GE's CEO Jeffrey Immelt to step down after 16 years
- Author: Zachary Reyes Jun 16, 2017,
Jun 16, 2017, 13:12
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 almost a third of their value on worries about the company's growth.
The executive moves are part of a succession plan in place since 2011.
Immelt, who took over from the legendary Jack Welch, oversaw major deals such as the 2015 purchase of the power assets of French industrial giant Alstom and a spate of large divestments from GE Capital after the 2008 financial crisis that essentially unloaded what was effectively the fifth biggest United States bank after the financial crisis hit the unit. According to his company bio, he also bolstered the unit's digital and technological capabilities, particularly through the launch of Sustainable Healthcare Solutions, to reinforce the company as a leader in industry technology. And this year, GE is down 6.9 percent as the index climbed 7.7 percent.
In pre-market activity on the NYSE, GE shares were gaining 2.7 percent to $28.69.
Jack Brennan, lead independent director for GE's Board of Directors, said, "During this time of dynamic global markets and relentless focus on technology and operational excellence, there is no better person to lead GE than John Flannery". He took over at GE in 2001, just days before the September 11 terrorist attacks.
$2 billion in costs to align executive bonuses with cuts and profit goals. In addition, Jeff Bornstein, current CFO, has also been promoted to Vice Chair of GE. The shares have fallen about 30 percent since Immelt took over as he faced criticism for cutting the dividend in 2009 and paying too much for some acquisitions.
On Monday, US antitrust officials ordered GE to divest a unit that sells chemicals to oil refineries as a condition of winning regulatory approval. Flannery said he got a phone call Friday offering him the CEO job.
Nelson Peltz's Trian Fund Management, which has a less than 1 percent stake in the company, criticized GE's performance and pressed for asset sales and cost cutting.
In a sign of just how great opposition to Mr Immelt had become in the investing community, the stock soared the most in 20 months on news of his departure.
In 1997, he moved to Argentina where he led GE's Equity business in Latin America and the overall GE Capital business for Argentina and Chile.
Trian has historically been loath to walk away from investments, and now has no plans to do so in the case of GE, according to a person familiar with the matter. Davis said he expects Flannery will break up many of GE's businesses, saying, "It's hard to imagine that you can see synergies between health care and power generation and aircraft engines".
"It is interesting that Flannery comes from GE Healthcare; he seems to have a heavy finance background and can leverage that", he said.