GE CEO Immelt stepping down, Flannery to take over role
- Author: Zachary Reyes Jun 18, 2017,
Jun 18, 2017, 22:58
"GE is such a big conglomerate, that's why it's so important here in Boston to work with hospitals, universities, all across different sectors", Walsh said.
JOHN FLANNERY: Those are big, big shoes to fill.
Since Immelt became CEO in 2001, GE's shares have fallen 30 percent, while the S&P 500 index more than doubled.
Immelt's inability to move that stock price, indeed it fell by almost half during his tenure, was thought by many to be his undoing. He took over at GE in 2001, just days before the September 11 terrorist attacks. "GE needed a new messenger".
"This is a business that really focuses on the needs of humanity". He also noted the potential to grow GE's already-large healthcare business, which Flannery led for the past three years in Chicago.
Still, Wall Street investors haven't been impressed with the company's performance.
The company has agreed to make cuts worth around $2bn as it faces pressure from investors over its finances. It would take several years to determine the pay-off of some of Mr Immelt's initiatives, including a digital division, he said.
In 2005, GE launched Ecomagination, a strategy to drive more efficient, clean innovation across the various business units.
Sixteen years leading a company like this is enough time.
"As GE pares down, it's the one business that looks like an outlier", Deane Dray of RBC Capital Markets told IBD.
Mr. Flannery said, "Today's announcement is the greatest honor of my career".
Mr Immelt rejected any notion that outsiders influenced his resignation.
"Our administration has valued working with Jeff and wishes him great success on future endeavors", Baker said.
"We can weather the cycle in the short term and we will be very well positioned to lead the industry going forward", said Immelt at the time.
He will assume chairman duties following Mr Immelt's retirement on December 31. This is part of succession plan GE put in place in 2011. In our view, the balance of delivering near-term results while positioning the business for the long haul is a trade-off that Flannery knows well from his recent role in GE Healthcare. He joined GE in 1987.
John Flannery, president and CEO of the conglomerate's health care unit, will take over the post in August. He also built up the oil and gas division just before crude prices plummeted. Activist investor Nelson Peltz of Trian Partners reportedly pushed for Immelt's departure earlier this year. On Monday afternoon, shares were up 4.1% to $29.08. Trian declined to comment. It ran into problems defining its role, given the panoramic suite of products it offered, and launched "strategic organizational changes" past year. Trian might have been a factor, Ms Dray said.
During the town hall discussion, Flannery said he thinks GE will be a leader in areas like digital products and 3D printing.
In addition, Chief Financial Officer Jeff Bornstein was named vice chair.