* Changes take effect May 2
* Board made decision at meeting on Wednesday evening
* Fortune named Novakovic one of "most powerful women in
By Andrea Shalal-Esa
WASHINGTON, March 8 General Dynamics Corp
on Thursday said its board split leadership at the
defense contractor by electing the head of its marine systems
unit, Phebe Novakovic, president and chief operating officer.
The move will make Novakovic one of the highest-ranking
women at the helm of a major U.S. defense company.
Novakovic will report to Jay Johnson, who will remain
chairman and chief executive, the company said in a statement.
The management changes take effect May 2.
Sources familiar with the decision said Johnson, 65, would
likely leave his position within a year, making room for
Novakovic, 54, to become chief executive. Fortune magazine last
year named Novakovic, a one-time CIA officer, one of the "50
most powerful women in business."
"This is the beginning of a succession process," said
defense analyst Loren Thompson. "Jay Johnson is 65 and the board
has now put in place a process for installing his successor."
The sources said Novakovic was strongly backed for the
position by Nick Chabraja, the former chief executive of General
Dynamics who has a seat on the company's board.
Board members discussed the management change during a
leadership retreat in January, but picked Novakovic for the
newly created position of president and chief operating officer
at a board meeting at the company's headquarters in Falls
Church, Virginia, late on Wednesday.
Johnson said Novakovic "is more than ready to assume a
larger role in the corporation," noting that she has performed
well in her role as executive vice president of Marine Systems
and previously as senior vice president of planning and
He said Novakovic will assist him with "the oversight and
management of the company's business groups as well as its
Rob Stallard, analyst with RBC Capital Markets, said General
Dynamics is following a model used by Lockheed Martin Corp
and Northrop Grumman Corp in developing a
succession plan, and he expects Novakovic to become CEO, should
everything go smoothly.
"This will be an opportunity for Phebe to broaden her
operational experience across the company, which should be good
preparation for the next step up," Stallard said in an analyst
note after the company announcement.
He said the changes are not expected to affect the company's
strategy. "We see this as a positive step, as we
think Novakovic has a good reputation with investors, and this
clarifies GD's management succession plans," he said.
General Dynamics shares were trading 63 cents or 0.9 percent
higher at $71.88 in afternoon trading on the New York Stock
Novakovic became an executive vice president of General
Dynamics in May 2010, and is responsible for the company's
Marine Systems group, which includes three companies: Bath Iron
Works, Electric Boat and NASSCO.
Novakovic previously served as a senior vice president in
charge of planning and development, and as vice president for