United Technologies Turns to Number-Cruncher in Sudden CEO Shift

By Richard Clough

United Technologies (UTX) Corp. turned to its head number-cruncher after the resignation of the chief executive officer, tapping an accountant whose balance-sheet management has boosted cash reserves.
Gregory Hayes, chief financial officer for six years, took over from Louis Chenevert, 57, in a surprise move announced yesterday. The handoff came about two weeks before the maker of Sikorsky helicopters and Carrier air conditioners is scheduled to hold its annual meeting.
Hayes, 54, has been the face of the Hartford, Connecticut-based company in recent years, leading quarterly-earnings conference calls and talking regularly with analysts. They said he earned a reputation as a straight talker, and respect in the investor community.
“He’s always been very direct and very candid,” said Peter Arment, an analyst with Sterne Agee & Leach Inc. “A lot of the investors have a pretty good understanding of
the messaging that Greg has provided.”
Hayes oversaw a boom in cash from operations, which last year hit a record $6.9 billion. He has been “renowned for his intense focus on operational execution, strong balance sheet management and cash-flow generation,” Nick Heymann, an analyst at William Blair & Co., said yesterday in a research note.
As CEO, Hayes could use the money amassed to cut deals, Credit Suisse analyst Julian Mitchell said in a note. “We would expect an increased discussion now in the investment community of potential large strategic moves.”

‘Seamless Transition’

Hayes began handling investor relations in 2006, before becoming CFO, and has continued to play a major role.
“Greg has essentially been the voice of UTC for an extended period,” said Cowen Group Inc. analyst Cai Von Rumohr.
His bluntness generated some controversy in 2010, when he said during a meeting with analysts that “any place outside of Connecticut is low cost” for businesses. He stood by the comment a year later when he appeared at a forum with Connecticut Governor Dannel Malloy. Hayes said singling out Connecticut may have been unfair “but it was still the truth,” according to the Associated Press.
United Technologies is Connecticut’s largest private-sector employer, and earlier this year received $400 million in tax credits in exchange for promising to remain in the state. Campaign ads for Malloy, a Democrat who was re-elected this month, highlighted the United Technologies deal as succeeding in keeping jobs in the state.
A certified public accountant with a bachelor’s degree in economics from Purdue University, Hayes worked for Arthur Andersen & Co. before going to Sundstrand Corp. in 1989. He was vice president of financial planning and analysis, and joined United Technologies after its merger with Sundstrand in 1999.
While Hayes has held a number of financial positions, he should have little trouble moving into an operations-focused role, Arment said. “It’s a surprise to everyone, but the transition should be seamless because Greg Hayes is a very dynamic and capable leader. He has been immersed in the strategy. Having known Greg for a while, he is not just a numbers guy.”