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Fiat said to widen CEO search to replace Marchionne in 2019

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Fiat Chrysler Automobiles NV is widening its search for a successor for Chief Executive Officer Sergio Marchionne (pictured) , with a group of second-tier managers joining company veterans on a growing list of candidates, according to people close to the discussions.

[MILAN] Fiat Chrysler Automobiles NV is widening its search for a successor for Chief Executive Officer Sergio Marchionne, with a group of second-tier managers joining company veterans on a growing list of candidates, according to people close to the discussions.

While Mr Marchionne's closest aides, including Europe chief Alfredo Altavilla and Chief Financial Officer Richard Palmer, are under consideration to replace the CEO, the search has broadened to some younger candidates as the board casts a wide net, said the people, who asked not to be identified because the matter is private. Executives from outside the company are not under consideration, the people said.

While Mr Marchionne, who turns 65 on Saturday, is set to stick around for about two years, succession has become a top priority for the board. It's a particularly complex issue as the long-time CEO holds unusually broad authority, directly involving himself in almost all strategic, operational and financing activities. His approach isn't likely to be replicated, with Fiat also considering overhauling its management structure to delegate powers to more executives, the people said. Fiat and Exor NV, the holding company that controls the carmaker, declined to comment.

"Replacing Mr Marchionne is a monumental task for every internal heir," said Giuseppe Berta, a professor of economic history at Milan's Bocconi University and former head of Fiat's archive. "The only way to succeed is to avoid imitating his strong leadership's style."

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Mr Marchionne, who was born in Italy and spent his teenage years in North America, transformed the once-struggling Italian company through a series of deals, largely remaking it in his multinational image. He spearheaded the merger with US-based Chrysler to create the world's seventh-largest carmaker and reduced the company's dependence on Italy by also shifting headquarters to London. He also spun off the Ferrari supercar brand as well as truck- and tractor-maker CNH Industrial NV.

The companies, all controlled by the Agnelli industrial clan, are worth about 44 billion euros (S$68.14 billion), more than eight times Fiat's value when he took over in 2004.

But Fiat still lacks the size and resources to tackle global giants like Volkswagen AG and Toyota Motor Corp. His efforts to address this weakness have come up empty. In 2015, he aggressively pursued a deal with General Motors Co, which was brusquely and repeatedly rejected. Earlier this year, he floated the idea of a potential offer from Volkswagen and then backed off it a few weeks later.

In addition to Mr Palmer, 50, and Mr Altavilla, 53, the list of potential candidates for Mr Marchionne's roles, which also includes overseeing Fiat's key North American operations, includes Jeep CEO Mike Manley; Chief Technology Officer Harald Wester; Latin America boss Stefan Ketter; and Reid Bigland, head of US sales and the Maserati and Alfa Romeo brands. The new CEO will have leeway to adjust the eventual management structure, which could include broader authority for regional managers, the people said.

Fiat is holding off on identifying a shortlist of candidates as Mr Marchionne's team is pressing to erase over 5 billion euros of debt and accumulate 4 billion euros in cash by the end of next year to better position the company for a potential merger. If a deal does emerge, the succession plan would likely be scrapped, and Mr Marchionne's departure could be accelerated or delayed, the people said.

Fiat is in a much different position then when Mr Marchionne took charge. At the time, John Elkann, 41, the head of the Agnelli family, was young and inexperienced and needed a strong manager to take the reins of the family's biggest asset. He plucked Mr Marchionne from relative obscurity at testing company SGS SA to rescue Fiat from near collapse. Despite its challenges, the carmaker is now better positioned, and Mr Elkann himself has shown his leadership, spearheading the US$6 billion acquisition of PartnerRe.

The search for a new successor comes as disruption looms in the auto industry. With the US auto market reaching the end of an unprecedented seven-year growth run, profits could get squeezed just as investment ramps up to develop self-driving electric cars. That's increased investor scrutiny on auto executives. Mark Fields was ousted as CEO of Ford Motor Co last month amid a falling stock price, while General Motors Co CEO Mary Barra has faced activist pressure to boost returns.

Even when Mr Marchionne steps down at Fiat, he will remain an influential figure, with top positions at other companies controlled by the Agnelli family. He is CEO of Ferrari, a role he plans to keep until 2021, chairman of CNH and vice chairman of Exor, the Agnellis investment vehicle."Mr Marchionne's successor has to lead Fiat Chrysler to a new transition phase," Mr Berta said. "Still, he would get the house in a much better shape than what Mr Marchionne found in the dramatic days when he was called to save the carmaker"

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