General Electric has dropped CEO John Flannery after barely a year on the job.
John Flannery is no longer the head of General Electric (GE), and shares are up more than 13% on the news.
As GE’s shares fell nearly one-third this year with investors worried about the company’s mounting debt and shrinking profit, it was time to take immediate action.
Flannery will be replaced by H. Lawrence Culp Jr., who served as the CEO and president of Danaher Corporation from 2000 to 2014. The respected executive is also set to become the first outsider to lead GE in the company’s 126-year history.
Lawrence Culp, with 55 years of age, is credited with leading a turnaround at Danaher, company that makes everything from dental tools to consumer packaging.
According to CNN Money, RBC analyst Deane Dray recently wrote to clients: “We hold Mr. Culp in the highest regard” given his “operational and strategic excellence”.
As for Scott Davis, lead analyst at Melius Research, Culp is a “proven CEO with pedigree and the support of Wall Street.”
Mission: Turn the company around
General Electric, an original member of the Dow since 1896, and the most valuable company in America as of 2004, worth nearly $400 billion, was recently booted from the exclusive index over the summer. Last week, its market value fell below $100 billion for the first time since March 2009.
GE is also dealing with an SEC investigation into its accounting practices and insurance business. The subprime mortgage unit is also under investigation by the Justice Department.
If GE does not work on bettering its financial arm, the company could be facing bankruptcy as it navigates, like many other multinational companies, the US-China trade war.