General Electric said Monday that its longtime CEO, Jeffrey Immelt, would retire at the end of this year, closing out a 16-year run at the helm of the industrial giant, which included a vast overhaul of the conglomerate’s portfolio but also an underperforming stock price that has trailed well below market indices and competitors.
Immelt, 61, will be succeeded on Aug. 1 by John Flannery, the current president and CEO of the company’s health care business, and will remain chairman until the end of the year. The company said the announcements were part of a succession plan that had been in place since 2011, and that now was an “ideal time for change” now that the company had completed its “pivot” away from financial services and the move of its headquarters from Fairfield, Connectricut., to Boston.
The company’s announcement comes amid recent pressure from the activist investor Nelson Peltz’s Trian Fund Management, which had pushed GE to cut costs and change up the executive compensation bonus plan. The company’s shares have fallen 12 percent since Jan. 1, while the Standard & Poor’s 500-stock index has climbed 8 percent.
Immelt’s tumultuous tenure began just a few days before the Sept. 11, 2001, terrorist attacks, and included presiding over the company amid the financial crisis at a time when its exposure to financial services made up roughly half its net income. He has made dramatic changes to GE’s business, not only through completing $260 billion in asset sales for GE Capital over the past two years, but in taking on big acquisitions and divesting out of businesses like GE Appliances, NBC Universal and GE Plastics.
Flannery, 55, has been at GE since 1987 and led the acquisition of Alstom, the largest industrial acquisition in the company’s history. During his tenure leading GE Healthcare, the company said, he has increased organic revenue by 5 percent.
General Electric is the only remaining member of the original Dow Jones industrial average, created in 1896 by Charles Dow. In the past, its very makeup — electric lightbulbs, appliances, NBC — gave GE a touch point to hundreds of millions of Americans and consumers worldwide.
Because of its size and ability to generate cash, the U.S. economy and the millions of pensioners, savers and investors depended on the success of the General Electric stock price and dividend — whether they knew it or not.
Immelt’s inability to move that stock price, indeed it fell by nearly half during his tenure, was thought by many to be his undoing.
(c) 2017, The Washington Post · Jena Mcgregor