Immelt Departing GE After 16 Years Of Change; Flannery To Lead

Jeffrey R. Immelt, who has transformed General Electric back into an industrial enterprise over his 13-year tenure as CEO, is turning over its day-to-day reins on Aug. 1 to John Flannery, a 30-year veteran of the company who has served in numerous posts overseas and has been running the company’s healthcare business since 2014. 

“[Immelt] sharply pared down the financial services business that [former CEO Jack] Welch had built up and went on a spending spree to acquire businesses in the power and oil and gas sectors. During his tenure, Immelt also disposed of GE's appliance unit and the NBC television business,” the Associated Press reports.

“[Flannery] is the quintessential company man, posits Julie Creswell in a profile for the New York Times.



“Flannery said he was going to ‘review all aspects of the business,’ with a particular focus on the cost structure. For the next few months, he will be traveling the globe, visiting businesses, customers and investors. Asked whether those decisions would be about the portfolio or the financial outlook, he said, ‘I think you should expect both,’” writes Creswell, who interviewed him.

Immelt, 61, will remain as chairman until the end of the year when Flannery, 55, will also assume that role. The former “succeeded in repositioning the company as a producer of large industrial products but failed to fully revive its lagging stock price,” according to the Associated Press, and therein apparently lies the transition.

The “Tweet This” line accompanying Christopher Helman’s story for Forbes: “It was ‘absolutely the right time to do it,’ Immelt said. Investors might wish he had done it sooner.”

“The stock was worth a bit less than $40 on Immelt's first day in 2001, with the U.S. in the middle of a recession. The stock briefly rose above $40 in 2007, just ahead of the economic crisis. It sank as low as $6.66 in March 2009 in the depth of the crisis, and closed at $27.94 a share Friday,” according to the AP.

Yesterday it surged 3.58% to close at $28.94 on the news.

“Nelson Peltz and his Trian Fund Management was an especially vociferous critic who has pushed GE in recent years to do more to simplify and streamline its industrial businesses. Immelt was deferential to GE’s shareholders in his comments during a video conference today,” Forbes’ Helman writes.

“‘I always knew my name wasn’t over the door. You owned the company,’ he said, looking almost teary-eyed. A Trian spokeswoman had no comment on GE today. The fund in the past has lauded Immelt's efforts to overhaul GE, but has insisted there is much more to be done.”

Immelt had a “legendary” act to follow in Welch, observes Barry Ritholtz for Bloomberg View. He then compares the performance of the two, based largely on the financials and the bull market Welch primarily was operating in versus the largely bear market that confronted Immelt. 

“Welch had lucky timing, Immelt didn’t. The accounting shenanigans at GE Capital under Welch, followed by the financial credit crisis, all but guaranteed that Immelt would come up short. Despite this, many still consider Welch the gold standard for CEOs,” Ritholtz writes.

“I am not suggesting that Welch was an awful CEO or that Immelt was great. Rather, in reconsidering the two CEOS in light of all the facts, it seems clear that one was given more credit than is due while the other got less,” he concludes.

Looking toward the future, “despite his financial background and long tenure at GE, Mr. Flannery has shown a willingness to break ranks,” observe Joann S. Lublin and Kate Linebaugh for the Wall Street Journal.

“At GE’s annual management retreat in Boca Raton, Fla., where the top leaders of the company meet and discuss the business, Mr. Flannery stunned the crowd by abandoning the standard PowerPoint in his 2015 presentation, said people familiar with the matter.” 

“‘That takes guts because there are 600 people in the room,’ one of the people said,” Lublin and Linebaugh continue.

Not only that, “General Electric’s incoming CEO has at least one thing in common with New Englanders, he’s a big Red Sox fan,” writes Christina Prignano for the Boston Globe in reporting that he will be relocating to the company’s Boston headquarters from Chicago. “In fact, John Flannery recently went as far as to name his new puppy after Mookie Betts.”


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