Swiss-Swedish engineering giant ABB has jolted the markets for a second time in five years by separating with a chief executive under unclear circumstances. Joe Hogan said on Friday he would step down when a successor could be found.
Hogan joined ABB from General Electric in 2008 to replace former CEO Fred Kindle, who abruptly left the company following a disagreement with the board over strategy. ABB released a statement saying that Hogan would now be leaving ABB for “private reasons”.
“Joe is a great and successful CEO and has done a remarkable job of leading the company through the deepest economic crisis in living memory. ABB today is in a much better position than it was when he joined five years ago,” ABB chairman Hubertus von Grünberg said in the statement.
Hogan’s imminent departure has taken the markets by surprise, according to Bank Vontobel analyst Panagiotis Spiliopoulos. While share prices have fallen under his tenure, Hogan has steered the ship well under trying circumstances, Spiliopoulos said.
“Hogan was unfortunate to start at a bad time, just before the financial crash,” he told swissinfo.ch. “He was forced to conduct a rigorous reduction programme to protect margins rather than expand the business.”
But at the same time, Hogan successfully rebalanced the group to better reflect future growth opportunities in the markets, Spiliopoulos added.
The group invested $20 billion (CHF18.8 billion) in growth during Hogan’s tenure, the company stated. The most notable acquisitions were electrical motors group Baldor in 2010 and electrical products firm Thomas & Betts last year, while ABB announced in April it would purchase Californian renewable energy specialist Power One for $1 billion.
The announcement of Hogan stepping down should not affect market sentiment as drastically as Kindle’s departure five years ago, according to Spiliopoulos.
“In this case it appears obvious that Hogan has not had any strategic disagreement with the board,” he told swissinfo.ch. “Shareholders like continuity, but five years is an above average period for a CEO to spend in office.”
“What is important is that Hogan will not leave a power vacuum in operational leadership.”
Spiliopoulos does not think ABB will replace Hogan internally, but will rather look to rival companies for a suitable replacement.
The most obvious internal successor, former chief financial officer Michel Demaré (who briefly stood in as CEO between Kindle and Hogan), left to become chairman of Syngenta last year.
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