22 May 2019
General Electric, Tesla and Pfizer have announced the replacement of their heads. Photo: Reuters/AFP/Bloomberg
General Electric, Tesla and Pfizer have announced the replacement of their heads. Photo: Reuters/AFP/Bloomberg

October begins with big executive changes in corporate America

The first of October is the China’s national day. In the United States, it may as well be executive retirement day for several big companies.

Three big corporates announced the replacement of their heads, and their shares subsequently went up.

First was General Electric, which kicked out incumbent CEO John Flannery and replaced him with a relatively unknown outsider, Lawrence Culp, who used to head industrial equipment supplier Danaher Corp.

The shock move made Flannery, who took the helm in August 2017, the GE chief executive with the shortest tour of duty.

Over the last 12 months, the conglomerate’s share price was halved because investors did not like his cost-cutting strategy to revive the 126-year-old company, which lost its seat in the Dow Jones Industrial Average in June.

Separately, Tesla shareholders welcomed the move to remove founder Elon Musk from the chairman’s seat.

Tesla’s stock surged as much as 17 percent after the electric car company agreed to a deal with the US Securities and Exchange Commission to unseat Musk as chairman.

Tesla and Musk also agreed to pay US$20 million each after Musk was accused of securities fraud for saying on Twitter that he had secured funding to take the company private. Musk, however, will remain as chief executive.

Meanwhile, shares of Pfizer, one of the world’s largest pharmaceutical firms, edged up 20 US cents after it was announced that its longest-serving CEO, Ian Read, will step down after eight years at the helm. He will pass the baton to chief operating officer Albert Bourla next year.

The announcement comes as Pfizer’s share price is at an all-time high.

Now what does this tell of listed companies and their succession plans?

This year, two of the richest tycoons in our part of the world are in retirement mode.

Hong Kong billionaire Li Ka-shing stepped down in May and handed over the chairmanship of his two biggest companies, CK Hutchison Holdings (00001.HK) and CK Asset Holdings (01113.HK), to his son Victor Li Tzar-kuoi.

The 90-year-old tycoon said he had prepared eight years before finally passing the baton to his elder son.

Last month, Alibaba Group chairman Jack Ma, 54, said he will retire by September next year, and named CEO Daniel Zhang as his successor.

Unfortunately, shareholders did not react positively to his announcement.

It looks like successors still have a lot to prove.

– Contact us at [email protected]


EJ Insight writer

EJI Weekly Newsletter

Please click here to unsubscribe