Ally Financial said today that Gerald Greenwald and Henry S. Miller have been elected to its board of directors. The U.S. Treasury directed appointments – it holds a majority interest in Ally – of the two well-known former auto executives, as well as the re-election of the other nine current members of the board, occurred at a meeting of common stockholders. Ally reported a net loss of $898 million for the second quarter of 2012 because of the charges taken over the bankruptcy of its home mortgage subsidiary ResCap.
The U.S. Treasury has invested $17.2 billion in Ally. Treasury currently holds about 74% of Ally common equity, and $5.9 billion in mandatory convertible preferred securities, which have a dividend rate of 9%. Ally has paid back to taxpayers $5.7 billion in dividends and proceeds related to a trust preferred securities transaction. In May, Ally announced plans that would accelerate repayment of roughly another third of Treasury’s holdings. Those plans include pursuing alternatives for Ally’s international auto lending businesses. ResCap is now off Ally’s balance sheet, but a public stock offering – another way for Treasury to exit – doesn’t appear possible at this time given Ally’s history and recent results. (See GM Bids on Ally’s International Auto Lending Business)
“Gerald and Henry are valued additions to the Ally board,” said Ally Chairman Franklin (Fritz) Hobbs. “They bring extensive experience from both the financial and auto sectors and will add key perspectives as Ally continues its transformation.”
Greenwald is a founder of Greenbriar Equity Group, a private equity firm focused on the global transportation sector. Prior to this, Greenwald was the chairman and chief executive officer of United Airlines from 1994 to 1999. During his time at the airline, he helped return the company to profitability and build its leadership position globally. Greenwald began his career in the auto industry at Ford Motor Company where he worked in several positions including controller, director of operations in Europe and president of Ford of Venezuela. He later joined Chrysler, where he worked in various positions including corporate controller and chief financial officer before being promoted to vice chairman. Gerry is not without a sense of irony. After Chrysler had bought Jeep, I asked him how sales were going. “I new we had a cult vehicle when I looked at sales in Los Angeles,” Gerry said. “I mean when was the last time it snowed in L.A.?”
Miller has served as chairman of Marblegate Asset Management, LLC since its formation in 2009. He was also co-founder, chairman and managing director of Miller Buckfire & Co., LLC from 2002 until 2011. Miller has a background in restructurings -some of them controversial because of how he handled unions – and has worked in various capacities on several complex cases throughout his career. Prior to founding Miller Buckfire, he was vice chairman and managing director at Dresdner Kleinwort Wasserstein, where he was the head of the financial restructuring group. He also served as managing director and head of both the restructuring and transportation industry group of Salomon Brothers. He has also served in senior leadership roles at Prudential Securities and Lehman Brothers.
In short, both Greenwald and Miller are steeped in the Wall Street financial culture that Treasury lives in and supports, for better or worse…