Stempel rumours lift GM shares

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SHARES in General Motors rose on Wall Street yesterday on reports that the car maker will replace its chairman, Robert Stempel, at its next board meeting on 2 November.

Reports in two leading US newspapers said Mr Stempel, who has faced a revolt by outside directors since April, will lose his job to John Smale, the former Procter & Gamble chairman who heads GM's executive committee.

The role of chief executive will probably go to the car maker's president, John Smith, who was promoted over Mr Stempel's choice by the board last spring.

General Motors spokesmen, who had denied earlier reports about Mr Stempel's status, refused to comment yesterday. Mr Smale issued a statement late on Thursday saying the GM board 'continues to reflect upon the wisest course for assuring the most effective leadership for the corporation'.

The statement made no mention of Mr Stempel, who had said there was 'no truth in the rumours'. GM, which has lost dollars 6.5bn ( pounds 4.02bn) since Mr Stempel took office in 1990, is expected to announce another quarterly loss of dollars 845m next week.

Although Mr Stempel has announced plans to close 21 of GM's 120 plants and make 20 per cent of its North American workforce redundant, the outside directors are believed to be impatient with the pace of the restructuring.

In April, Mr Smith was given the mission of turning around the American operation by year-end, which now appears impossible.

The car maker's share price has risen 15 per cent since reports of Mr Stempel's exit began circulating, and the stock was up again 25 cents yesterday at dollars 33. Motor industry analysts raised their investment recommendations yesterday from 'hold' to 'buy'.

Jack Kirnan, analyst with Salomon Brothers, said: 'Wholesale changes are likely to be announced over the next few weeks.'