GE Abruptly Replaces CEO Flannery with Former Danaher CEO Culp
[Updated 10/1/18, 10:57 am. See below.] In an unexpected move, General Electric has replaced its chief executive just 16 months after naming him its next leader.
GE (NYSE: GE) announced Monday it named H. Lawrence Culp, Jr., as CEO and chairman, immediately replacing John Flannery (pictured above). Culp has served on GE’s board since April. Before that, the 55-year-old ran Danaher (NYSE: DHR) for 14 years, during which time he helped grow the industrial conglomerate’s revenues and market value five-fold, GE said in a press release.
Thomas Horton, who also joined GE’s board in April, was named lead director. He’s the former CEO of American Airlines (NASDAQ: AAL).
Investors welcomed the news: GE’s stock price was up more than 12 percent in early trading on Monday, hovering around $12.75 as of this writing.
It’s a stunning turn of events at one of America’s longest-standing corporations. Flannery spent a little more than three decades at GE, running its healthcare business for about three years before taking the top job. Last year, he succeeded Jeff Immelt, whose nearly 16-year tenure brought a significant makeover at GE. Immelt sold the company’s appliances and plastics businesses, NBC Universal, and much of its capital business, while making acquisitions in sectors such as energy, life sciences, 3D printing, avionics, and cloud-based software. The vision was to make GE a “digital industrial company” that would take advantage of technology trends, including the growth of connected devices in factories and hospital equipment enhanced with machine learning software. Immelt also moved GE’s headquarters from a Connecticut suburb to downtown Boston.
But Immelt’s transformation of GE didn’t produce the results Wall Street hoped for—the company’s stock dropped 30 percent during his tenure, the worst performance in the Dow Jones Industrial Average during that period.
Things haven’t gotten better since. Flannery’s short stint as CEO was marked by the continued drop in GE’s stock price, layoffs, cuts to the company’s dividend, and efforts to divest or spin out some of its key businesses. GE also announced Monday that its struggling power business would take a non-cash impairment charge of up to $23 billion, and said the full company’s financial performance this year would fall short of its previously announced targets. [Added Monday’s announcements.—Eds.]
Apparently, GE’s board didn’t think Flannery would right the ship. Now, we’ll see whether another new CEO can turn things around.
“We will be working very hard in the coming weeks to drive superior execution, and we will move with urgency,” Culp said in a prepared statement. “We remain committed to strengthening the balance sheet, including deleveraging. Tom and I will work with our board colleagues on opportunities for continued board renewal. We have a lot of work ahead of us to unlock the value of GE.” [Added statement.—Eds.]