GE Capital chief exit puts spotlight on Immelt

May 30, 2013

By Agnes T. Crane
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

The exit of GE Capital’s chief shifts the spotlight onto his boss, Jeffrey Immelt. Michael Neal, who has led General Electric’s erstwhile high-flying lending unit for eight years, may be soon handing the helm to someone else, according to the Wall Street Journal. His departure raises the question of who will eventually replace the conglomerate’s top dog.

Neal’s retirement isn’t out of the ordinary by GE standards. At 60, he’s at a typical age when many of its executives decide to call it quits. And while Immelt has been in the corner office for nearly 12 years, eight years is a good run for a chief executive. It’s about the average for a head honcho in the United States, according to a 2012 Conference Board study.

Moreover, Neal has cleaned up most of the mess he had a hand in creating. Under his early stewardship, GE Capital invested heavily in commercial real estate with borrowed money, much of it short term. When the crisis erupted in 2008, the lending unit nearly sank the parent. Since then, Neal has shrunk GE Capital’s balance sheet by about one-fifth and kicked its dependency on short-term corporate debt. Immelt plans to shrink it further and has even mooted spinning parts of it off.

Immelt, too, has found some post-crisis redemption by nursing GE back to health and reorienting the company back to its industrial roots. And he’s overseen the stock’s quadrupling since the dark days of 2009 – though at $23.70 a share it’s still roughly half what it fetched before the crisis.

That recovery might make it easier for Immelt to step away. At 57, he’s under no imminent age constraints – his predecessor Jack Welch didn’t retire until 65. But succession planning is as much about the person waiting in the wings as it is the boss. Hotshot John Rice, for example, who heads the company’s operations in growth markets like China and India, is already 56 years old.

Neal may have never been in the running for the top spot. But his retirement is likely to kick off speculation of when Immelt might follow him out the door.

 

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