Caterpillar CEO To Retire in March -- 5th Update
October 17 2016 - 1:26PM
Dow Jones News
By Bob Tita and Andrew Tangel
Caterpillar Inc. Chairman and Chief Executive Doug Oberhelman
will retire earlier than expected, after ill-timed bets on China
and mining tipped the equipment maker into its longest-ever sales
decline.
The Peoria, Ill.-based maker of hulking yellow excavators and
bulldozers said Monday that Mr. Oberhelman would step down as chief
executive on Dec. 31 and as executive chairman at the end of
March.
Caterpillar's next chief executive will be Jim Umpleby, a
35-year company veteran who runs the engine business. Dave Calhoun,
a former General Electric Co. executive and head of private-equity
portfolio operations at Blackstone Group LP, will become
nonexecutive chairman, the first time Caterpillar has split the CEO
and board leadership roles.
Caterpillar's board has rejected investor calls in the past to
split the chairman and chief executive jobs, saying "unified
leadership and direction" was critical to wrangling the company's
sprawling business. All but one of Caterpillar's 12 directors --
the chief executive -- are independent.
A Caterpillar spokeswoman declined to make Messrs. Oberhelman,
Umpleby and Calhoun available for comment. She wouldn't elaborate
on why Caterpillar's board decided to split up the top jobs.
Mr. Oberhelman, 63 years old, will be stepping down ahead of
Caterpillar's traditional CEO retirement target of 65. A regulatory
filing showed that Caterpillar's board made the appointments on
Thursday.
"The timing of the change in leadership suggests confirmation
that the outlook for 2017 may be for a fifth consecutive year of
revenue decline, " said J.P. Morgan analyst Ann Duignan in a client
note.
After taking the top job in 2010, Mr. Oberhelman spent five
years plowing billions of dollars into factories to build more
machinery and move the company deeper into mining equipment. It
proved a risky bet, as The Wall Street Journal reported Sunday.
In 2012, Caterpillar recorded its highest-ever annual sales.
Soon after, China's economic growth began to ease and prices
softened for the commodities that fueled its boom, such as copper
and oil. Miners began to shelve projects and equipment orders.
Caterpillar now faces its fourth straight year of falling sales,
the longest decline in its history.
Mr. Umpleby, 58, faces a tall order in trying to reverse that
slide while global trade remains weak and commodity prices
languish. He joined Caterpillar's Solar Turbines subsidiary in 1980
and cycled through executive positions in engineering, sales,
manufacturing and customer services before being named president of
Solar in 2010 and group president for the company's engine business
in 2013. Previous chief executives have also managed the highly
profitable turbine engine unit on their way to Caterpillar's top
job.
This year, Caterpillar's shares are up 28%, and other big-ticket
equipment makers are also on a tear after cutting costs and
production.
But Caterpillar's shares are still down 25% from their 2012
peak, and were 0.8% lower in midday trading Monday.
Write to Bob Tita at robert.tita@wsj.com and Andrew Tangel at
Andrew.Tangel@wsj.com
(END) Dow Jones Newswires
October 17, 2016 13:11 ET (17:11 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Caterpillar (NYSE:CAT)
Historical Stock Chart
From Aug 2024 to Sep 2024
Caterpillar (NYSE:CAT)
Historical Stock Chart
From Sep 2023 to Sep 2024