Flannery replaces Immelt at GE

Jeff Immelt

"And it's something you can expect us to do with speed and with urgency and with no constraint". Its biggest divestiture was GE Capital, which at one point generated the majority of the company's earnings.

"Our administration has valued working with Jeff and wishes him great success on future endeavors", Baker said.

GE will make the results of the review public in the fall, but major changes are not needed, Flannery said. "We're in an incredible position to go forward". The question now is whether his successor, John Flannery, can deliver on Immelt's vision while also blazing new trails and reinvigorating the company's stock performance.

The company will press ahead with its target of cutting overhead costs by US$2 billion by 2019 and boosting profits to US$2 a share next year.

Immelt has served as CEO for 16 years and will be replaced by John Flannery, now the president and CEO of GE Healthcare.

Trian Fund Management has put heat on Immelt as GE's share price lagged the larger market this year, but has never publicly called for his ouster.

Immelt, 61, succeeded legendary CEO Jack Welch, who led the company for 20 years and vastly increased its size and scope.

Immelt announced Kieran Murphy as the new president and CEO of GE Healthcare, effective immediately. But other shareholders may be less likely to go along with such an effort as they give Mr. Flannery time to boost the stock and improve performance, making an already tough-to-win vote significantly more hard.

Back in 2015, when activist investor Nelson Peltz bought $2.5 billion stake in GE, he pressed for cost cutting and asset sales.

Even if it didn't force the CEO change, Trian will likely continue to wield influence.

Sixteen years leading a company like GE is enough time, Immelt said.

Analyst Robert McCarthy at Stifel Nicolaus wrote in a note to clients that the timing of the change in leadership was "unsurprising since the serial underperformance of the stock".

During his tenure, Mr Immelt oversaw the restructuring of the company's GE Capital unit and steered the group as it shifted its focus from finance to manufacturing. The company's shares had been down more than 11% so far this year, and the stock was the second-worst performer on the Dow Jones Industrial Average of 30 stocks, behind Verizon. In particular, the company's cash flow has been a cause for concern.

Mr. Flannery, 55 years old, is a 30-year veteran of GE who spent much of his career in the company's once sprawling financial business.

Since joining GE Healthcare in 2014, Mr. Flannery has led the turnaround of the business, increasing organic revenue by five percent and margins by 100 bps in 2016.

In 2002, Flannery "became the President & CEO of GE Equity and was asked to lead the business through a hard cycle", says the company bio, which adds that he then moved to Asia for a time.

Related:

Comments


Other news