They were the odd couple atop the world's largest industrial corporation. One was a consummate organization man who had risen fast by mastering the bureaucracy of a giant company, the other a feisty free spirit who had built a billion-dollar firm from scratch. For two years everyone had wondered what would become of the uneasy chemistry between General Motors Chairman Roger Smith, 61, and H. Ross Perot, 56, the company's largest shareholder.
Last week the answer came: an explosion that hurled Perot off the GM board of directors and into the headlines. At a session that Perot agreed to skip, the other members of the GM board voted unanimously to buy back his 11.3 million shares of company stock for $700 million. In effect, they told the brash Texan that he could take his money and his loud mouth and go away.
Yet the partnership had once seemed so promising. Both men shared the same vision and goal: to use technology to thrust General Motors boldly into the 21st century. When GM in 1984 bought Dallas-based Electronic Data Systems, the computer-services firm that Perot had founded, Smith was trying to inject high-tech know-how and a can-do spirit into a stodgy company. But the job of grafting an entrepreneurial operation onto a highly departmentalized, regimented and unionized organization proved to be more troublesome than anticipated.
More important, Perot demanded much greater autonomy for EDS than Smith was prepared to grant. When Perot became impatient with the pace of change at GM and began carping publicly about the need to "nuke the GM system" and "teach an elephant to tapdance," the clash of personalities and cultures became increasingly intolerable. Ominously for Smith, the dispute threatened to escalate into a battle for control of GM. Says a source close to the conflict: "The question for the board was how it could have good corporate governance with two chief executive officers."
Perot's sudden resignation from the GM board and from the chairmanship of EDS created an instant uproar and raised new uncertainties about the future of the troubled company. Wall Streeters questioned the economic wisdom of GM's paying so much money to jettison an in-house critic. Pundits quipped that Smith had paid a hefty "ransom" to free himself from his adversary—a reference to last week's revelations of Perot's financial support for National Security Council efforts to ransom American hostages held in Lebanon. One of Perot's assistants dubbed the GM payoff "hush-mail." Shareholders, meanwhile, were outraged that GM paid about $60—or twice the going market rate—for each of Perot's series E shares. One stockholder, Abraham Duman of Highland Park, Tll., filed a suit against GM, claiming that its directors had violated their fiduciary responsibility by paying such an enormous sum to Perot.