Immelt to step down as CEO of GE
Healthcare chief to take over
General Electric CEO and Chairman Jeff Immelt 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.
John Flannery, 55, who is leading GE’s healthcare division, will take over as CEO. The company’s chief financial officer, Jeff Bornstein, was named as vice chairman.
Investors welcomed the shakeup, as GE shares rose 3.6% to close at $28.94 Monday.
The moves come after Immelt led GE through a dramatic downsizing that included shedding $260 billion of financial assets held in its GE Capital division. Under Immelt’s reign, the company has sought to emphasize its expertise in software and data analysis.
During Immelt’s tenure, the Boston-based 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, oilfield 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.
“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. Today, GE is a high-tech industrial company with a bright future.”
But 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 its 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 couldn’t immediately be reached for comment.
Amid speculation over whether the showdown played a role in the executive turnover, GE revealed an unusual amount of detail about its succession planning process.
The board said the process began in 2011. It decided in 2013 that it should name a new CEO in summer 2017, the board said. It interviewed candidates in early May and picked Flannery on Friday.
Still, there was speculation that Immelt was pushed out. “Why Big Corps suck: GE’s Immelt being pushed aside because shortsighted investors want focus on cost-cutting,” Tom Peters, the business author who wrote “In Search of Excellence,” said on Twitter.
In a meeting with employees Monday, Flannery said he had been in Immelt’s “doghouse” in the past. But Immelt continued to tap him for important jobs in the company. As CEO of GE’s healthcare division since 2014, Flannery boosted revenue and profit. He also spent time as CEO of GE’s India division and held several roles at GE Capital.
“John is the right person to lead GE today,” Immelt said. “He has broad experience across multiple businesses, cycles and geographies. He has a track record of success and led one of our most essential businesses. Most important are his strong leadership traits — good judgment, resilience, a learner, team builder and a toughminded individual and competitor.”