General Electric last week announced the departure of three senior executives, a further sign that John L Flannery, the company’s new chief executive, is moving quickly to chart a course different from that of his predecessor, Jeffrey R Immelt.
The departing executives were senior members of Immelt’s team. Two of the three, analysts say, were not surprising given their ages and the pattern of most chief executives to make management changes after assuming control.
The most striking move, they say, is the departure of Jeffrey S Bornstein, vice chairman and chief financial officer. Bornstein, 51, was regarded as a potential successor to Immelt. After Flannery was chosen as the chief executive in June, GE said he and Bornstein would work closely in the transition and Bornstein was given extra financial incentives to remain with the company.
But Bornstein was GE’s top finance executive under Immelt. And the criticism by activist investors who lobbied for change, helping nudge Immelt into retirement earlier than expected, was that GE should have cut costs more aggressively and spent less on new initiatives, like building up GE’s software business.
The strategy was Immelt’s, but Bornstein held the purse strings. “Jeff Bornstein was Immelt’s guy and he lost out in the succession race to John Flannery,” said Scott Davis, chief executive of Melius Research, an independent financial analysis firm.
“Flannery wants new guys, new faces and not someone tied to profit performance that fell short.”
In the statement announcing his departure, Bornstein said, “As John evaluates the strategy for GE and puts his leadership team in place, he and I have concluded that this is the right time to bring in a new CFO with a fresh perspective.” GE’s new chief financial officer will be Jamie S Miller, starting in November. She has been head of the company’s transportation business.
The two other departing executives are John G Rice and Beth Comstock. Rice, 60, was in charge of GE international expansion efforts, known as the global growth organisation. He has been at GE for 39 years and will retire at the end of this year. Comstock, 57, oversaw the company’s business innovations unit, running GE’s venture investment arm as well as operations including sales, marketing and communications. Comstock, too, will retire at the end of this year.
Bornstein, a 28-year GE employee, will also leave the company at the end of the year.
