Industrial conglomerate GE announced on Monday that it has booted CEO John Flannery just over a year into his tenure and replaced him with turnaround expert Lawrence (Larry) Culp Jr. in a unanimous vote effective immediately.
Larry Culp Jr. is GE's new CEO.Additionally, GE's board of directors appointed Thomas Horton as lead director. Culp and Horton have been members of the board since April 2018. Culp becomes the first outsider to be named as CEO in the company's 126-year history, Bloomberg reported.
Culp, 55, served as CEO and president of Danaher from 2000 to 2014, during which time the company's market capitalization and revenues grew fivefold.
Horton, 57, served as chairman and CEO of American Airlines from 2011 to 2013 and as chairman of American Airlines Group from 2013 to 2014. During this time he restructured the airline and its eventual merger with US Airways, creating the world's largest airline. Horton also served earlier in his career as the chief financial officer of American Airlines and AT&T.
The personnel moves come at a time when GE is struggling financially with a cash-flow shortfall that has prompted the company to divest some units and announce plans to spin off its GE Healthcare business into a standalone company, which is expected to be completed in 2019. A GE Healthcare spokesperson told CNBC.com that Flannery's departure did not affect plans to spin off the division.
Indeed, along with the announcement of Flannery's departure, GE said that its Power business will fall short of previously indicated guidance for free cash flow. As a result, the company plans to take a charge for goodwill impairment that could total almost all of the unit's approximately $23 billion goodwill balance. The impairment charge is not yet finalized and remains subject to review, GE added.
Other GE divisions apart from the Power business continue to perform in line with its previously announced guidance, according to the company.
