Don't call me psychic. When I wrote "General Dynamics... Admiral Dynamics?" three months ago, I honestly had no idea that this was in the works.
Weapons maker General Dynamics (NYSE: GD) made its changing of the guard on Wednesday. Effective July 1, 2009, legendary, and legendarily laconic, CEO Nicholas Chabraja will be out, and retired Adm. Jay Johnson will be in. Already a member of General D's board of directors, Johnson will leave his day job as CEO of Dominion Resources' (NYSE: D) Dominion Virginia Power subsidiary. He will join General Dynamics on Sept. 2 of this year, and 14 months later, Johnson will receive a battlefield promotion to CEO of the whole shebang.
Good news?
The mainstream press is putting out mixed reviews of the switch. Some pundits point to Johnson's age (61 years young) and argue he will be just holding down the fort until a more permanent replacement for Chabraja (65 and retiring) can be found. But in Johnson's defense, it's hard to imagine a better choice to lead a defense contractor than someone who's been a fleet commander, chief of naval operations, and member of the Joint Chiefs of Staff. Johnson was also, I might point out, a combat aircraft carrier aviator in Vietnam. (Does that sound familiar?) If a certain someone should happen to win the presidency come November, those naval ties might come in real handy.
A lawyer on a mission
In contrast, when Chabraja took the top job at General D, his resume looked downright dovish. No offense, but the man literally went from college to law school to law firm to in-house counsel for General Dynamics. But did the absence of admiral's epaulettes detract from his performance? Hardly.
From the moment Chabraja took over as CEO on June 1, 1997, General Dynamics has been the market's top-performing defense contracting stock. Shares have sextupled (not as dirty as it sounds) in value, outperforming United Tech (NYSE: UTX), Lockheed Martin (NYSE: LMT), and Northrop Grumman (NYSE: NOC) -- up 330%, 170%, and 130%, respectively. Meanwhile, Boeing (NYSE: BA) and Raytheon (NYSE: RTN) shareholders have had to make do with mere double-digit gains.
There's no denying it: Johnson has the credentials for the top job at General D. But he also has some mighty big combat boots to fill.
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