Johnson Controls announced on Wednesday morning that CEO George Oliver will retire from his role at the industrial conglomerate. This decision follows “constructive dialogue” with Elliott Management, which acquired a significant stake in the company earlier this year.
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Johnson Controls
Oliver, who has led Johnson through significant transformations, stated in a release, “I believe that now is the right time to begin the process of identifying the next leader of the new Johnson C He will continue in his role as CEO until a successor is appointed and will remain as chair of the board after stepping down as chief executive.
Following the announcement, Johnson shares jumped 8% in Wednesday morning trading. The company also reported its fiscal third-quarter earnings, which included adjusted earnings per share (EPS) of $1.14 and net sales of $7.2 billion, marking a 1% increase compared to the previous year. However, net income decreased to $975 million, or $1.45 per share, from $1.05 billion, or $1.53 per share.
Elliott Management, which has been vocal about its desire for leadership changes and portfolio adjustments at Johnson Controls, played a key role in the transition. According to sources familiar with the situation, Elliott’s push for a leadership refresh and divestitures has been clear from the beginning.
In addition to Oliver’s retirement announcement, Johnson disclosed that former Xylem CEO Patrick Decker will join its board immediately, with Elliott’s endorsement. While Elliott views Decker as a strong potential candidate for the CEO position, the firm will support whichever candidate emerges from Johnson Controls’ anticipated thorough and transparent search process.
Elliott partner Marc Steinberg commented on the developments, saying, “We appreciate the productive discussions we’ve had with George and his team.” He added, “As one of Johnson Controls’ largest investors, we believe the leadership and board actions announced today, along with the recent portfolio changes, position the company to realize the benefits of its transformation.”
Earlier this month, Johnson also took steps to streamline its operations by signing an $8 billion deal to sell its residential HVAC business to Bosch. Elliott’s stake in Johnson Controls was valued at over $1 billion earlier this year, according to sources familiar with the matter.
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