Incoming GM CEO Could Learn Lessons From AIG Turnover

If "GM can rise again," as President Obama says it can, the automaker's new CEO may want to take some lessons from another new CEO on what not to do in the executive suite.

First and foremost, analysts say: Be honest. And hide nothing.

When Edward Liddy replaced ousted CEO Robert Willumstad at AIG in September as a condition for getting $85 billion in government aid, he opted not to renegotiate millions of dollars in bonuses for employees at the company's most controversial division, citing legal concerns. The matter was apparently kept from the incoming administration, and when AIG went ahead with $165 million in bonus payments, the public backlash was severe.

With public confidence key to GM's recovery, analysts say its new CEO, Fritz Henderson, should take this opportunity to press for whatever contract and benefits renegotiations he can and, perhaps more importantly, stay open with the administration and the taxpayers.

"This is a time when openness is critical. ... If there's any more negative publicity that they're giving out bonuses or buying up private jets, they'll take a terrible hit," said Charles Craver, an employment law professor at George Washington University. "At this point they are beggars. ... And if they lose the goodwill of the American people, they'll be in big trouble."

The long and short of it? "No secrets," Craver said.

Henderson said Monday that GM is committed to working "around the clock" to meet the rigorous demands of the Obama administration. That was after Obama said Monday that GM and Chrysler had provided unacceptable restructuring plans -- he granted Chrysler an additional 30 days and GM an additional 60 days to come up with something better if they want government money.

"Over the next 60 days, we will work around the clock, with all parties, to meet the aggressive requirements that have been set by the task force, and to make the fundamental and lasting changes necessary to reinvent GM for the long-term," Henderson said in a written statement.

"The road is tough, but the ultimate goal -- a leaner, stronger, viable GM -- is one we share."

According to The Wall Street Journal, Henderson also told employees that the company will end up in bankruptcy court if it does not significantly restructure.

Dennis Virag, president of the Automotive Consulting Group, said Henderson has no choice at this point but to comply with the administration's demands.

"The lesson learned is concede to everything the administration asks for," he said, noting that AIG got slammed for adhering to their contracts.

This time, Obama is asking for "painful concessions" from all parties.

"It's something [Henderson] has to do now," Virag said of contract renegotiations. "I think it's more concessions on the part of the union. I think it's significantly more concessions on the part of the bondholders. I think it's more restructuring within GM itself, potentially more plant closings, dealer closings, right on down the line."

Virag and Craver both said the fact that bankruptcy is now being floated as a possibility is a good thing, since it gives people like Henderson leverage in the bargaining process.

Craver said the time is ripe for the United Auto Workers union to renegotiate health care and pension benefits -- a colossal burden on GM. While Liddy did not push to renegotiate AIG's bonus payments six months ago, Craver said the threat of bankruptcy this time could pressure big concessions for workers' benefits at GM.

"When you're really on the edge of elimination, you really have tremendous bargaining power," Craver said.

Fourth-quarter reports from 2008 showed that pension plans at GM were under-funded by about $12.4 billion.

The existing loan terms for GM and Chrysler also called for the UAW to swap equity in the companies for 50 percent of the companies' cash contributions into the union-run trust fund for retiree health care. GM owes roughly $20 billion to its trust, while Chrysler owes $10.6 billion.

The union has agreed to other terms of the loans, including work rule changes and reducing total hourly labor costs to be comparable to those at Japanese automakers with factories in the U.S.

The terms also called for debt holders to accept equity in the companies for two-thirds of the automakers' debt. GM owes roughly $28 billion to bondholders, while Chrysler owes about $7 billion in first and second-term debt, mainly to banks.

Going forward, analysts say GM will have to watch its image carefully.

AIG's image suffered long before the bonus controversy, as it came to the government four times for bailout money. The firm also drew criticism for sending top executives on a pricey retreat just days after accepting the first $85 billion.

Ousted GM CEO Rick Wagoner might draw criticism almost immediately, since he is leaving his job with a $20 million retirement package.

But the Treasury Department has reportedly barred GM from paying severance to any senior executives, and unlike some former executives with golden parachutes, Wagoner is a 30-year veteran of the company he helmed for the last nine years.

FOXNews.com's Judson Berger and The Associated Press contributed to this report.