GE asset sales may be Bob Nardelli's revenge

Bob Nardelli, who left General Electric nearly two decades ago after losing a succession battle to run the once high-flying conglomerate, is looking to inch his way back into the company amid its current management turmoil and questions over its future, FOX Business has learned.

He has recently reached out to GE officials with an offer to help with the planned sale of $20 billion of assets and the possible breakup of the company into separate units as well as providing guidance on how to better manage key areas of the industrial conglomerate, according to people with direct knowledge of the matter.

Nardelli has mainly spoken with Ed Garden, who represents activist shareholder Trian Fund Management on the company’s board, these people say.

It’s unclear if any official or unofficial position at GE will  materialize for Nardelli, who has made these overtures as GE’s share price has been crushed amid investor concerns over the company’s direction, these people say. GE has lost 51% of its value over the past 52 weeks.

Ticker Security Last Change Change %
GE GE AEROSPACE 159.26 -3.45 -2.12%

In addition, he has also been advising private equity firms that are eyeing the purchase of GE assets including its transportation business. CEO John Flannery, who took over from long-time chief Jeff Immelt last year after he was pressured to resign, unveiled plans to sell assets at the company’s investor day last November.  FOX Business was first to report last March that Immelt’s job was on the line because of the poor-performing stock price.

Nardelli sees the management and operational turmoil as a way to return to the company he almost ran, and correct the problems he believes Immelt failed to address, these people say.

“A lot of us former GE people are calling this ‘Nardelli’s revenge,’ ” said one former long-time GE executive who spoke on the condition of anonymity. “Bob has never hidden his disdain for Jeff’s management of the company and belief that he could have done it better.”

Nardelli didn’t respond to emails for comment. Spokesmen for GE didn’t return numerous calls for comment, while spokesmen for Trian and Immelt declined to comment.

In January, during an interview on FOX Business Network, Nardelli described the decline of the company he almost ran as “heart-breaking” and is urging fast action by the company’s new leadership.

Under Immelt, who edged out Nardelli back in 2000 to run the company after a high-profile succession battle, GE’s share price has largely underperformed the stock market and more recently sank to a multi-year low. While Flannery is attempting to craft a turnaround, investors remain skeptical. GE was forced to cut its dividend last year and is slashing thousands of jobs as part of planned asset sales.  The company is also dealing with an investigation by the Securities and Exchange Commission over its accounting practices as Flannery considers a complete breakup of GE into separate, publicly traded units.

After Nardelli left GE in 2000, he had stints running Home Depot, which was founded by Bernie Marcus, Arthur Blank and former GE board member Ken Langone. In 2007, he was named CEO and chairman of Chrysler, then owned by a private equity firm, Cerberus Capital. His career at GE spanned nearly 30 years, beginning as an entry-level manufacturing engineer, rising through the ranks to run the company’s power systems unit.

It was Jack Welch, the legendary CEO of GE, who made the company one of the world’s largest conglomerates and hottest stocks before his departure in 2001, who often remarked that Nardelli was the “best operating executive” who ever worked for him. But when it came time for a successor, Welch bypassed Nardelli and another GE official, James McNerney, for Immelt, a smooth, Ivy League-educated executive overseeing the medical systems subsidiary.

Nardelli is said to still be angered at being passed over for the top job particularly amid Immelt’s uneven, 16-year tenure at the helm.

The announcement of a possible breakup of GE into separate companies and asset sales prompted Nardelli to reach out to Garden, the board member and senior executive at Trian, primarily because such moves would play into what Nardelli believes are his strengths as a manager who understands GE’s businesses from a granular perspective and what these units might be worth if sold, according to people with knowledge of the matter.

A person close to Trian leadership told FOX Business that Nardelli and Garden did indeed meet recently, but Garden offered no role to Nardelli. With that, Nardelli has been focusing more on advising possible buyers of GE’s transportation unit, mainly among private equity firms that are interested, these people added.

GE has hired Morgan Stanley to possibly sell the transportation unit in a deal in which the conglomerate would be seeking as much as $2.5 billion, though it’s unclear if any major firm would be willing to pay that price for a business that has seen better days.

A Morgan Stanley spokesman had no immediate comment.

Late Monday, GE further acknowledged that the company is struggling. In a SEC filing it disclosed the following; “While our compensation programs did not drive company performance in the way we had hoped, they did hold the senior leadership team accountable. For 2017, the Compensation Committee determined that, for the first time in GE’s history, the senior leaders at GE’s headquarters – our past and present CEOs, CFOs, Vice Chairs, General Counsel and HR directors – would not receive bonuses.”

Immelt and Flannery still received total compensation paychecks worth multi-millions for 2017.