Biggest Mistake

Lee Iacocca at 78 has mellowed a bit. But he still simmers when the subject turns to Robert Eaton, who succeeded him as chairman of Chrysler Corp. in 1992 and six years later sold out to Daimler-Benz AG.

The deal was called a “merger of equals” at the time, but turned out to be a takeover with Chrysler operating as a division of what is now known as DaimlerChrysler AG.

“I think it was the biggest mistake of my business career,” he tells Ward's in Bel Air, CA, of hiring Eaton from General Motors Corp. in 1992 as Chrysler's president and chairman-in-waiting.

Eaton was chairman of GM Europe at the time. “I got the wrong guy. I wanted Hughes or Smith (Louis Hughes or John F. Smith Jr., then both high-ranking GM executives).” Iacocca blames himself. “I didn't do my due diligence,” he says. “Eaton was always a staff guy. He never ran a division.”

Robert Lutz, whom Iacocca lured from Ford Motor Co., was widely considered his heir-apparent. Iacocca denies he torpedoed Lutz's chances. “The board didn't like Lutz,” he says.

Iacocca teamed with Las Vegas billionaire Kirk Kerkorian in an attempted Chrysler takeover in 1995. “The Germans saw it as a good buy, and I came up with the same thing,” he says.

“We had $12- to $13-billion, but we needed another $13 billion and he (Kerkorian) couldn't come up with it.” Kerkorian has since sued DC for $9 billion, charging the German auto maker with misleading stockholders by calling it a merger instead of a takeover. Iacocca's not involved.

“I still haven't gotten over Daimler-Benz buying Chrysler,” he says. “Chrysler said the company was not for sale. He (D-B Chairman Juergen Schrempp) stole it. But I can't complain too much because the guy I put in (Eaton) sold out. They went to the Germans and he (Schrempp) said “We're lying to you, bald-faced. This is not a merger of equals, but who gives a sh —. I'll give you a billion off the top. You (Eaton) take $100 million and spread the other $900 million among the troops.' And it was Chrysler's money!”

Iacocca says Schrempp since has made overtures. He sent Chrysler Group Chairman Dieter Zetsche here “to pick my brain,” he says, and Schrempp “led me on for 18 or 19 months” about possibly joining DC.

Schrempp met with him in New York in December 2000. “He wanted me to come in at the highest level reporting to him,” Iacocca says. Given the giant egos of both men, it's not surprising they never discussed an official title.