Who will be in charge of Ferrari?

Fiat CEO resigns after new chairman named
Italian automaker faces new crisis
By Reuters | May 31, 2004

TURIN, Italy -- Italian automaker Fiat, still mourning the death of the last senior member of its founding Agnelli family, was plunged into turmoil yesterday when its chief executive suddenly quit moments after a new chairman was named.

The Agnellis, who control Fiat with a 30 percent stake, moved quickly after Umberto Agnelli died of cancer on Thursday, handing the top job at Italy's biggest industrial group to the head of its sportscar unit Ferrari, Luca di Montezemolo.

Chief executive Giuseppe Morchio, generally respected by investors for his plan to pull Fiat out of its worst crisis, said in a statement that he would leave the company immediately in protest at the board changes.

Sources in Fiat's hometown of Turin said Morchio and Montezemolo were both forceful characters who may have clashed. Agnelli had given Morchio a free rein to whip the family company back into shape when he was hired in 2003.

Fiat said its board would choose a new chief executive tomorrow, but the surprise resignation, the day after Umberto Agnelli was buried, means a new team will now take over delicate discussions with creditor banks and partner General Motors.

Promoting Montezemolo, one of Italy's most prominent businessmen, to the chairman's seat from Ferrari was seen as a sign that the Agnellis are still committed to the carmaker their ancestor founded 105 years ago but which has slumped into crisis.

Three younger Agnellis were named to the board. John Elkann, the 28-year-old heir of Fiat's flamboyant patriarch, Gianni Agnelli, who died last year, will be vice chairman. Umberto's son Andrea Agnelli and another cousin will take board seats.

Morchio's four-year turnaround plan for Fiat was drawn up with Umberto Agnelli.

Morchio had replaced about half of Fiat's top managers with hand-picked outsiders who worked in a close-knit team to breathe new life into Fiat.

Alongside Agnelli, Morchio was a tough bargainer with GM, which owns 10 percent of Fiat Auto and is in a legal battle with Fiat about whether it can be forced to buy the rest. Morchio was also a key point man with banks.

GM had no immediate comment about yesterday's upheaval at Fiat.