The logo of Johnson Controls stands over a production plant
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Johnson Controls CEO George Oliver will retire from the top job at the industrial conglomerate, the company announced Wednesday morning, after “constructive dialogue” with Elliott Management, which amassed a stake in the company earlier this year.
“I believe that now is the right time to begin the process of identifying the next leader of the new Johnson Controls,” Oliver said in a release. He will remain CEO until a successor is found, and will continue serve as chair after stepping down from the chief executive role.
Johnson Controls’ shares surged more than 9% on the news in premarket trading Wednesday. The company also announced its fiscal third-quarter earnings, with adjusted EPS of $1.14 and quarterly net sales of $7.2 billion, up from a year earlier.
Elliott made its desire for leadership refreshment and portfolio divestitures clear from the outset, according to people familiar with the matter who requested anonymity to discuss private matters freely.
The company also announced, with Elliott’s blessing, that it would appoint former Xylem CEO Patrick Decker to its board effective immediately.
Elliott believes that Decker would be a good choice as CEO but will be supportive of whoever emerges victorious from the thorough and public search process Johnson Controls is expected to mount, one of the people said.
“We appreciate the productive discussions we’ve had with George and his team,” Elliott partner Marc Steinberg said in a release.
“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,” Steinberg said. Elliott’s stake in the HVAC giant was worth more than $1 billion earlier this year, according to a person familiar with the matter.
The company has also taken steps to streamline its portfolio, signing an $8 billion deal to sell its residential HVAC business to Bosch earlier this month.
