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Ellen Kullman’s ouster at DuPont should worry GE’s Jeff Immelt

GE CEO Jeff Immelt (l) and Dupont CEO Ellen Kullman (r)GE CEO Jeff Immelt (l) and Dupont CEO Ellen Kullman (r)
GE CEO Jeff Immelt (l) and Dupont CEO Ellen Kullman (r)Photographs by Getty Images

When DuPont CEO Ellen Kullman announced her resignation yesterday afternoon, General Electric CEO Jeff Immelt must have swallowed pretty hard.

Just hours earlier, activist investor Nelson Peltz had disclosed that his investment firm, Trian Fund Management, had amassed a $2.5 billion stake in GE, making it one of the conglomerate’s largest shareholders. The same Nelson Peltz who Kullman had battled for two years, successfully beating back his proxy challenge but, as we learned yesterday, ultimately losing the war. Gulp.

Immelt publicly welcomed Peltz, perhaps heartened by the activist’s lack of any requests for board seats and general endorsement of GE’s current strategy. But the reality is that his performance helming GE (GE) has been worse than was Kullman’s at DuPont (DD). If she was ultimately ousted, what does that mean for Immelt’s future at GE?

For example, GE’s stock price has fallen 30.27% (through market close yesterday) since Immelt became CEO on Sept. 7, 2001. DuPont stock was up a whopping 106.69% since Kullman took the reins on Jan. 1, 2009 (not including today’s big bump on Kullman’s ouster). Even if you normalize for time period, Immelt still falls well short of Kullman.

Then there is top-line financial performance, through year-end 2014. For Immelt, we used baseline data from the beginning of 2001, even though he didn’t formally take over until near the end of Q3 (had we used the beginning of 2002, the starting revenue figure would have been lower, but the EBITDA and profit would have been higher):

Revenue
DuPont under Kullman: 27.98%
GE under Immelt: 14.29%

EBITDA
DuPont under Kullman: 71.04%
GE under Immelt: 21.48%

Net Income
DuPont under Kullman: 106.55%
GE under Immelt: 19.61%

And the general trend-lines aren’t much different if you calculate by using the first half of 2015 or estimates for all of 2015 (which would include DuPont’s spin-off of its performance chemicals business). In fact, some of the gaps actually expand.

To be sure, there are plenty of differences between GE and DuPont, just as there are between Immelt and Kullman. Moreover, Peltz today holds just 0.491% of GE’s outstanding shares (making him the company’s 18th largest shareholder), whereas he is the fourth-largest shareholder in DuPont with a 2.71% stake.

But Immelt would still be well advised to dig deep into Kullman’s history at DuPont, if he wants to ensure it doesn’t repeat itself at GE.