Just over a year into his attempt to turn around a moribund GE, John Flannery is out as head of the company.
The company announced that H. Lawrence Culp, Jr. has been named chairman and chief executive officer by a unanimous vote of the GE Board of Directors, effective immediately. Additionally, the GE Board has appointed Thomas W. Horton as lead director. Culp and Horton have been members of the Board since April 2018. Culp succeeds Flannery, who took over for Jeffrey Immelt in August 2017.
While GE said its businesses other than Power are generally performing consistently with previous guidance, due to weaker performance in the GE Power business, the company will fall short of previously indicated guidance for free cash flow and EPS for 2018. In addition, GE expects to take a non-cash goodwill impairment charge related to the GE Power business. GE Power’s current goodwill balance is approximately US$23 billion and the goodwill impairment charge is likely to constitute substantially all of this balance. The impairment charge is not yet finalized and remains subject to review. The company will provide additional commentary when it reports third-quarter results.
During his tenure, Flannery repeatedly said that turning around the Power business would be a multi-year endeavor, but one that would be accomplished.
Culp said that GE remains a fundamentally strong company with great businesses and tremendous talent.
“It is a privilege to be asked to lead this iconic company,” Culp said. “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. 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. I am excited to get to work.”
Culp, 55, served as chief executive officer and president of Danaher Corp. from 2000 to 2014. During his tenure, GE said he led the highly successful transformation of the company from an industrial manufacturer into a leading science and technology company. During his 14 years at the head of Danaher, the company’s market capitalization and revenues grew five-fold.
Horton, 57, served as chairman and CEO of American Airlines from 2011 to 2013, and chairman of American Airlines Group from 2013 to 2014. During his tenure GE said he led the successful restructuring of the airline and its eventual merger with US Airways, creating the world’s largest airline.