GE Veteran John Rice Returns to Troubled Power Unit -- Update

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 [e-mail]

(END) Dow Jones Newswires

November 19, 2018 18:57 ET (23:57 GMT)

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