General Electric (GE) announced H. Lawrence Culp, Jr. will replace John Flannery as Chairman and CEO of the company, effective immediately.
The company also named Thomas W. Horton as lead director, the company said in a statement Monday. Both Horton and Culp have been members of GE’s board since April. The change in leadership comes following a unanimous vote of the GE Board of Directors.
Flannery’s departure comes just 14 months after he took the helm as Chairman and CEO of the company Aug. 1, 2017.
Shares of GE surged 14.61% to $12.94 per share at 9:31 a.m. EDT. The stock had been down more than 30% this year as of market close Friday.
With the announcement of its leadership change, the Boston, Massachusetts-based company also said it would take a $23 billion goodwill impairment charge on its GE Power business. GE cut its outlook for free cash flow and EPS for 2018 “due to weaker performance” in GE Power, it said in a statement. The company said its businesses other than Power “are generally performing consistently with previous guidance.”
“We remain committed to strengthening the balance sheet including deleveraging,” Culp said. “We have a lot of work ahead of us to unlock the value of GE.”
Culp, who served as CEO and president of manufacturing company Danaher Corporation from 2000 to 2014, may “inspire confidence in turn-around potential,” UBS analyst Steven Winoker wrote in a note.
“A new CEO might not change the facts of the current headwinds, but as we have noted many times, it is hard to refute Larry Culp’s track record and accomplishments at Danaher during his tenure,” Winoker said. “Of course, GE is in a very different starting position than Danaher at the time with GE’s Power, balance sheet and cash challenges. However, we believe that CEO Culp will, at a minimum, re-baseline the company, drive execution and make long-term decisions that benefit the company and shareholders.”
Recently, concerns about gas turbine failures in Texas weighed on GE, though the issue has since been resolved.
GE’s struggles are well-known, and it’s been reflected in its underperforming stock price. Yahoo Finance readers voted it the worst company of 2017. The stock was an original member of the Dow Jones Industrial Average in 1896, but was unceremoniously removed in June.
—
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck.
Read more from Emily: