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General Motors

(GM) - Get General Motors Company Report

took a major management succession step Wednesday by naming its 46-year-old president and chief operating officer to replace John F. Smith Jr. as chief executive.

The elevation of Richard Wagoner Jr., effective June. 1, will make him the youngest chief executive at the world's leading automaker since the 1920s when Alfred P. Sloan began running the company at age 47.

It also will make Wagoner the youngest CEO at any of the world's big automakers and one of the youngest at any major Fortune 500 company.

The succession move, which had been widely expected, is the beginning of a departure process for Smith, 61, who has been widely credited with helping rescue GM from years of punishing losses since he was appointed CEO more than seven years ago.

But Smith will remain chairman indefinitely, perhaps reflecting some reticence among GM directors about the promotion of Wagoner to the top two executive positions because of his relatively young age.

Smith held the CEO position since directors placed him there in a boardroom coup in November 1992, when the board, led by director John Smale, ejected former chairman Robert Stempel. It then initiated a large reshuffling of the company's management, which included the appointment of Smith as CEO and Wagoner as chief financial officer and executive vice president.

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Wagoner has quickly risen within GM. Before his 1992 financial officer appointment, he was head of GM's Brazilian operations. He started his career with GM in 1977.

Wagoner is seen as a driving force in the company's ambitious plans to build an Internet presence for business-to-business commerce and consumer marketing. He also takes partial credit for spearheading a vast reorganization of the company's domestic marketing divisions.

Although it remains unclear who will replace Smith as chairman, the most likely candidate will be GM vice chairman Harry Pearce, 57. Pearce's ability to continue serving the company had been called into question when he was diagnosed with leukemia in 1998, but the company says he has since recovered.

Investors sold shares of GM Wednesday. In midafternoon trading, the stock was down about 3 3/16, or 4%, to 82 1/16. The move might have been due to profit-taking after the stock's stunning 5.8% rise on Tuesday, when GM

announced it would will pare its stake in the tracking stock of

Hughes Electronics


by about half. (GM shares closed down 3 7/8, or 4.6%, at 81 3/8.)

Despite the retrenchment in share prices Wednesday, many investors and analysts remained positive on GM. "We would expect that the company will continue on its current track, and that Wagoner will have good working relationships with the current structure within the company," said auto analyst Michael Bruynesteyn at

Prudential Securities