Johnson Controls CEO Steps Down After Activist Investor Talks

Johnson Controls announced on Wednesday that CEO George Oliver will retire from his position following discussions with Elliott Management, which has recently acquired a significant stake in the company. Oliver stated that it is the right time to initiate the search for his successor while he will continue to serve as chair until a new leader is appointed. The news prompted an 8% surge in Johnson Controls' shares during morning trading. In conjunction with Oliver's announcement, the company reported its fiscal third-quarter earnings, revealing an adjusted earnings per share (EPS) of $1.14 and quarterly net sales of $7.2 billion, reflecting a 1% increase from the previous year. However, net income saw a decline, dropping to $975 million, or $1.45 per share, compared to $1.05 billion, or $1.53 per share, in the same quarter last year. Elliott Management has been vocal about its desire for leadership changes and portfolio divestitures since acquiring its stake in Johnson Controls. The company also revealed the immediate appointment of former Xylem CEO Patrick Decker to its board, a move that Elliott supports. While Elliott views Decker as a strong candidate for the CEO position, they are committed to supporting the outcome of the forthcoming public search process. Elliott partner Marc Steinberg expressed appreciation for the constructive discussions with Oliver and his team, emphasizing that the recent leadership and board changes, along with portfolio adjustments, position Johnson Controls for successful transformation.