New CEO at GE Wastes No Time Reshaping Team
The retirement announcements of two veterans suggest that CEO John Flannery is aggressively scrutinizing corporate costs, especially those springing from seemingly nebulous, centralized initiatives.
GE’s (GE) unexpected announcement of three executive departures on Friday suggests that new CEO John Flannery is wasting no time shaping the management team that will help him execute the strategic vision he will describe to investors on Nov. 13. Although we were not surprised that former CEO Jeff Immelt decided to step down as chairman earlier than intended, we did not anticipate CFO Jeff Bornstein’s decision to leave by the end of the year. Bornstein had been named vice chairman at the same time Flannery succeeded Immelt as CEO, and we expected them to work together in evaluating GE’s next steps. That said, Bornstein’s 28 years at GE translate into valuable experience; we expect to see him land at a company where he could wield even greater influence. Jamie Miller, who will succeed Bornstein, has quickly risen the ranks after joining GE in 2008. She brings a mix of financial and technological leadership experience that will likely be helpful in managing GE’s pursuit of its digital-industrial strategy.
We believe that the retirement announcements of 39-year and 27-year veterans John Rice and Beth Comstock suggest that Flannery is aggressively scrutinizing corporate costs, especially those springing from seemingly nebulous, centralized initiatives. Rice most recently managed GE’s Global Growth Organization, which championed GE’s efforts in emerging markets, while Comstock led strategy for fledgling growth ventures like Current. In our opinion, these efforts can be effectively handled by the business heads of each segment, who may be even closer to the specific opportunities within each sector.
While admittedly abrupt, opportunity often follows significant change, and we continue to believe that shares of wide-moat GE look undervalued. New CEO Flannery is quickly demonstrating a decisive management style. As such, we expect to see a clear plan of action result from his portfolio review, which appears to be quite sweeping in scope in these early days.
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Barbara Noverini does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.