The potential 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 succeed the conglomerate’s top dog.
Mr. Neal’s retirement would not be out of the ordinary by G.E. standards. At 60, he’s at a typical age when many of its executives decide to call it quits. And while Mr. 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 chief executive in the United States, according to a 2012 Conference Board study.
Moreover, Mr. 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 financial crisis erupted in 2008, the lending unit nearly sank the parent. Since then, Mr. Neal has shrunk GE Capital’s balance sheet by about one-fifth and kicked its dependency on short-term corporate debt. Mr. Immelt plans to shrink it further and has even considered spinning off parts of it.
That recovery might make it easier for Mr. 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. John Rice, for example, who heads the company’s operations in growth markets like China and India, is already 56 years old.
Mr. Neal may have never been in the running for the top spot. But his retirement is likely to kick off speculation about when Mr. Immelt might follow him out the door.
Agnes T. Crane is a columnist at Reuters Breakingviews. For more independent commentary and analysis, visit breakingviews.com.
