- The Washington Times - Tuesday, November 28, 2000

HARTFORD, Conn. General Electric Co. yesterday anointed Jeffrey R. Immelt, a 44-year-old company man, as successor to John F. Welch, one of the business world's most fabled CEOs, in a move as carefully orchestrated as it was closely watched.

The selection was six years in the planning and allows Mr. Welch, 65, a year to train Mr. Immelt, who was head of GE's medical systems division and now carries the title of president and chairman-elect.

Mr. Welch is to step down by the end of 2001, ending a 20-year reign that saw GE's transformation from a company best known for light bulbs and appliances into an empire that makes aircraft engines, provides financial services and includes the television network NBC.

GE's board quietly approved the choice during a special meeting over the Thanksgiving weekend, when Mr. Welch felt the company could avoid the intense media attention that the succession question has drawn.

"It's all going to unfold very nicely," Mr. Welch said. "You won't see a bump."

Mr. Welch and Mr. Immelt appeared yesterday at a news conference in New York, appearing at ease in each other's company and wearing similar open-collar blue shirts and blazers.

The two men share an emphasis on company loyalty Mr. Welch has worked for GE since 1960, Mr. Immelt since 1982. Mr. Immelt's father worked for GE for 38 years.

A Wall Street favorite because of his penchant for careful planning and surprise-free management, Mr. Welch has been grooming potential successors for years while laying a foundation with analysts for a hassle-free transition.

There were two other finalists for the top job: Robert L. Nardelli, president and CEO of GE Power Systems, and W. James McNerney, head of GE Aircraft Engines. Like military leaders passed over for promotion, their days with GE appeared numbered. Their successors, as well as Mr. Immelt's, already have been designated.

"You can be sure they're being pursued very aggressively on the outside and are … evaluating their options very aggressively," Mr. Welch said.

Mr. Immelt said he was honored to head what Fortune magazine called "the most admired company in the world."

"I have a tremendous passion for the company," Mr. Immelt said. "We simply have the best team in the world."

Mr. Welch is widely credited with remaking GE into the world's most valuable company, worth about $490 billion based on yesterday's closing stock price.

He shook up the company's management structure and sold major divisions including housewares, air conditioning and semiconductor businesses.

In his two decades as chairman, profits have risen from $1.6 billion to $10.7 billion in 1999.

Several best-selling books have been written about Mr. Welch, and this year Time Warner Trade Publishing paid Mr. Welch a $7.1 million advance for his own book about management techniques. It was believed to be the largest-ever advance payment for a nonfiction title.

Mr. Immelt made it clear that more growth is planned at GE.

"We just don't believe in any of the rules of size," he declared and predicted that the Internet "will change every job in the company."

Analysts praised the selection.

"He is an extremely capable executive leader," said analyst Martin Sankey, vice president of Goldman, Sachs & Co. in New York. "He compiled a strong record of generating growth and moving into new markets."

"He was the successor I expected; he was the successor I wanted," said Michael Linsky of McDonald Investments Inc. "I think he will do a superb job."

Mr. Immelt, who grew up in a Cincinnati suburb and attended Dartmouth and Harvard, joined GE in 1982. After a brief stint in corporate marketing, he held a series of jobs in the plastics division. He moved to appliances in 1989 as vice president of consumer service, and in 1991 was made vice president for marketing and product management.

In 1992 he returned to the plastics division, rising to vice president and general manager. He was made president of the Waukesha, Wis.-based medical systems division in 1997.

Mr. Welch said Mr. Immelt's relative youth was a factor in the decision.

He said he wanted an executive who could be in the post for a long time.

"The idea of a guy coming in for 24 months on a rescue ship is stupid," Mr. Welch said. "You make your mess, you clean it up."

Mr. Welch did not say what Mr. Immelt's new salary would be. "He got a [big] raise, I'll tell you that," he said.

Wall Street has been unusually calm about the transition, and trading yesterday reflected that; shares of GE rose 12.5 cents to $49.50 in trading on the New York Stock Exchange.

Mr. Welch had initially planned to leave this year after turning 65 but put that off a year after GE announced in October it was buying Honeywell International Inc. for $45 billion in stock. Among the reservations Honeywell executives had about the merger was the issue of Mr. Welch's departure. His announcement that he would stay an extra year helped seal the deal.

Mr. Immelt said he was not involved in the Honeywell acquisition but planned to become immersed in the transaction quickly.

In October, six of GE's seven business segments reported double-digit profits for the third quarter. The company reported net income of $3.18 billion, or 32 cents per share, up about 20 percent from income of $2.65 billion, or 27 cents per share, in the third quarter of 1999.

Quarterly revenue jumped about 18 percent, from $27.2 billion in the third quarter of 1999 to $32 billion in the third quarter of this year.

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