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GE's Immelt to retire, John Flannery to take over as CEO
[BENGALURU] General Electric Co said CEO Jeff Immelt would step down, capping a 16-year term that included steering the conglomerate through the financial crisis but saw its shares losing nearly a third of their value on worries about the company's growth.
GE said John Flannery, the head of its healthcare unit, would replace Mr Immelt as CEO, effective Aug 1, and as chairman after Mr Immelt retires on Dec. 31.
The company's shares jumped 4.1 per cent to US$29.09 in early trading on Monday as Mr Flannery's appointment to the top job ended a six-year long succession planning program.
Mr Immelt, 61, who took over from Jack Welch in 2001, has been credited with guiding the company through the recession, which nearly toppled the maker of jet engines, wind turbines and locomotives.
Mr Immelt also oversaw the divestment of GE Capital - its massive lending unit - shifting the conglomerate's focus from finance to manufacturing, and bet on developing digital technologies to transform the company's factories.
However, since Mr Immelt became CEO in 2001, GE's shares fell 30 per cent, while the S&P 500 index more than doubled. That underperformance had some pressing for more urgency from Mr Immelt.
Activist investor Nelson Peltz's Trian Fund Management, which owned 68.9 million shares of GE worth US$2.05 billion as of March 30, has criticised the company's performance and pressed for asset sales and cost cutting.
Trian's head of communications Anne Tarbell did not immediately return a call seeking comment.
Stifel analyst Robert McCarthy said the timing was not surprising because of the serial underperformance of the stock and "investor fatigue with management's continued perceived ungainly portfolio actions".
During Mr Immelt's tenure, GE bought French peer Alstom's power business and announced a deal to acquire oil and gas company Baker Hughes, while jettisoning the NBC unit and even its famed appliances division.
Still, the company, the oldest surviving member of the Dow Jones Industrial Average, has struggled to boost sales significantly in the past few quarters. In particular, the company's cash flow has been a cause for concern.
Mr Flannery, 55, who is currently president and CEO of GE Healthcare, joined GE Capital about three decades ago. At the lending unit, he focused on leveraged buyouts and later led the corporate restructuring group.
He has led GE's India business, its equity business in Latin America and the GE Capital business for Argentina and Chile.
Mr Flannery has also led the turnaround of the healthcare business, increasing organic revenue by 5 per cent and margins by 100 basis points in 2016, GE said in a statement.
The company said Kieran Murphy, president and CEO of GE Healthcare Life Sciences, will replace Mr Flannery.