United Technologies [UTX] on Monday announced the retirement of Chairman and CEO Louis Chenevert, effectively immediately, and said that Gregory Hayes, the company’s chief financial officer, has been elected as its president and CEO.
UTC made no mention of why Chenevert, 57, retired after 22 years with the company. He became president of UTC and a board member in 2006 and succeeded George David as CEO in 2008. Chenevert succeeded David as chairman in 2010.
Joseph Nadol, J.P. Morgan’s aerospace and defense analyst said in a note to clients on Monday that in a conference call Hayes “indicated the [leadership] change is unrelated to financial performance, that there is no financial impropriety, and that it is business as usual at the company.”
Edward Kangas, lead independent director of UTC’s board, has been elected as non-executive chairman. Kangas is the former Chairman and CEO of the audit and consulting firm
Deloitte, Touche, Tohmatsu.
Hayes, 54, has been with UTC for 25 years, the last six as CFO. In addition to his responsibilities for leading UTC’s finances, Hayes also directed communications between the company’s board and the investor community.
“The appointment of Greg Hayes to succeed Louis Chenevert continues the excellent leadership UTC has enjoyed for the past half century,” Kangas said in a statement. “The board thanks Mr. Chenevert for his 22 years of service to UTC, his leadership over the last six years and for this many contributions and important transformational initiatives during his tenure. Greg is highly regarded by the board and by UTC employees, customers and shareowners. We are confident Greg will lead UTC to increasing profitability and shareowner returns.”
Hayes in a statement said that UTC’s “focus will remain on creating innovative products and solutions for our global customers and delivering best-in-class returns for our shareholders, all supported by our highly skilled and talented workforce.”
In his client note, Nadol suggested two reasons for Chenevert’s departure. One is related to personal reasons that prevented him from staying on, which would likely mean there will be no near-term strategic changes at the company.
Nadol said that “we view Hayes as highly qualified to lead” the company and who also “understands investors and communicates with them effectively.”
The other possibility, Nadol said, is that Chenevert may have had a “strategic disagreement with the board,” potentially around maintaining the company’s building systems and aerospace businesses intact “or to break them up. Chenevert preferred to hold the company together, and his resignation could be a sign that the board will pursue a split.”
If UTC moves forward with a breakup of the aerospace and building systems businesses, Nadol said that given Hayes’ financial background and deal experience at the company, he “is the most well positioned executive…to carry out this strategy.”
There is also the possibility of a “disagreement regarding a major acquisition,” Nadol wrote.
UTC affirmed its annual guidance for sales around $65 billion and earnings between $6.75 and $6.85 per share. The company will host an investor and analyst meeting on Dec. 11 as previously planned.