GE said Monday that Mr. Immelt will be replaced by the head of the company's health care business, John Flannery, and retire as chairman of the board on December 31. The board selected them as finalists after lengthy interviews last month at an offsite location in NY. GE's stock performance is making shareholders more and more furious. Bornstein was promoted to vice chair of the company.
GE said Immelt's departure was not triggered by outside influences and was the culmination of six years of succession planning. Trian declined comment on the CEO change yesterday.
Flannery praised Immelt's leadership, saying the changes he made took "courage" and the company now is "clearly better positioned" in its markets because of the outgoing leader's efforts to simplify operations. "It's been ongoing for four years". Year-to-date, GE has declined -10.88%, versus a 9.37% rise in the benchmark S&P 500 index during the same period.
For 16 years, Jeffrey Immelt has led General Electric while the sprawling conglomerate sold off one business after another in order to refocus. That underperformance had some pressing for more urgency from Immelt.
"John is the right person to lead GE today". GE also said it would seek to link bonuses for senior managers to achieving those cost-cutting and profitability goals.
Sales and earnings are expected to be down this quarter, and being a multinational the company is going to be hurt by a strong dollar, he said. At an April activist conference in New York, Trian co-founder Ed Garden upped the ante.
It was at the Electrical Products Group Conference in May that Immelt's differences with Trian became obvious.
Among other industrial conglomerates, United Technologies (UTX) dipped 0.6% to 119.88 to re-enter buy range, Honeywell (HON) eased 0.4% to 133.26 but remains near a 135.20 buy point, while US -listed shares of German rival Siemens (SIEGY) dropped 2%. The fund is already up by at least $250 million since it disclosed the $2.5 billion bet in 2015, though the shares are still far below the $45 share price it targeted.
"GE's digital-first transformation is a sound strategy, and I'd be surprised if they changed course", said Tom Hopcroft, president and CEO of the Massachusetts Technology Leadership Council, in an e-mail.
Flannery, a married father of three, has at least one thing on his side as he prepares to move into the CEO's office at GE's new headquarters in Boston.
During a career that has taken him from Latin America to Asia and then back to the U.S., Flannery has been leaned on by management to goose profits at struggling units, expand internationally and engineer acquisitions.
"Sixteen years leading a company like this is enough time", he said in an interview.
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