The new CEO of GE is the former leader of Danaher

By Thomas Heath, The Washington Post

General Electric announced Monday that it would replace general manager John Flannery, who had taken control of the industrial giant a little over a year ago. H. Lawrence Culp, former CEO of Danaher Corp., will replace him. GE also announced that its activity in the energy sector would cost $ 23 billion without money, which does not correspond to earnings forecasts in 2018.

The company's shares rose more than 12% in the Monday morning negotiations.

GE's shares have declined significantly over the last year, even as the stock market has generally peaked. The stock price of the company fell by half and its market capitalization was reduced to less than $ 100 billion.

Flannery has replaced long-time CEO Jeffrey Immelt, whose mandate has made GE the weakest Dow Jones industrial average among companies that had not gone bankrupt or had left bankruptcy. the group of first order values.

GE – manufacturer of bulbs, appliances, turbines and former owner of NBCUniversal – has touched the lives and investment portfolio of hundreds of millions of Americans and consumers around the world. Due to the size of the company, the US economy and millions of retirees, savers and investors have depended for decades on the success of its share price and dividend.

Mr. Flannery began his career at GE in 1987. He rose through the ranks of the company's presidency and general management of the health care sector before assuming the position of senior manager.

Admired for a long time for its management, GE has been plunged for years into underperforming divisions and poorly synchronized acquisitions. In the past year, she sold her locomotive business and sold her oil investment Baker Hughes to raise money.

But his board required faster results than Flannery was able to provide.

Culp, who has been appointed to GE's board of directors this year, is the CEO of General Electric since his current president and president, who had not spent years working for the company before to go up to his post. Culp is only the 14th person to run the company, 126 years old, and his most recent CEOs have held office for nine to twenty years.

At Danaher, Culp led the acquisition of Tektronix, an Oregon technology company, in 2007. It was Danaher's largest deal at the time. That went wrong, because Tek's innovative culture came up against the cost-conscious and very strict management style at the beginning of the Great Recession.

Danaher eventually turned Tek into a new company called Fortive, which includes slow-growing industrial companies in Danaher's portfolio.

GE's successions of CEOs have been among the most-watched events in US companies, making the sudden transfer to Culp all the more remarkable.

According to the Conference Board, although a year is a short time, almost all of the company's standards – the average CEO is just under nine years old – is particularly abbreviated in a company like GE, known since long time for its development reputation. business leaders and seen its management practices become largely copied.

"Here's the company that has been the model for over 100 years, able to generate talent in leadership, and no one was part of the group on which the board felt it was. Comfortable, "said Noel Tichy, a professor at the university. from the Michigan School of Business, who led GE's Leadership Training Center, known as "Crotonville" in the mid-1980s, and who has written extensively on emerging, corporate leadership and GE.

Culp, who retired as CEO of Danaher in 2015, led the industry giant, a Wall Street Journal-led executive, for 14 years, termed "one of the biggest success stories of US companies. in the last ten years ". market capitalization has been multiplied by about five and returns distributed to shareholders have largely surpassed the Standard & Poor's stock index by 500 shares.

"GE remains a fundamentally strong company with great companies and exceptional talent.It is a privilege to be invited to lead this iconic company," Culp said in a statement. "We will work very hard in the coming weeks to get a superior execution, and we will act urgently."

GE has also appointed Thomas Horton, former CEO of American Airlines, as lead director, succeeding former Vanguard CEO John "Jack" Brennan, a director who said earlier this year that he would not run again not in 2019. The position of senior director independent members of the board of directors and is common in publicly traded companies where the chairman is also a current or former CEO. As CEO of American, Horton led the restructuring of the company and its merger with US Airways.

The board of directors who appointed Flannery CEO in June 2017 is now very different. There remain only seven directors of this 18-member board after the announcement of the company's redesign in February. He added three independent directors – including Culp and Horton – but said goodbye to eight others, bringing the board down to just 12 members and marking a kind of large-scale change rarely seen in corporate governance. (GE 's board of directors now has 11 directors and Flannery has stepped down and the company has also named Edward Garden late last year, under pressure from activist activist Nelson. Peltz, and saw two other council members retire.)

"It's a board that is not loyal to anyone now," said Peter Crist, chairman of the executive search firm Crist Kolder Associates, a long-time GE observer.

"The advice is getting impatient and the new advice is doubly impatient in a difficult situation," he said. "They have no legacy to society and they demand a change."

The manufacturing conglomerate has long been a pillar of American industry. It employs 300,000 people, competes in 180 countries and has received great respect for its management and corporate governance.

But the firm stumbled under the reign of Immelt, who retired in 2017 after 16 years at the top. Immelt had succeeded Jack Welch, a legend in business management circles.

Flannery had worked to restore trust. After his appointment in August 2017, several senior executives left the company, including the CFO.

Flannery subsequently shut down the company's fleet of vehicles, reduced the number of cars handed over to management and announced a review of its compensation policies. Despite this, the company announced disappointing financial results shortly after taking office. He cut his dividend in half while he was looking to save money and recover after more than a decade of late earnings and poor stock market performance.

Shareholder payments for each share fell 24 cents a quarter to 12 cents, the third time the company reduced payments in 125 years of existence.

The manufacturing conglomerate has embarked on a radical overhaul that plans to reorganize its board of directors and divest its business units, including its legendary lighting business that dates back to its founder, Thomas Edison.

GE has long been one of Wall Street's biggest dividend payers, behind Exxon and Apple. From individual investors to pensions to foundations, everyone has been counting on GE's dividend for decades.

Restoring GE as a strong society will probably lead to more painful changes in the future.

Culp "will look at the wallet and say" it's a guardian, it's not, "and orchestrate the change," Crist said.

"He is a very smart, impartial and strategic strategic CEO," he said. And investors are likely to "see it as the good game of hands able to direct it without any emotion of the past".

– The Washington Post