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Jeffrey Immelt to Retire as General Electric Chief Jeffrey Immelt to Retire as General Electric Chief
(about 1 hour later)
General Electric said on Monday that its longtime chairman and chief executive, Jeffrey R. Immelt, would retire, ending a 16-year run in which he refocused the company on its industrial roots but also made notable acquisitions.General Electric said on Monday that its longtime chairman and chief executive, Jeffrey R. Immelt, would retire, ending a 16-year run in which he refocused the company on its industrial roots but also made notable acquisitions.
Mr. Immelt will be replaced by John Flannery, the president and chief executive of GE Healthcare in a shift that comes as the conglomerate struggles to increase profitability. G.E. has been under particular pressure since Trian Fund Management, which is run by the billionaire investor Nelson Peltz, took a big stake in it nearly two years ago.Mr. Immelt will be replaced by John Flannery, the president and chief executive of GE Healthcare in a shift that comes as the conglomerate struggles to increase profitability. G.E. has been under particular pressure since Trian Fund Management, which is run by the billionaire investor Nelson Peltz, took a big stake in it nearly two years ago.
“During this time of dynamic global markets and relentless focus on technology and operational excellence, there is no better person to lead G.E. than John Flannery,” Jack Brennan, the company’s lead independent director, said in a news release. “He brings unique experience and a strong skill set to the job.” The shift could augur bigger changes at the conglomerate, with Mr. Flannery saying in a video broadcast on Facebook that he would “take a fresh look at the company” with a “sense of urgency” before presenting recommendations later this year.
He said that while “no one’s happy with the stock price now,” the health care sector in particular offered “so much long term growth,” adding that G.E. was “just scratching the surface of what we can do in that business.”
Mr. Flannery, 55, will become chief executive of G.E. on Aug. 1. Mr. Immelt, 61, will remain as chairman until he retires on Dec. 31. Mr. Flannery will then add the role of chairman on Jan. 1, 2018.Mr. Flannery, 55, will become chief executive of G.E. on Aug. 1. Mr. Immelt, 61, will remain as chairman until he retires on Dec. 31. Mr. Flannery will then add the role of chairman on Jan. 1, 2018.
G.E. also said that Jeff Bornstein, its chief financial officer, would be promoted to vice chairman. The company said its board had overseen a succession planning process since 2011.G.E. also said that Jeff Bornstein, its chief financial officer, would be promoted to vice chairman. The company said its board had overseen a succession planning process since 2011.
“During this time of dynamic global markets and relentless focus on technology and operational excellence, there is no better person to lead G.E. than John Flannery,” Jack Brennan, the company’s lead independent director, said in a news release. “He brings unique experience and a strong skill set to the job.”
Like Mr. Immelt, Mr. Flannery is a veteran of G.E., beginning at GE Capital in 1987 with a focus on evaluating risk for leveraged buyouts. He has held other posts across the wider conglomerate, running its corporate restructuring and workout group, leading its GE Equity business and working with GE Capital in Latin America and Asia.
In 2013, he took over business development at the corporate level, where he was involved in G.E.’s acquisition of Alstom, the shrinking of GE Capital and the sale of GE Appliances. Mr. Flannery joined GE Healthcare in 2014, overseeing a turnaround of that business, the company said.
“John is the right person to lead G.E. today. He has broad experience across multiple businesses, cycles and geographies,” Mr. Immelt said in the company statement. “He has a track record of success and led one of our most essential businesses.”
The announcement caps a long career for Mr. Immelt, who joined the company in 1982 and who has navigated several crises during his tenure as G.E.’s top executive.The announcement caps a long career for Mr. Immelt, who joined the company in 1982 and who has navigated several crises during his tenure as G.E.’s top executive.
He replaced Jack Welch, G.E.’s legendary chairman and chief executive, just days after the Sept. 11, 2001, terrorist attacks in the United States. He replaced Jack Welch, G.E.’s legendary chairman and chief executive, just days before the Sept. 11, 2001, terrorist attacks in the United States.
Mr. Immelt also steered G.E. through the global financial crisis and oversaw the sale of the bulk of its sprawling finance arm, GE Capital. Though focused on its industrial businesses, G.E. has retained some financing operations related directly to those businesses. Mr. Immelt later steered G.E. through the global financial crisis and oversaw the sale of the bulk of its sprawling finance arm, GE Capital. Though focused on its industrial businesses, G.E. has retained some financing operations related directly to those businesses.
G.E. has not shied away from making headline-grabbing moves during Mr. Immelt’s tenure. Under Mr. Welch, G.E. aggressively expanded in the finance business through its GE Capital arm, becoming one of the largest lenders in the United States and regularly generating strong profits.
Three years ago, the American company made a $13.5 billion deal to take over the power business of the French giant Alstom. But, that business — and the regulatory demands that came with it — became much less attractive and a riskier bet after the financial crisis in 2008.
GE Capital was called a “systemically important financial institution” in the years that followed — the official name for a lender that the government considers too big to fail. The designation cut into potential profits by imposing additional restrictions and requirements upon its operations.
Since announcing plans to sell off the bulk of that business two years ago, G.E. has sold about $200 billion of GE Capital noncore businesses, including a number of its finance operations in Europe.
The systemically important designation was removed from GE Capital last year.
The wider company has come under pressure in recent years, since Mr. Peltz’s Trian took a 1 percent stake in G.E. in 2015. The investment was worth about $2.5 billion, with Mr. Peltz saying at the time that the company’s stock was “undervalued and underappreciated” and could be transformed to “allow its world-class industrial businesses to drive attractive shareholder returns.”
But, G.E.’s stock price slumped late last year and Trian said that it “intensified its dialogue” in March with G.E.’s senior management “regarding new initiatives to help ensure that G.E. can meet its financial commitments.”
After discussions with Trian, G.E. said it would seek to reduce costs by more than $2 billion in its industrial arm by the end of 2018 and improve profit. G.E. also said it would seek to link bonuses for senior managers to achieving those cost-cutting and profitability goals.
Still, during Mr. Immelt’s tenure, the company has not shied away from making headline-grabbing moves.
Three years ago, it made a $13.5 billion deal to take over the power business of the French giant Alstom.
The move was part of efforts to extend G.E.’s reach in providing electrical utilities with generating equipment and power-grid distribution systems. G.E. and competitors like Siemens see big opportunities in that sector as the world moves away from coal and toward cleaner natural gas, solar power and wind energy.The move was part of efforts to extend G.E.’s reach in providing electrical utilities with generating equipment and power-grid distribution systems. G.E. and competitors like Siemens see big opportunities in that sector as the world moves away from coal and toward cleaner natural gas, solar power and wind energy.
And in October, G.E. agreed to merge its oil and gas division with another services provider, Baker Hughes, as it sought to create an entity that could profit from a recovery in oil prices.And in October, G.E. agreed to merge its oil and gas division with another services provider, Baker Hughes, as it sought to create an entity that could profit from a recovery in oil prices.
The 125-year-old G.E. has also sought inroads in software, quietly opening a software center in California in 2011. Mr. Immelt had said he wanted G.E. to be a “top 10 software company” by 2020.The 125-year-old G.E. has also sought inroads in software, quietly opening a software center in California in 2011. Mr. Immelt had said he wanted G.E. to be a “top 10 software company” by 2020.
Like Mr. Immelt, Mr. Flannery is a veteran of G.E., beginning at GE Capital in 1987 with a focus on evaluating risk for leveraged buyouts. He has held other posts across the wider conglomerate, running its corporate restructuring and workout group, leading its GE Equity business and working with GE Capital in Latin America and Asia. Shares of G.E. rose more than three percent in early trading in New York on Monday.
In 2013, he took over business development at the corporate level, where he was involved in G.E.’s acquisition of Alstom, the shrinking of GE Capital and the sale of GE Appliances. Mr. Flannery joined GE Healthcare in 2014, overseeing a turnaround of that business, the company said.
“John is the right person to lead G.E. today. He has broad experience across multiple businesses, cycles and geographies,” Mr. Immelt said in the company statement. “He has a track record of success and led one of our most essential businesses.”
In March, G.E. said that it would seek to reduce costs and improve profit in its industrial arm as it faced pressure from Trian.
G.E. also said it would seek to link bonuses for senior managers to achievement in cost-cutting and profitability goals.
Shares of G.E. rose nearly 4 percent in premarket trading in New York on Monday.