What really happened to GM's CMOAugust 13, 2012: 5:00 AM ET
Joel Ewanick was a quickly rising star -- and a trusted associate to CEO Daniel Akerson. So why was he unceremoniously fired? Fortune found out what actually happened during his last days at the country's largest auto maker.
By Alyssa Abkowitz
FORTUNE -- Joel Ewanick, General Motor's chief marketing officer, knew trouble was brewing. During the week leading up to his ouster, sources familiar with the situation say he had started to refer to current projects in the past tense and seemed quieter than usual. "It was kind of clear he knew something was going to happen," one source says.
The rest of the world quickly learned what Ewanick apparently suspected: the once-rising star had flamed out. On July 29, GM (GM) announced Ewanick's resignation through a terse statement and GM spokesman Greg Martin told the press, Ewanick "failed to meet the expectations the company has of an employee." The failure centered on the $559 million, seven-year sponsorship deal GM inked with Manchester United, Europe's largest soccer team.
Insiders say Ewanick misrepresented the deal to upper management, telling CEO and chairman Daniel Akerson that the largest automaker in the U.S. was spending about a third less on the deal than what was originally agreed upon with Manchester United. (Upon the revelation, the deal was reworked.) When confronted about the situation, Ewanick repeatedly denied the misrepresentation, insiders say. GM declined further comment. Ewanick couldn't be reached for comment.
What hasn't been widely known until now was the degree to which personal dynamics -- and personal relationships -- played a role in Ewanick's departure. Fortune has learned that Ewanick and Akerson were surprisingly close, despite deep differences in their management and communications styles. Akerson, a graduate of the U.S. Naval Academy who served in the Navy for five years, is polished and buttoned-up in public settings while Ewanick, who joined GM in May 2010, is rough around the edges, and some former colleagues describe him as a bit impetuous.
In other words, he's not unlike a lot of marketing executives. And analysts suggest he probably didn't think twice about spreading the cost of the Manchester United deal among several budgets. "It's the kind of thing that's been done in the past," says Edmunds.com senior analyst Michelle Krebs. Other sources add that $559 million is only 12 percent of GM's entire advertising budget – a small amount to spend on a deal with Manchester United, whose recent IPO valued one of the most valuable sports franchise in the world at $2.3 billion.
But while the deal misrepresentation, which was brought to light by a whistleblower within Ewanick's division, sparked the ouster, sources say that Ewanick's denial of it sealed his fate with Akerson. "That may have been the final straw," an insider says.
For all their outward differences, Akerson and Ewanick shared an aggressive operating style. A former administration official who helped GM through its bankruptcy describes Akerson as impatient "in a good way;" he's moved quickly through the company to make changes since taking over as CEO in 2010. The former official adds, "Dan wants to bring in guys who share his hunger and drive."
Ewanick, who spent a brief stint at Nissan (NSANY) before joining GM, operated in a similar fashion. People who worked with him say he might rally behind an idea one day and squash it the next, forcing his team to go back to square one to find something better. "He really kept you on your toes," says one person who worked with Ewanick. That style worked well for the marketing guru at Hyundai, where he helped spur sales, because the U.S. arm of the Korean automaker essentially operated as a marketing firm. But at GM, "he had to pay attention internally on levels he never had to think about on an import," Krebs says.
And that's where tension arose between the two executives. When Ewanick cursed during a talk in Cannes in June, a source at the event describes it as funny and endearing, putting a human face on Ewanick. Akerson later chastised the marketing exec for the incident, according to Bloomberg News. Similarly, Akerson wasn't pleased when Ewanick publicly discussed GM's decision to pull its advertising from Facebook (FB) days before the social networking firm's IPO. But apparently Akerson felt he could not simply scold or look the other way when he learned Ewanick misled management about the Manchester United dealings.
Of course it's too early to tell whether the soccer sponsorship at the center of the maelstrom ultimately will help GM's sales, particularly in Europe. But Years from now, it may look like a brilliant move on Ewanick's part.
In the meantime the former marketing chief is lying low. After the news of his resignation broke he took his family to upstate Michigan for vacation. And there's speculation that he may write a book or go on a speaking circuit, though it's unclear if Ewanick will go that route. "It happened so quickly," says a source familiar with the situation. "He's still processing it all."