Apr 3, 2024 - Business

With GE’s split, the last chapter of the Jack Welch era is over

Jack Welch

The late Jack Welch, in 2005. Photo: Thomas Lohnes/DDP/AFP via Getty Images

The legacy of former GE CEO Jack Welch lies in tatters. GE no longer exists — its split into three separate parts concluded Tuesday — and his school of management has barely fared any better.

Why it matters: Welch was the most important CEO of his generation, a man who was richly rewarded for using financial engineering to goose his company's share price at the expense of its employees' jobs.

By the numbers: On Aug. 28, 2000, with Welch at the end of his tenure as CEO, GE was the most valuable company in the world, worth $594 billion.

  • Since then, the S&P 500 — the stock market broadly — has more than tripled. If GE had kept pace with the rest of the market, it would be worth just over $2 trillion today, roughly the same as Nvidia.
  • Instead, it has now become three separate companies — GE Aerospace (worth $148 billion as of the close of trade on Tuesday), GE HealthCare ($40 billion), and something called GE Vernova ($38 billion). In aggregate their $226 billion valuation is a little smaller than Netflix.

Zoom out: Welch himself has been the subject of two highly critical recent biographies, by David Gelles ("The Man Who Broke Capitalism") and Bill Cohan ("Power Failure").

  • Welch acolyte David Calhoun has announced his resignation as CEO of Boeing in the wake of multiple safety lapses at the company. Wall Street analyst Ron Epstein greeted the news by saying the company needs a "drastic cultural overhaul" after being run by not one but two Welch disciples.
  • Other Welch-affiliated leaders to suffer ignominious defenestration include Robert Nardelli at Home Depot, Paulo Fresco at Fiat, and Larry Johnston at Albertsons.

Where it stands: The last remaining Welch disciple helming a major U.S. public company is David Zaslav at Warner Bros Discovery. So far reviews of his tenure have been mixed at best.

The bottom line: Welch was a bona fide corporate hero in the 1990s. Today, he is viewed much more as a villainous creature of corporatist excess.

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