Flannery Out, Culp In As General Electric CEO
A management shift involving the most senior members of General Electric Company (NYSE: GE) was announced Monday, boosting the stock higher by nearly 15 percent in premarket trading.
What Happened
GE said its board of directors unanimously voted to remove John Flannery as chairman and CEO and replaced with H. Lawrence Culp Jr. In addition, the board named Thomas W. Horton, an airline executive with experience in restructuring and M&A deals, as lead director.
Culp, a member of GE's board since April, served as CEO and president of Danaher Corporation (NYSE: DHR) from 2000 to 2014.
GE's board credits the executive with leading the transformation of the company from an industrial manufacturer into a leading science and technology company. Danaher's market cap and revenue both grew fivefold while Culp was CEO.
Why It's Important
Flannery was named CEO of GE in August 2017. Under his watch, the stock hit a near-decade low as investors showed signs of concerns over a turnaround that the ex-CEO said is a "multiyear fix," CNBC reported in August.
Monday's announcement marks a new chapter in GE's history, as the new senior executive team will focus on "strengthening the balance sheet including deleveraging," Culp said in the press release.
What's Next
In conjunction with the leadership change announcement, GE said it will fall short of its 2018 cash flow and EPS guidance due to weaker performance in the GE Power business. In addition, the company will be taking a $23 billion non-cash goodwill impairment charge related to the power business, although the details are not yet finalized and will be subject to review.
The company will offer additional commentary in its third-quarter print Nov. 25.
Related Links:
Cramer Wants GE's Entire Board Added To His 'Wall Of Shame,' Faults Immelt And Flannery
John Flannery Gives The Inside Story Of GE's Dividend Cut And More
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