It has been close to one month since my last warning on the possibility that Rick Wagoner, GM’s CEO,  may be forced (and I contend should) to take a permanent vacation from General Motors.  According to stories in the press the pressure increased on GM to force Wagoner out if the firm is to get a government bailout.  According to a story by Gregg Stoll and Greg Hitt in today’s Wall Street Journal,

On Sunday, Sen. Christopher Dodd (D., Conn.), a supporter of emergency loans for Detroit, suggested Mr. Wagoner should go if the government follows through and provides billions of dollars to help the auto giant restructure and return to profitability.       

“I think you’ve got to consider new leadership,” the senator said on the CBS talk show “Face The Nation.” A Dodd aide said later the senator’s demand for change would not be a “condition written into the” rescue package coming together on Capitol Hill, and draft legislation prepared by top Democrats doesn’t make that explicit requirement. But Mr. Dodd’s displeasure was clear. “If you’re going to restructure, you’ve got to bring in a new team to do this,” he said. “I think [Mr. Wagoner] has to move on.”       

…In a statement, a GM spokesman said the company “appreciates” Sen. Dodd’s comments but added GM’s employees, dealers, suppliers and its Board of Directors “all support Rick Wagoner and are confident he is the person to lead GM through these difficult times.”       

But calls for Mr. Wagoner and others to step down appear to be growing. In a statement from his office Sunday, Sen. Charles Schumer (D., N.Y.), said that, “while it can’t happen tomorrow because of the urgency of the companies’ financial situation, I would like to see management changes as part of any restructuring.”       

On Sunday, Jerome B. York, an adviser to billionaire investor Kirk Kerkorian who served as a GM director in 2006 when Mr. Kerkorian owned a stake in the company, called publicly for sweeping change at GM.       

“Aside from a failure of leadership at the most senior executive management level, GM has five long-serving directors who have been on the board 10 years or more,” Mr. York said in a telephone interview. “They have approved of and overseen many of the moves that have contributed to the company’s troubles. They should also resign.”       

We will just have to wait and see how this all plays out.  Unfortunately, it is very late in the game to be considering new management but at a minimum it’s a start.  Of the big three Wagoner has to be the first to go.  Mulally at Ford has shown he understands the situation and has made a start at turning Ford around.  For more:  AP (Globe & Mail 12/10)    AP (NPR – Marketplace)  Reuters  Deal.com  Jalopnik  Auto News (video)  Portfolio.com  U.S. New & World Reports  

Rex Nutting of MarketWatch reported today that according to a survey by outplacement firm Challenger, Gray & Christmas November layoffs were up 148% compared with a year earlier.  This dramatic number contrasts sharply with Liberum’s latest report on executive turnover numbers for November 2008.  Liberum found that executive turnover actually declined in November when compared with the same time frame in 2007.  CEO changes declined 32%, CFO changes declined 46%, all C-level changes (from board of directors down to VP level) declined 39% and board of director changes declined 39%.    As corporations continue major layoffs of mid-managers and blue collar workers most executives running public corporations have so far managed to keep their positions of authority.  Liberum expects the surprising divergence in executive turnovers from what has been happening to general workers employed by corporations to shift as we move into the winter and spring months.  As the recession takes a greater bite out of the economy, shareholders and even corporate boards can be expected to rachet up the pressure on executives to improve their performance and that of their companies or face the loss of their jobs. We anticipate the level of executive turnovers will begin to increase in February.  

Airgas Inc. (ARG), a leading distributor of industrial medical and specialty gases, completed a deal on Monday to buy three additional businesses. With these companies, Airgas increases the number of companies it has acquired this year to a full dozen and a combined revenue of $185 million.

The three companies Airgas bought Monday are Gordon Woods Industrial Welding Supply, Inc., Accu Air Gases & Equipment LP and Summit Gas & Gear LP. These companies are separately managed industrial gas and welding supply distributors with a combined avenue revenue of $25 million and 10 different locations in Southern California.

This week, as part of our special focus on Industrial Manufacturing this week, we spoke with Peter McCausland, the Chairman and CEO of Airgas. For the complete interview click here.

For our complete Industrial Manufacturing report, including interviews and analysis from a variety of perspectives on this space, and stock picks, click here.

Jena McGregor wrote a fascinating piece on Business Week’s Management IQ blog yesterday on the growth of international members on corporate boards.  McGregor examines the issues surrounding the idea both pro and con.  She writes,

In an attempt to diversify, boards have long sought to add women or minorities to their ranks. But as U.S. markets slow and global revenues become more critical than ever, they’re increasingly seeking foreign members or directors with significant international know-how. “It’s an emerging area,” says National Association of Corporate Directors president Kenneth Daly. “There’s a lot of interest in foreign companies having U.S. directors as well as U.S. companies wanting foreign directors.” Bart Friedman, a partner with Cahill Gordon & Reindel, who advises boards on governance matters, says he sees the interest doubling each year. “I’m not aware of a board that hasn’t at least thought about the issue.” 

The blog is very worthwhile read for anyone interested in the corporate boards and how they can be helpful to a company’s success.  Check it out.  Fore more:  Reuters   

Rowan Companies RDC (NYSE), the onshore and offshore contract drilling company yesterday announced the replacement for retiring CEO, Danny F. McNease.  Rowan selected W. Matt Ralls as McNease’s replacement.  Ralls has a varied background in the industry and appears to be a very good fit for the circumstances the company is currently facing.  He is expected to start at the first of the year.  The company also selected former Lehman Brothers executive and long time Rowan board member, Jack Lentz, chairman of the board.  According to the company’s press release,

Mr. Ralls, 59, most recently served as Executive Vice President and Chief Operating Officer of GlobalSantaFe Corporation, an international contract drilling company, from June 2005  

until the completion of the merger of GlobalSantaFe with Transocean, Inc. in November 2007. Prior to that time Mr. Ralls served as Senior Vice President and CFO of GlobalSantaFe. He joined Global Marine, Inc. in 1997 as Vice President and Treasurer and was Senior Vice President, CFO and Treasurer prior to the November 2001 merger that created GlobalSantaFe. Mr. Ralls previously held executive positions at two publicly traded oil and gas companies and various management positions in commercial banking. Mr. Ralls has been a Director of GP of El Paso Pipeline Partners since January 2008. He has been a Director of Complete Production Services since 1995. Mr. Ralls received an undergraduate degree in mechanical engineering and a Masters in Business Administration degree from the University of Texas at Austin. 

The outgoing CEO, Danny McNease announced his resignation back in October.  Rowan Companies was doing quite well under his tutelage during the oil boom but during this past summer as floor began to fall out again the company saw its fortunes turn.  McNease was not the right person for the contracting market.  Ralls should help Rowan weather the changes in the oil drilling market and prepare the firm for when oil prices rise again and call for increased drilling.Keep a close eye on the moves Ralls takes after he takes effective control of the company’s reins.  For more:  Energy Current  Reuters  

Yesterday, a study by the National Bureau of Economic Research determined that the U.S. has been in a recession since December of 2007. Though this is hardly news, it is certainly an official validation of what has happened over the past year. Investors are no doubt uncertain about what to do, having never seen a market like this their lifetime. Here at TWST, we asked several portfolio managers to give some general advice to investors in this uncertain time:

Kevin Charlebois, Brookfield Soundvest Capital Management: We are advising our clients that, although there has been a material downturn in stock market prices, in the neighborhood of 40% or so from their peak, we believe we are through most of the downturn, though we may not be through all of it. The next three to nine months may continue to be choppy, but for a long-term investor, this is the time to be investing available cash in the shares of good companies. In other words, your time will be more productively spent if you stop the fruitless search for the bottom and expend your energy on finding the true long-term bargains available in today’s marketplace.

Gerald Seizert, Seizert Capital Partners: We are going to be in a very challenging equity environment. Returns are likely to continue to be very volatile for the next 12 months and maybe longer. However, valuation levels of the broad market are becoming attractive to the long-term investor. We are at levels that have typically been associated with early stages of a bull market. For those with a holding period that is longer than a year or two, the market is at a level that is compelling. Significant absolute returns will be made by those who stick to a disciplined focus on companies with strong fundamentals, selling at attractive multiples of cash flow and that have sustainable dividends. As always but particularly now,the key virtue for the equity investor is patience.

For the complete investing strategies report, including full interviews with a variety of portfolio managers and stock picks, click here.

Andrew Ross Sorkin wrote a terrific column today in the New York Times Dealbook.  His piece provided a brief but incisive  overview of the issues surrounding the controversy over CEO pay and performance.  Sorkin starts off the column asking why Vikram Pandit, Citigroup’s embattled one year old CEO, should remain in his position.  According to Sorkin,

Many Americans, including many people on Wall Street, would argue that an executive with a record like that (referring to Pandit) should get paid little or nothing.  

The reference to Pandit related more to the problem than Pandit’s actual circumstances or his own opinion on what should take place with regard to Pandit.  In the piece Sorkin goes on to review what many of the specialists in the field think and what options exist for improving the problem.  If you are at all interested in executive compensation and performance check it out. 

Our special focus this week is on Industrial Manufacturing. Like much of the market, this particular sector has been hard hit since the end of September. However analyst Jim Lucas of Janney Montgomery, LLC does have a few picks, and at the top of his list is a company called Danaher (DHR):

Mr. Lucas: Danaher, to put it quite simply, is best in class. Just go back to the first criterion, identifying companies with strong management. With Danaher, it all starts with the Danaher Business System. In my 15 years of research, it is the most unique operating culture that I’ve come across, and it is a culture that permeates the entire organization. Danaher is a prodigious cash flow generator, and they do an exceptional job of redeploying that cash in a shareholder friendly manner, meaning that, when there are opportunities when the stock is undervalued and there are not a lot of acquisitions to do, they buy back stock.

For the complete Industrial Manufacturing report, including a full interview with Mr. Lucas as well as interviews CEOs from top companies in this sector, click here.