GE Veteran John Rice Returns to Troubled Power Unit -- Update
November 19 2018 - 7:12PM
Dow Jones News
By Thomas Gryta
One of Jeff Immelt's top lieutenants is returning to General
Electric Co. to help oversee a restructuring at its problematic
power division and provide some stability to the conglomerate's
anxious customers.
The company Monday said John Rice, who spent some four decades
at GE, would become chairman of its gas power business, a newly
created position. Mr. Rice, 63 years old, had retired last year as
GE's international executive after Mr. Immelt's exit.
New CEO Larry Culp is splitting the power unit into two pieces
-- one running its natural-gas fueled power generation business and
another group that will include coal and nuclear power operations.
Mr. Culp named CEOs to run those units, reporting directly to him,
and Mr. Rice as chairman of one unit.
Mr. Rice, 63 years old, was formerly GE's lead international
executive and ran GE's energy business, which included the power
business, from 2000 to 2005. His new role is unusual as while each
of GE's major units have CEOs, none of them have chairman.
In his short tenure, former CEO John Flannery cleared out much
of GE's top management as he tried to rebuild the company, an
approach that worked for him when he ran the health-care business.
But as CEO, the moves left a shallower pool of talent with the
necessary experience at a time of crisis, something that has
concerned analysts and investors in recent months.
Mr. Culp, the first outsider in GE's history to run the company,
has expressed his support for current management, but he also has
fewer options to change his starting lineup.
"I think he is desperate for leadership," said analyst Scott
Davis, who called bringing back Mr. Rice a creative solution. "Rice
knows power and is good overall."
Mr. Rice spent his final years at GE in Hong Kong building the
company's business outside the U.S. and company officials called
him GE's Secretary of State. He is one of the GE appointed board
members at oil-services firm Baker Hughes, which is majority-owned
by GE.
Under Mr. Immelt, Mr. Rice was also seen as the executive who
would take charge if anything ever happened to the CEO.
Following the tumult in the boardroom and executive suite of the
past two years, Mr. Rice's return leaves him as one of the few of
his generation of GE leaders that will still be with the company.
Other than David Joyce, the longtime leader of GE's aviation, the
heads of GE's other major units have all changed.
GE has also switched CEOs twice and replaced its finance chief
in the past year. Mr. Culp, who joined GE's board in April, took
over as CEO on Oct. 1 after GE's board abruptly fired Mr. Flannery
after 14 months. Before him, Mr. Immelt led GE for 16 years.
GE Power, one of the conglomerate's oldest and biggest
divisions, has posted deep losses as management misjudged falling
market demand and the 2015 acquisition of Alstom SA's power
business added even more capacity. GE recently wrote off the entire
deal as part of a $22 billion accounting charge in the third
quarter.
The unit makes the core of a power plant: massive turbines that
run on fuel to generate electricity. GE has said its equipment
generates a third of the world's electricity.
The division is also under federal investigation for its
accounting practices. The collapse of the business has reduced GE's
cash flow and pushed GE to slash its quarterly dividend twice over
the past year to a token 1 cent per share.
Under Mr. Flannery, the power division was combined in 2017 with
a former energy connections division run by Russell Stokes, who
became CEO of the enlarged power business. The latest shuffle
leaves Mr. Stokes, 47, in charge of everything except for the
natural-gas operations.
Scott Strazik, 40, formerly president of GE's power services
business, will be CEO of the gas power division with Mr. Rice as
chairman.
Write to Thomas Gryta at thomas.gryta@wsj.com
(END) Dow Jones Newswires
November 19, 2018 18:57 ET (23:57 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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