General Electric says Jeff Immelt is stepping down as CEO after a 16-year run at one of nation's biggest bellwether businesses. And this year, GE is down 6.9 percent as the index climbed 7.7 percent. After he steps down from his position as CEO, he will continue to be chairman of the board through to his retirement from GE on December 31, 2017. GE has been under particular pressure since Trian Fund Management, which is run by the billionaire investor Nelson Peltz, took a big stake in it almost two years ago.
Jeff Bornstein, current CFO, has been promoted to vice chair of GE. Immelt made the decision a year ago to move the GE's headquarters to Boston, from its Fairfield, Connecticut home.
Under Immelt's leadership, the energy mammoth reportedly returned $143 billion to investors in dividends, and moved its headquarters to new space in Boston's Fort Point Channel and Innovation District.
He has led GE's India business, its equity business in Latin America and the GE Capital business for Argentina and Chile. The company's stock rose about 3.6 percent on Monday, closing at $28.94 per share. "He has broad experience across multiple businesses, cycles and geographies", Immelt said in the company statement. Shares climbed 5% in early trading Monday after the announcement about Immelt.
Flannery described the promotion as "the greatest honor" of his career and promised to lead GE into a new era.
Immelt replaced the legendary chief executive Jack Welch, who over saw a huge expansion of the company increasing the stock value 4000 percent according to CBS.
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Immelt also oversaw the restructuring of the GE Capital unit and shifted the conglomerate's focus from finance to manufacturing. He outlined Trian's thinking on how the industrial giant could achieve profit of as much as $2.33 a share in 2018 if it delivered on promised cost cuts, kept on its existing growth path and stabilized the oil and gas business. GE also said it would seek to link bonuses for senior managers to achieving those cost-cutting and profitability goals.
While GE credits Immelt with improving its financial performance and its focus, GE's stock price has trailed the market with him as CEO.
"John Flannery has a great background in global business, deal making and most recently in leading a turnaround in GE's $18 billion medical business", Welch said by email.
General Electric has also invested more heavily in new technologies, including a recent $1.65 billion acquisition of LM Wind Power, a Denmark-based manufacturer of rotor blades for wind turbines.
Kieran Murphy, who has been CEO of GE Healthcare's life-sciences unit, was named to replace Mr Flannery as president and CEO of the entire health division.
"No one's happy with the stock price now", Flannery said.