GE, the struggling conglomerate, said Monday it has replaced CEO John Flannery with H. Lawrence Culp Jr., effective immediately. Flannery has been CEO for less than two years.
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Besides Culp, who served as the chief executive of Danaher Corp. for 14 years, the company also announced Thomas W. Horton as lead director. Culp, 55, and Horton, 57, have been on the GE board since April.
Further, the company said it is reviewing plans to take an approximately $23 billion noncash goodwill charge for its ailing GE Power business.
Shares of Boston-based GE, which has more than 300,000 employees worldwide, rose nearly 15 percent in premarket action after the leadership change was announced. The stock has lost about 35 percent of its value this year.
|GE||GENERAL ELECTRIC COMPANY||8.66||-0.40||-4.42%|
While GE’s businesses -- other than its Power business -- are generally performing consistently with previous guidance, due to weaker performance in the Power business, the company will fall short of previously indicated guidance for free cash flow and earnings per share for 2018.
"We will be working very hard in the coming weeks to drive superior execution, and we will move with urgency. We remain committed to strengthening the balance sheet including deleveraging," Culp said in a statement.
Analysts welcomed the change from Flannery to Culp.
"The GE of today is vastly different from the GE of 10 years ago; the changes that have taken place since Flannery’s appointment have been relatively drastic with little financial results to show,"Tim Hubbard, professor at University of Notre Dame's Mendoza College of Business, said in a statement.
"It’s hard to expect a CEO to maintain their job while there is a 35 percent decline in stock price over 10 months. The market’s reaction this morning is expected. The large increase in stock price [during] this morning’s premarket trading is an indication that Flannery's leadership was not providing enough value — and that the market expects Culp to be better suited for the top position. Indeed, an outsider may be just what GE needs to move forward as it continues to redefine itself while trying to maintain its best parts."
Horton was CEO of American Airlines from 2011 to 2013, and chairman of American Airlines Group from 2013 to 2014.
Flannery succeeded Jeffrey Immelt as CEO and board chairman. Before that Flannery was president and CEO of GE Healthcare.