General Electric Co. has announced that the company’s CEO, Jeff Immelt, will be retiring. Immelt will be replaced by John Flannery. Flannery is currently in charge of GE’s healthcare and his appointment will mark an end to a multiple year succession plan that has been in the works for quite some time. Immelt, who is already 61, will still remain at the company as chairman until his official departure on December 31. GE’s stock rose 3.6% in premarket trading as soon as the news came out. Immelt has been in charge of the company for the last 15 years.
The 61-year-old took over from Jack Welch in 2001 and has been praised for steering the company through the difficult financial crisis that nearly crashed the wind turbines, locomotives, and jet engine markets globally. The CEO has also been credited for doing a comprehensive restructuring strategy on GE’s capital unit to move the company from finance towards manufacturing. His departure will mark the entry of Flannery who has worked at the company for nearly 30 years. The 55-year-old has also managed GE’s equity business in Latin American countries. Flannery has also led GE Capital in the same countries including Chile and Argentina. The upcoming CEO has been credited in leading a significant turnaround in GE’s healthcare.
Organic revenues for the business rose by 5% in 2016 with margins also increasing by a 100 point basis. GE confirmed that Flannery will be replaced by Kieran Murphy who serves as the CEO of GE healthcare and Life Sciences.
Jeff Immelt has been praised for trying to develop his own legacy at GE. Although he took over from Jack Welch who had done a remarkable job in streamlining GE, Immelt was seen as his own man and during his tenure, he had to navigate the company through major economic shocks. It was during Immelt’s tenure that the 9/11 attacks happened.
Immelt also navigated the company through the financial crisis and also recessionary quarters that occurred during the Obama administration. The retiring CEO also made a number of changes to the business. Immelt is viewed to have taken a different path from former CEO, Jack Welch, including reducing the involvement of GE in a number of businesses that were there during the Welch era. Immelt had been hailed for expanding GE’s operations overseas and the company’s expansion into Plastics, Appliances, and GE Capital. He also oversaw the sale of major GE businesses.
During his tenure, the company’s plastics business was sold to Saudi Arabian interests for nearly $11 billion. Immelt was also in charge during the sale of GE’s Appliance and NBC Universal. The two deals brought in $3.3 billion and $8 billion respectively. He also initiated GE’s exit from the banking market and while so far the move has not been completely finalized, it will be one of Immelt’s major legacies. As for Flannery who is taking over, he has definitely proved himself working with the company already. It will be interesting to see how his leadership style will compare to former CEOs.