Flannery will replace Immelt as CEO at GE
Outgoing exec sold off NBC, media assets to remake company
General Electric Chairman and CEO Jeff Immelt, who took the reigns of the conglomerate from legendary executive Jack Welch, is set to retire after a 16-year tenure defined by moves to shed assets and attempts to redefine the industrial giant as a digital powerhouse.
GE said Monday that Immelt, 61, would relinquish his CEO post on Aug. 1 and continue as chairman through Dec. 31.
Immelt became CEO four days before the 9/11 attacks and had the task of leading GE out of its industrial legacy into the digital age. A few years later, he would be faced with navigating the company through the financial crisis, ultimately shedding much of its lending business.
John Flannery, 55, a GE veteran who currently leads the company’s health care division, will take over as CEO.
The company’s chief financial officer, Jeff Bornstein, was named vice chairman.
GE’s stock didn’t fare well under Immelt, falling 27% during his time as CEO. In recent quarters, the company has faced pressure from activist investors at Trian Fund Management, led by Nelson Peltz, to bolster its profit by shedding costs and overhauling executive compensation. After a period of squabbling, GE announced plans to shed $2 billion in annual industrial costs from 2016 to 2018, which Trian hailed in March as a positive step. Trian declined to comment.
GE shares rose 3.6% Monday to close at $28.94.
Immelt led GE through a dramatic downsizing that included shedding $260 billion of financial assets held in its GE Capital division. During his tenure, the company sold off its media assets, including NBC, as well as plastics, appliances, industrial solutions and consumer finance. It bolstered its digital capability, renewable energy, oil field services and life sciences, among other areas.
With the company significantly leaner, its revenue dipped by 1% in the first quarter while total costs were cut by 3%.
The company also got increasingly global. Today, about 60% of its revenue comes from foreign markets, up from 40% when Immelt joined. Under Immelt, the company has sought to emphasize its expertise in software and data analysis.
“Jeff has positioned the company incredibly well for the future,” Jack Brennan, lead independent director on GE’s board, said in a statement. “He executed a massive portfolio transformation and navigated the company through economic cycles and business disruptions. To-
day, GE is a high-tech industrial company with a bright future.”
Given GE’s lackluster financial performance this year, there was immediate speculation on whether Immelt’s retirement was not fully voluntary. “Why Big Corps suck: GE’s Immelt being pushed aside because shortsighted investors want focus on cost-cutting,” tweeted Tom Peters, the business author who wrote In Search of Excellence.
GE’s board of directors said the change marked the culmination of a succession planning process that began in 2011 and that it interviewed internal and external candidates earlier this year. Flannery was chosen Friday.
In a meeting with employees Monday morning, Flannery said that he had been in Immelt’s “doghouse” in the past. But Immelt continued to tap him for a series of important jobs in the company. As CEO of GE’s health care division since 2014, Flannery boosted revenue and profit. He also spent time as CEO of GE’s India division, led business development and held several roles at GE Capital.
“John is the right person to lead GE today,” Immelt said. “He has a track record of success and led one of our most essential businesses.”