London, Sept. 6: ABB said Thursday that its chief executive, Joergen Centerman, had resigned. The announcement came a day after the company gained important breathing room from creditors by agreeing to sell most of its financing unit to General Electric.
ABB said its chairman, Juergen Dormann, 62, would take on the expanded role of chief executive immediately. Dormann said in an interview that two years of relentless pressure had taken a toll on Centerman.
Centerman, who had spent almost his entire career at ABB, a Swedish-Swiss engineering conglomerate, came at the helm in late 2000 and presided over a number of stunning developments.
Last year, ABB reported its first loss ever as demand for its products slumped and costs related to asbestos lawsuits climbed. It narrowly averted a financial crisis and became a lightning rod for criticism of poor corporate governance when it awarded two former executives unusually large retirement packages.
The company’s increasingly tenuous financial position led it to put non-core units up for sale as a way to raise money to reduce debt, leaving it to focus on its automation and power businesses. It was a part of that strategy that ABB agreed on Wednesday to sell most of its financing unit to GE for $ 2.3 billion.
Despite that transaction, which will allow the company to reduce its debt significantly, the ABB board had grown increasingly frustrated that Centerman was carrying out the strategy so slowly, an executive close to the company said. A lack of personal chemistry between the top executives did not help matters, this person added.
Faced with mounting pressure from the board and from investors, who had grown sceptical of his ability to deliver on profit and revenue projections, Centerman resigned earlier this week, the executive close to the company said. Board members approached Dormann about taking on the role of chief executive at a regularly scheduled meeting Thursday, this person said.
Dormann, who has been a member of the ABB board since 1998 and its chairman since November, is largely credited with the repositioning of Aventis, formed through the merger of Rhone-Poulenc of France and Hoechst of Germany.