Tuesday, November 02, 1999
Welch to exit GE very carefully
Skills mark plans to retire
BY DENISE LAVOIE
The Associated Press
STAMFORD, Conn. — In preparing for his retirement in 2001, General Electric Co. Chairman and Chief Executive Jack Welch is displaying the same careful, forward-thinking management style that led Fortune magazine to name him “Manager of the Century.”
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TWO POSSIBLE SUCCESSORS HAVE AREA TIES
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The list of top GE executives considered leading candidates to succeed Jack Welch includes two with Cincinnati ties:
• W. James McNerney, 50, president of Evendale-based GE Aircraft Engines.
• Jeffrey R. Immelt, 43, a native of Finneytown, who leads GE Medical Systems.
Robert Nardelli, 51, head of GE's Power Systems unit, also is said to be a strong contender.
And another considered in the running is Dennis D. Dammerman, 54, who last year replaced Gary Wendt as chairman and CEO of GE Capital Services, GE's most profitable division.
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Mr. Welch, who will turn 64 on Nov. 19, announced in 1995 that he would retire at age 65. Since then, rampant speculation has persisted about who would replace him at the helm of GE, one of the most successful conglomerates in the world.
In an interview Monday with CNBC, the business news cable television network owned by GE, Mr. Welch said he would depart in April 2001, five months after his 65th birthday and exactly 20 years since he was appointed chairman and chief executive officer.
Analysts and others who follow Mr. Welch say the way he has handled his departure is typical of his management style: hands-on, forward-thinking and market-conscious.
“It's consistent with the fact that he's just a marvelous manager and he wanted to make sure that his exit strategy in retirement was going to go very smoothly,” said David Mauer, a professor of finance at Southern Methodist Univer sity's Cox School of Business.
“The beauty of having Welch announce that well in advance allows analysts to carefully look at the manage ment GE has ... and come to the conclusion that GE will not skip a beat after Welch leaves.”
GE has been tight-lipped about who Mr. Welch's successor will be except to repeatedly say that the new CEO will come from inside the company.
Analysts said there is a list of six to 12 people to replace Mr. Welch, made up of division heads and other top executives.
“It's a moving target. There certainly have been shifts along the way,” said Russell Leavitt, an analyst with Bank of America Securities in New York.
“One of the reasons why he's encouraged the idea that a younger person should become CEO is that it's his view in order to do the job properly,
you need a longer span of 10 or 20 years.”
To help prepare his top talent for a potential shot at the chairman's role, Mr. Welch has made it a point to move his managers around so they can gain experience in all of the company's divisions.
Noel M. Tichy, a University of Michigan Business School professor who ran GE's management development operation in 1985-87, said Mr. Welch began preparing the company to pick his suc cessor more than a decade ago.
“I think his legacy is to see strong leadership when he leaves,” said Mr. Tichy, who wrote a 1993 book on Mr. Welch, Control Your Destiny or Someone Else Will: How Jack Welch is Making General Electric the World's Most Competitive Company.
The new CEO is expected to be in place by the end of 2000. Mr. Welch said he will stay on until April 2001 so he can help the new CEO and the rest of GE's leadership through the company's annual meeting.
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Welch to exit GE very carefully
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