3 Min Read
(Adds detail on appointment, stock price, analyst comments)
By Alwyn Scott
NEW YORK, June 8 (Reuters) - Aircraft parts maker Spirit AeroSystems Holdings Inc named Chief Operating Officer Tom Gentile to succeed Chief Executive Larry Lawson on Wednesday, a long-expected move - but the company's shares fell 3.5 percent.
Gentile, 51, a former General Electric Co executive who became operating chief in April, had been widely seen as preparing to take on Lawson's role.
Lawson, 58, who will retire on July 31, is credited with restoring Spirit's profitability after steep losses in 2013.
The Wichita, Kansas-based company is a major supplier to Boeing Co, Airbus SA, Bombardier Inc and other plane and helicopter makers. It was formed in 2005 in a spin-off of assets from Boeing.
Analysts said the stock decline reflected Lawson's strong performance and concern that more leadership turnover might be in store.
"But the news is not a total surprise and (Spirit's) low valuation should limit downside as well," Seth Seifman, analyst at JP Morgan, said in a note to clients. He kept the stock rated "overweight."
The new CEO "may want to put more of his own people in key positions," Canaccord Genuity analyst Ken Herbert wrote in a note, adding "we do not necessarily view this as a negative."
Lawson's changes likely "will continue to play out" and "provide meaningful contributions to longer term (free cash flow) and earnings," he added. Herbert rates the stock a "buy".
Spirit shares were down 3.5 percent at $45.80 in mid-day trading on the New York Stock Exchange.
After a long career as a Lockheed Martin Corp executive, Lawson joined Spirit in early 2013, the year it reported a $621.4 million loss. In 2014, profit rose to $358.8 million, and it more than doubled to $788.7 million in 2015.
Lawson will receive a cash award of $1.1 million for 2016 and a separation payment of about $1.3 million, which is equal to one year of his current base salary, the company said.
The leadership transition will take place in coming weeks and Gentile will become CEO after Lawson retires, the company said.
Reuters reported in January that Spirit was interviewing candidates for the COO job, which had been vacant since 2013, with an eye toward elevating the successful candidate to the top job when Lawson eventually retires.
Spirit last month moved to retain Chief Financial Officer Sanjay Kapoor by providing stock that vests over two years and increasing his base salary and bonus. (Additional reporting Arunima Banerjee in Bengaluru; Editing by Saumyadeb Chakrabarty and Bernard Orr)