Former GE Heir Saw Star Fall
Dec. 09, 1998
STAMFORD, Conn. (AP) _ Up until a few years ago, Gary Wendt consistently held a prominent position on the list of likely successors to General Electric Co. chairman John F. Welch.
But Wendt's turbulent relationship with Welch, along with an embarrassingly public divorce, took some of the sheen off his star as the head of GE Capital Services, GE's most profitable division.
The company announced Wendt's resignation Tuesday. In a prepared statement, GE said Wendt had ``agreed to resign.'' A spokesman refused to elaborate on the reasons for Wendt's departure.
Analysts said Wendt's resignation, which had been rumored for months, came after it became apparent that he was no longer on the short list of possible successors to Welch.
Although Wendt, 56, is credited with turning GE Capital into one of the world's most successful financial services companies, he has spent his entire 23-year career at GE Capital and lacks experience in GE's other businesses.
Recently, Wendt had talked openly about leaving. In a pretrial deposition for his divorce, Wendt said he had seriously considered quitting over the past few years.
``There was going to come a time when I couldn't stand it anymore and I just had to leave,'' he said.
Wendt also confirmed his rocky relationship with Welch, saying simply, ``He's very difficult on me, I find.''
The divorce itself was embarrassing for both Wendt and GE.
During the trial, Wendt's wife of 31 years, Lorna Jorgenson, argued that she was entitled to half of their assets as compensation for her duties as a corporate wife. At one point, the judge sealed the courtroom because sensitive GE financial information was being discussed.
Analysts say Wendt's relationship with Welch had grown increasingly tense since the divorce made national headlines.
A judge last December ordered Wendt to pay his ex-wife $20 million. Wendt has since remarried.
More recently, Wendt _ known as an abrasive and hard-nosed negotiator _ had clashed with Welch about proposed cutbacks at GE Capital.
``When you have people who run large companies like this, people who are strong-willed, there just comes a point in time when change is necessary, and change is a good thing,'' said Peter Crist, president of Chicago-based Crist Partners Ltd., a national executive search firm.
It was Wendt's aggressiveness that helped build GE Capital into a financial services company so powerful that it rivals many banks. Wendt had been chairman and chief executive officer for 12 years.
``He knew how to quantify the risks involved in any particular enterprise he was involved in. He knew how much he was willing to pay for any particular risk, and he wouldn't pay any more,'' said David Ellis, a finance professor at Babson College in Wellesley, Mass.
GE Capital, with more than 20 separate businesses, provides other businesses with capital, equipment or financial services.
It has long been GE's most profitable unit; in 1997, it accounted for 40 percent of GE's $8.2 billion profit. Wendt's achievements included offering services such as home mortgages, credit cards and corporate financing.
Wendt's plans are unclear, although analysts said that with his reputation he could easily start his own investment fund or get a top position with another financial services firm. He could not be reached for comment Tuesday.
In a prepared statement, Wendt said, ``While there is never a point at which a job can be considered complete, it is gratifying to be leaving knowing that our business is in good shape and well-positioned to enter the 'new millennium.' ''
GE Capital said Dennis D. Dammerman, 53, will replace Wendt as chairman and CEO. Dammerman has served as senior vice president, finance, and chief financial officer at GE, as well as corporate director.