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A Lifer at General Electric, John Flannery Is Named Chief Executive For G.E.’s John Flannery, It Was a 30-Year Trip to the Top
(about 13 hours later)
He is the quintessential company man.He is the quintessential company man.
John Flannery, who was tapped on Monday to become the chief executive of General Electric this summer, has spent his 30-year career with the industrial giant. He has headed offices from South America to Asia. He has turned around a flailing business, the company’s $18 billion health care division. He even has a home on Nantucket, where a cluster of high-ranking G.E. executives vacation.John Flannery, who was tapped on Monday to become the chief executive of General Electric this summer, has spent his 30-year career with the industrial giant. He has headed offices from South America to Asia. He has turned around a flailing business, the company’s $18 billion health care division. He even has a home on Nantucket, where a cluster of high-ranking G.E. executives vacation.
He will need to draw on this accumulated experience and good will in the years ahead. In taking over from Jeffrey R. Immelt, G.E.’s well-liked chief executive of 16 years, Mr. Flannery faces the difficult task of managing one of corporate America’s last conglomerates. Although G.E. slimmed down under Mr. Immelt, shedding its finance division and NBCUniversal, it remains an extraordinarily complex company, making everything from microwaves to wind turbines.He will need to draw on this accumulated experience and good will in the years ahead. In taking over from Jeffrey R. Immelt, G.E.’s well-liked chief executive of 16 years, Mr. Flannery faces the difficult task of managing one of corporate America’s last conglomerates. Although G.E. slimmed down under Mr. Immelt, shedding its finance division and NBCUniversal, it remains an extraordinarily complex company, making everything from microwaves to wind turbines.
Mr. Flannery, 55, will also be counted on to revive the company’s languishing stock price. Under Mr. Immelt’s leadership, shares of G.E. fared poorly, drawing the ire of investors and the involvement of an activist hedge fund that hastened the succession planning that led to Mr. Flannery’s appointment.Mr. Flannery, 55, will also be counted on to revive the company’s languishing stock price. Under Mr. Immelt’s leadership, shares of G.E. fared poorly, drawing the ire of investors and the involvement of an activist hedge fund that hastened the succession planning that led to Mr. Flannery’s appointment.
Already, Wall Street is betting that Mr. Flannery has what it takes. G.E. shares were up more than 3 percent on Monday. And analysts spoke approvingly of his behind-the-scenes maneuvering in various G.E. deals — particularly the $13.5 billion agreement two years ago to take over the power business of the French giant Alstom and the spinoff that year of G.E.’s consumer finance arm, Synchrony Financial.Already, Wall Street is betting that Mr. Flannery has what it takes. G.E. shares were up more than 3 percent on Monday. And analysts spoke approvingly of his behind-the-scenes maneuvering in various G.E. deals — particularly the $13.5 billion agreement two years ago to take over the power business of the French giant Alstom and the spinoff that year of G.E.’s consumer finance arm, Synchrony Financial.
That Mr. Flannery is not afraid to divest assets has some analysts betting that he could reach back into that toolbox to further simplify G.E.’s sprawling business.That Mr. Flannery is not afraid to divest assets has some analysts betting that he could reach back into that toolbox to further simplify G.E.’s sprawling business.
Any major divestitures will probably take time. Mr. Flannery said in a video broadcast on Facebook that he planned to conduct a review of the company with a “sense of urgency” and that he would make recommendations later in the year.Any major divestitures will probably take time. Mr. Flannery said in a video broadcast on Facebook that he planned to conduct a review of the company with a “sense of urgency” and that he would make recommendations later in the year.
Mr. Flannery said he was going to “review all aspects of the business,” with a particular focus on the cost structure. For the next few months, he will be traveling the globe, visiting businesses, customers and investors. Asked whether those decisions would be about the portfolio or the financial outlook, he said, “I think you should expect both.”Mr. Flannery said he was going to “review all aspects of the business,” with a particular focus on the cost structure. For the next few months, he will be traveling the globe, visiting businesses, customers and investors. Asked whether those decisions would be about the portfolio or the financial outlook, he said, “I think you should expect both.”
Mr. Flannery lands in the hot seat at a pivotal moment for G.E., a 125-year-old company with $120 billion in annual sales.Mr. Flannery lands in the hot seat at a pivotal moment for G.E., a 125-year-old company with $120 billion in annual sales.
Major shifts in geopolitical tides have resulted in bumpy currency fluctuations for the multinational conglomerate. And while Mr. Immelt, who is retiring as G.E.’s chief on Aug. 1, praised President Trump’s policies on deregulation and tax reform, he criticized his nationalistic trade policies, publicly supporting Mexico and the North American Free Trade Agreement, which Mr. Trump wants to renegotiate.Major shifts in geopolitical tides have resulted in bumpy currency fluctuations for the multinational conglomerate. And while Mr. Immelt, who is retiring as G.E.’s chief on Aug. 1, praised President Trump’s policies on deregulation and tax reform, he criticized his nationalistic trade policies, publicly supporting Mexico and the North American Free Trade Agreement, which Mr. Trump wants to renegotiate.
In an interview, Mr. Flannery said he had had “no interaction with President Trump,” adding that the administration’s proposals to cut taxes and spend on infrastructure represented an “agenda” that G.E. supported.In an interview, Mr. Flannery said he had had “no interaction with President Trump,” adding that the administration’s proposals to cut taxes and spend on infrastructure represented an “agenda” that G.E. supported.
But Mr. Flannery suggested that he would try to steer clear of politics as he conducted his review of the company.But Mr. Flannery suggested that he would try to steer clear of politics as he conducted his review of the company.
A keen wine collector who often grills for guests at his Nantucket home, Mr. Flannery, who is married and has three children, is an avid reader and enjoys attending R.E.M. and Natalie Merchant concerts. He named the family’s new puppy, a 12-week-old black Labrador, after Boston Red Sox outfielder Mookie Betts.A keen wine collector who often grills for guests at his Nantucket home, Mr. Flannery, who is married and has three children, is an avid reader and enjoys attending R.E.M. and Natalie Merchant concerts. He named the family’s new puppy, a 12-week-old black Labrador, after Boston Red Sox outfielder Mookie Betts.
Analysts said that in the last few months, it had become clear that Mr. Flannery had landed on the shortlist of chief executive candidates. Various institutional investors who visited General Electric’s headquarters in Boston were increasingly meeting with Mr. Flannery.Analysts said that in the last few months, it had become clear that Mr. Flannery had landed on the shortlist of chief executive candidates. Various institutional investors who visited General Electric’s headquarters in Boston were increasingly meeting with Mr. Flannery.
In the fall of 1987, Mr. Flannery, fresh from graduating from the Wharton School at the University of Pennsylvania, arrived at General Electric’s finance arm, GE Capital. Just a few weeks later came Black Monday and the stock market crash.In the fall of 1987, Mr. Flannery, fresh from graduating from the Wharton School at the University of Pennsylvania, arrived at General Electric’s finance arm, GE Capital. Just a few weeks later came Black Monday and the stock market crash.
The son of a former director for bank supervision for the Federal Deposit Insurance Corporation, Mr. Flannery worked with a group that assessed risks in providing financing for the booming arena of leveraged buyout deals. In the wake of the market crash, as banks steered clear of the risky deals, GE Capital moved in.The son of a former director for bank supervision for the Federal Deposit Insurance Corporation, Mr. Flannery worked with a group that assessed risks in providing financing for the booming arena of leveraged buyout deals. In the wake of the market crash, as banks steered clear of the risky deals, GE Capital moved in.
Besides providing funding for early cable and wireless deals, Mr. Flannery’s team was involved in G.E.’s funding the 1987 leveraged buyout of the magazine publisher Edgell Communications. G.E. took a hit a few years later when that company, suffering from a steep decline in sales and overburdened by a heavy debt load, filed for bankruptcy.Besides providing funding for early cable and wireless deals, Mr. Flannery’s team was involved in G.E.’s funding the 1987 leveraged buyout of the magazine publisher Edgell Communications. G.E. took a hit a few years later when that company, suffering from a steep decline in sales and overburdened by a heavy debt load, filed for bankruptcy.
But Mr. Flannery’s star was already on the rise. After tours in Latin America, Asia and India, Mr. Flannery returned to corporate headquarters to run mergers and acquisitions in 2013.But Mr. Flannery’s star was already on the rise. After tours in Latin America, Asia and India, Mr. Flannery returned to corporate headquarters to run mergers and acquisitions in 2013.
There, under the direction of Mr. Immelt to transform the company and shed various businesses, Mr. Flannery negotiated the Alstom deal in France and also spun off Synchrony and sold off G.E.’s refrigerator business.There, under the direction of Mr. Immelt to transform the company and shed various businesses, Mr. Flannery negotiated the Alstom deal in France and also spun off Synchrony and sold off G.E.’s refrigerator business.
In 2014, Mr. Flannery stepped in to run the company’s health care business, which is a leader in imaging and diagnostic equipment. Many analysts and investors expected the unit to be sold or spun off, but Mr. Flannery instead expanded it, pushing into life sciences and cell therapy systems businesses.In 2014, Mr. Flannery stepped in to run the company’s health care business, which is a leader in imaging and diagnostic equipment. Many analysts and investors expected the unit to be sold or spun off, but Mr. Flannery instead expanded it, pushing into life sciences and cell therapy systems businesses.
Still, Mr. Flannery may face new pressure to evaluate businesses to divest. And one early target, some analysts say, could be the health care division he has been leading.Still, Mr. Flannery may face new pressure to evaluate businesses to divest. And one early target, some analysts say, could be the health care division he has been leading.
“What has always struck me about his background is that he ran G.E.’s business development — that is G.E. shorthand for mergers and acquisitions,” said Deane Dray, an analyst at RBC Capital Markets. “So when he was running health care — a guy who wasn’t a health care guy but an M&A guy — one could draw the conclusion that he was preparing it for some sort of action that would maximize shareholder value.”“What has always struck me about his background is that he ran G.E.’s business development — that is G.E. shorthand for mergers and acquisitions,” said Deane Dray, an analyst at RBC Capital Markets. “So when he was running health care — a guy who wasn’t a health care guy but an M&A guy — one could draw the conclusion that he was preparing it for some sort of action that would maximize shareholder value.”
The health care division is still very much a part of G.E. But analysts say that with pressure coming from investors — including the activist hedge fund Trian Partners, led by the billionaire Nelson Peltz — health care could once again be a target for a sale or a spinoff sooner rather than later.The health care division is still very much a part of G.E. But analysts say that with pressure coming from investors — including the activist hedge fund Trian Partners, led by the billionaire Nelson Peltz — health care could once again be a target for a sale or a spinoff sooner rather than later.
“Health care is not a shining star of G.E.,” said Paul Keckley, an independent health care industry analyst. “It has been a staple, but aviation is what is driving the company’s earnings more these days.”“Health care is not a shining star of G.E.,” said Paul Keckley, an independent health care industry analyst. “It has been a staple, but aviation is what is driving the company’s earnings more these days.”
He added, “The question is going to be how quickly institutional investors have him answer the question of break up the business or keep it together.”He added, “The question is going to be how quickly institutional investors have him answer the question of break up the business or keep it together.”
Mr. Flannery on Monday played down the idea that he was simply an unsentimental deal maker.Mr. Flannery on Monday played down the idea that he was simply an unsentimental deal maker.
When he took over the health care business, he said, the expectation was that this “bean-counter guy is here, and we’re for sale.” Instead, he made a top-to-bottom review of the business, streamlining it in places but investing in others.When he took over the health care business, he said, the expectation was that this “bean-counter guy is here, and we’re for sale.” Instead, he made a top-to-bottom review of the business, streamlining it in places but investing in others.
“There was a preconception” about me, he said. “But the reality was the opposite.”“There was a preconception” about me, he said. “But the reality was the opposite.”