GM's new chairman not afraid to make unpopular calls

By Ben Klayman

DETROIT (Reuters) - General Motors Co's new Chairman Theodore "Tim" Solso is not afraid to make edgy and sometimes unpopular decisions, a trait that could come in handy as the No. 1 U.S. automaker seeks to further reinvent itself under new Chief Executive Mary Barra.

The plain-spoken native of the U.S. Pacific Northwest joined the automaker's board in 2012. In his former role as chairman and CEO of diesel engine maker Cummins Inc, Solso actively embraced tough new federal emissions regulations at a time when some rivals resisted change. He also introduced benefits for gay couples at a company based in a more conservative region of Indiana.

GM declined to make Solso, 66, available for comment, but friends and former co-workers give him high marks for his willingness to try new things in an industry not known for that.

For this reason, many believe that Solso will be a good partner for Barra, 52, who last month became the auto industry's first female CEO at the same time that Solso got his new job. A person familiar with the GM board's thinking, who asked not to be identified, said Solso was selected to add experience to a team of executives that was viewed as more green.

Barra, who meets with Solso weekly, described him as knowledgeable and seasoned. She has vowed to accelerate the restructuring begun under her predecessor, Dan Akerson.

"He's a great person to provide insight," she said last month. "It's clear his role as the nonexecutive chair is to lead the board activities. He's very clear my job is to lead the company, but he's also there to bounce strategy off of."

Other than a brief time in 2009 when the company went through bankruptcy reorganization, the last nonexecutive chairman at GM was in 1995. Former colleagues said Solso knows how he fits in GM's structure.

"He's not going to be a figurehead, but he also understands very well that he's not the CEO and his job is to ensure Mary is a dang good CEO," Joe Loughrey, the former president at Cummins under Solso, said of his friend.

Many friends and former co-workers believe Solso took the job because he felt he could help the automaker navigate challenges he faced at Cummins. He has met with the top 25 executives since he became chairman.

"He believes the challenges that GM faces are really quite parallel to the challenges Cummins faced when he became CEO in 2000," said Will Miller, a Cummins board member and the son of legendary Cummins CEO Irwin Miller, whom Solso has described as a mentor. "That sense of the opportunity to be of service is what's driving his decision."

AGGRESSIVE GOALS

While GM has returned to record profit since its $49.5 billion U.S. taxpayer bailout, it is still losing money in Europe and even former GM Chairman and CEO Akerson said it was underperforming on profit for a company its size.

Tom Linebarger, Solso's successor at Cummins, said Solso will help push for strong financial performance at GM. "He set aggressive goals for people, but he did it in a way that pushed you," Linebarger said of Solso.

That certainly would make GM investors happy. During Solso's 12-year run as Cummins' CEO, sales nearly tripled to more than $18 billion and the company's stock price surged to $120 a share from $4. In 2010, Solso, who grew up in Oregon, was a finalist for MarketWatch's "CEO of the Decade" award, along with Apple Inc's Steve Jobs and the top executives at Google Inc, Amazon.com Inc and Starbucks Corp.

Longbow Securities senior vice president Eli Lustgarten, who has covered Cummins as an analyst for more than two decades, recalled meeting Solso for the first time at an analyst dinner after he was named CEO at Cummins in early 2000. "I recommended the stock the next day because it was very clear where he wanted to take the company," Lustgarten said.

One of Solso's first actions as CEO at Cummins was to write a memo to the entire company making it clear that results mattered, Loughrey said. In a 2011 commencement speech at DePauw University in Indiana, Solso's alma mater, he also emphasized embracing change.

"You at least have a 50-50 chance of surviving if you're willing to embrace radical change and pursue it," he said, adding that the graduates should proactively tackle issues before they become problems.

AHEAD OF THE CURVE

It was that approach that led Solso in 2002 to push Cummins to support the U.S. Environmental Protection Agency's tighter emissions standards, despite serious resistance from the industry because of a supposedly impossible timeline, Loughrey said.

"We got way ahead of the curve," he said. "By the time 2006 rolled around, we introduced an engine on the Dodge Ram pickup truck that met the 2010 standards, which took the industry by surprise because there were competitors who were saying the 2010 standard was impossible to hit."

Linebarger also described the 2000 introduction of domestic partner benefits at Cummins, a move that provided coverage for gay couples and upset some people in conservative Columbus, Indiana, where Cummins was based. Solso believed it was the right move for the company and called a meeting to explain his position.

Solso is described as down-to-earth and just as happy to work at his ranch in Montana and relax with his dog. The dog is also named Tim, in his honour, after he and his wife supported a program that helped female prisoners train service dogs, according to Brian Casey, president of DePauw University. Tim the dog failed the program because he was too playful and Solso inherited him.

Jose Zaglul, president of Earth University, a school in Costa Rica founded to develop leaders from impoverished students in Latin America, Caribbean and African countries, recalls meeting Solso about 10 years ago.

Solso went from funding a scholarship at the school and advising Zaglul, to joining the board and pushing Cummins to commit matching funds to the school. The company even sent a top financial executive to aid in planning the university's survival during the recession.

"He's not doing it just to have it on his resume that he works with an institution in Latin America," Zaglul said. "He does it because he believes in our mission."

Count Solso's predecessor as a fan. "I would say he's a lot more qualified than I am," Akerson said last month.

(Editing by Matthew Lewis)