In shepherding GE through a multi-year strategic transformation into three distinct companies in the healthcare, energy and aerospace industries, its board overcame them all in an effort that ultimately created enormous value for shareholders. At $230 billion, the combined market capitalization of GE Aerospace, GE Vernova and GE HealthCare today is more than triple GE’s valuation in November 2021 before the spin-offs were announced.
Providing rigorous oversight during that period of intense structural change demanded steadfast resolve from the board in the face of stakeholder skepticism.
“The courage our board demonstrated through the transformation of GE and launch of GE Aerospace, GE Vernova and GE HealthCare cannot be overstated,” recounts Larry Culp, chair and CEO of GE Aerospace. “This is not just a board that runs toward the fire. Our board balanced urgency with thoughtful oversight, pushing each other and management to challenge their assumptions while never losing sight of the company’s purpose of building a world that works.”
In charting a new course, GE’s board and management were under intense investor scrutiny, having weathered a combination of internal missteps and external headwinds that included the Boeing MAX grounding, the pandemic and assorted geopolitical and economic disruptions. Stabilizing the business and repositioning it for long-term strength required embracing reality “as it is, not as we wish it to be,” and confronting challenges head-on. GE’s board’s critical role in this process began with decisive support for make-or-break decisions that paved the way: The $20 billion sale of GE’s BioPharma business, which closed in early 2020, provided GE with the liquidity to navigate emerging headwinds from Covid-19, and the $30 billion combination of its GECAS business with AerCap in 2021 equipped GE to execute large-scale deleveraging.
Together, these moves strengthened the company operationally, enabling the board to tackle its next challenge: weighing whether GE’s distinct businesses could thrive better on their own. Its conclusion came down to two factors: the prospect of tangible benefits from managing the businesses in a more focused, decentralized, bottoms-up way, and understanding how under-owned the conglomerate was by sectoral investors. While investor skepticism about conglomerate value and limited sector-focused ownership were key concerns, the board was able to validate the separation with data on the potential for value creation from three focused, independent, market-leading companies.
But building consensus on the decision and overcoming shareholder concerns was just the start. Once the split was announced, the board needed to address execution risk by ensuring strong leadership continuity, tying leadership incentives to multi-year transformation goals (including free cash flow targets and operational performance), prioritizing stakeholder engagement and holding frequent deep-dive meetings and strategy sessions to measure progress.
“In a period marked by substantial financial and operating challenges, GE’s board demonstrated steadfast resolve, recognizing the enormous opportunity of these leading businesses in powerhouse industries,” says Tom Horton, lead director at GE Aerospace, which reported TSR of 57.7 percent as compared to peers’ 11.7 percent in 2024. “The board, alongside a world-class leadership team, worked to drive clarity, accountability and conviction to pursue bold changes. This paved the way for success at GE Aerospace, GE Vernova and GE HealthCare as independent companies today.”
