General Electric (NYSE:GE) has announced that its longtime chairman and chief executive, Jeffrey R. Immelt, would retire by the end of the year. Immelt will be replaced as CEO by John Flannery, the president and chief executive of GE Healthcare, on Aug. 1. Flannery has been at GE since 1987.
Immelt said in a statement, “John is the right person to lead GE today. He will be trusted by investors, our customers and the GE team.” Flannery said in a statement, “Today’s announcement is the greatest honor of my career. I am privileged to have spent the last 16 years at the company working for Jeff, one of the greatest business leaders of our time.”
The retirement ends a 16-year run for Immelt, who joined the company in 1982. Immelt steered GE through the global financial crisis and oversaw the sale of the bulk of its finance arm, GE Capital. GE is now focused on its industrial businesses, retaining some financing operations directly related to those businesses.
During Immelt’s tenure, the company has divested out of businesses like GE Appliances, NBC Universal and GE Plastics. In October, GE agreed to merge its oil and gas division with Baker Hughes, another services provider. The company also recently moved its headquarters from Fairfield, Conn., to Boston.
The shift comes as the conglomerate struggles to boost profitability. The company’s underperforming stock price has trailed well below market indices and competitors. 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 inability to move that stock price was thought by many to be his undoing. The company’s share price fell by nearly half during his tenure. Many people saw a management shake-up coming. Activist investors have been pushing GE to cut costs and change up the executive compensation bonus plan. Now, many are expecting fairly dramatic changes under Flannery.
Immelt will remain as chairman until he retires on Dec. 31 and Flannery will add the role of chairman on Jan. 1. Jeff Bornstein, GE’s chief financial officer, will be promoted to vice chairman and Kieran Murphy, president of GE Healthcare’s life sciences division, will succeed Flannery as CEO of GE Healthcare.
Jack Brennan, the company’s lead independent director, said in a news release, “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 brings unique experience and a strong skill set to the job.” Shares of GE climbed around 3 percent in premarket trading after the news.