next year. Agnelli last year said he could imagine a future Fiat without cars but has since pledged to revive the historic unit.
Top managers from Fiat and Detroit-based GM have been locked in talks for weeks, said it involve scrapping or delaying the put in return for an immediate cash injection. Investors say they want news about the talks after Friday's board meeting.
The board is also expected to discuss the long-awaited sales of insurance unit Toro and aviation arm Fiat Avio, which could raise about 3.5 billion to 4.0 billion euros and could potentially stave off the need for an immediate capital increase.
A financial source last week told Reuters the board would discuss a 2.5 billion euro capital increase -- a first step in a plan to pump 5 billion euros into Fiat Auto.