Published: Fri, June 16, 2017
Money | By Armando Alvarado

GE's stock is jumping on news CEO Jeff Immelt is retiring

GE CEO Jeffrey Immelt Monday said he will retire in August and will be replaced by the current president and CEO of GE Healthcare, John Flannery.

General Electric announced a leadership shakeup on Monday as it faces scrutiny after a corporate makeover executed by outgoing chief Jeff Immelt in the wake of the 2008 financial crisis failed to ignite strong growth.

GE announced today that Jeff Immelt will step down as CEO of General Electric. Others, including Honeywell International and Caterpillar, also have announced new leaders over the past year as traditional industrial companies seek new chiefs to help them adapt to an increasingly digital economy. Overall, GE's stock has dropped 30 percent since Immelt took over for Jack Welch in 2001, making it the worst performer in the Dow Jones Industrial Average during that period, according to MarketWatch.

GE will press ahead with cutting overhead costs by US$2 billion by 2019 and boosting profits to US$2 a share next year. "He has a track record of success and led one of our most essential businesses", Mr. Immelt said in a statement.

Mr. Bornstein will remain chief financial officer and become vice chairman, GE said. The shares have fallen about 30 percent since Immelt took over as he faced criticism for cutting the dividend in 2009 and paying too much for some acquisitions.

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Working within a number of divisions worldwide, Flannery's expertise and focus has made him a prime candidate for the role, in addition to his long-standing commitment to the business and drive it in the right direction and improve company operations. Just like Goldman Sachs and Bank of America, it took a lot of time to stabilize the goldmine and restore the confidence of tired customers and investors.

He also will receive at least $US20.7 million from early vesting of restricted stock and pro-rated portions of his target performance shares, based on GE's closing price Friday, as well as $US9.86 million from deferred compensation plans.

The company's announcement comes amid recent pressure from the activist investor Nelson Peltz's Trian Fund Management, which had pushed GE to cut costs and change up the executive compensation bonus plan. Mr. Flannery will take over as chairman of the board next year. As of 2016, the company had invested $20 billion in clean technology innovation and solutions that returned more than $270 billion of revenue, Ecomagination Global Executive Director Deb Frodl told GTM's Julia Pyper. The new CEO may be more willing to pursue a much-needed breakup of the company, Davis said.

Flannery's experience includes work at GE Capital, evaluating risks for leveraged buy-outs, and leading restructuring efforts.

Brennan added, "With the GE Capital pivot behind us and the company's transition to Boston complete, this is the ideal time for change". Two years after that he was tapped to lead business development at GE Corporate, where he focused on capital allocation for the company and led the acquisition of Alstom, the largest industrial acquisition in the company's history.

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