General Dynamics In Power Switch
Thursday, May 8, 2008
General Dynamics' board chose a retired admiral and chief executive of Dominion Virginia Power to take over the $27 billion-a-year defense business.
Jay L. Johnson, 61, will replace Nicholas D. Chabraja, General Dynamics' chief executive and chairman since 1997. Chabraja, 65, is retiring and will step down as chief executive on June 30, 2009. He will remain as chairman of the board until May 2010.
Johnson has worked for Dominion Virginia and its affiliates since 2000 and became chief executive last fall. Johnson served as chief of naval operations for the U.S. Navy from 1996 to 2000, when he retired as an admiral.
Since 2003, Johnson has been a member of the General Dynamics board. He will become vice chairman in September.
"On Wall Street, Nick Chabraja is the most admired chairman in the defense industry because he had an unbroken record of continuously improving earnings in his tenure," said Loren B. Thompson, a defense consultant at Lexington Institute in Arlington. "Johnson now has a hard act to follow. But he comes in as having proven himself at Dominion Power and as the top leader at the Navy, one of GD's biggest customers."
Falls Church-based General Dynamics is one of the nation's largest defense companies and has had an increase in business related to the Iraq and Afghanistan wars. It makes a wide range of weapons systems, from ammunition to warships, tanks and armored vehicles.
Last month, it reported a 32 percent increase in first-quarter profit, to $572 million, much of it from repairing and retrofitting vehicles and other equipment for the Army. Sales were up 11 percent, to $7.01 billion.
Chabraja is the longest-serving leader among the five largest U.S. defense companies.
In its most recent proxy statement filed with the Securities and Exchange Commission, the company valued Chabraja's retirement package at $45.4 million.
Chabraja was the company's longtime lawyer before he became an executive vice president in 1994. In 1997, he became chairman and chief executive -- a somewhat unconventional choice in the defense industry, where engineers and program managers usually rise to become top executives.
Before Chabraja came on as chief executive, General Dynamics sold off some of its well-known divisions, including its F-16 jet and the Cessna Aircraft Co. Chabraja took General Dynamics into new business areas, analysts said, expanding the company and creating major ship-building and information technology operations. Under Chabraja, General Dynamics bought shipmaker Bath Iron Works, private-jet maker Gulfstream Aerospace, General Motors' defense unit and the information technology company Anteon International.
"He created a multimillion-dollar IT segment from nothing and added eight different models of the Gulfstream," said Paul Nisbet, an analyst with JSA Research. "He'll be remembered as the one who really built General Dynamics into what it is today."
Johnson, who was reared in West Salem, Wis., graduated from the U.S. Naval Academy in 1968. He is a career Navy pilot and served on two combat cruises in Vietnam, flying the F-8 Crusader. He also has commanded an F-14 fighter squadron and a carrier air wing. He commanded the USS Theodore Roosevelt battle group from 1993 to 1994 in Bosnia and he supported operation Southern Watch over Iraq.
Shares of General Dynamics barely moved yesterday, falling 48 cents, or 0.5 percent, to $89.68. News of Johnson's appointment came after the market closed.