General Electric chief set to retire

Immelt will be replaced by John Flannery, president and chief executive of GE Healthcare in a shift that comes as the conglomerate struggles to increase profitability. 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 nearly two years ago.

The shift could augur bigger changes at the conglomerate, with Flannery saying in a video broadcast on Facebook that he would “take a fresh look at the company” with a “sense of urgency” before presenting recommendations later this year.

He said that while “no one’s happy with the stock price now,” the health care sector in particular offered “so much long term growth,” adding that GE was “just scratching the surface of what we can do in that business.”

Flannery, 55, will become chief executive of GE on Aug. 1. Immelt, 61, will remain as chairman until he retires on Dec. 31. Flannery will then add the role of chairman Jan. 1, 2018.

GE also said that Jeff Bornstein, its chief financial officer, would be promoted to vice chairman. The company said its board had overseen a succession planning process since 2011.

“During this time of dynamic global markets and relentless focus on technology and operational excellence, there is no better person to lead GE than John Flannery,”Jack Brennan, the company’s lead independent director, said in a news release. “He brings unique experience and a strong skill set to the job.”

Like Immelt, Flannery is a veteran of GE, beginning at GE Capital in 1987 with a focus on evaluating risk for leveraged buyouts. He has held other posts across the wider conglomerate, running its corporate restructuring and workout group, leading its GE Equity business and working with GE Capital in Latin America and Asia.

In 2013, he took over business development at the corporate level, where he was involved in GE’s acquisition of Alstom, the shrinking of GE Capital and the sale of GE Appliances. Flannery joined GE Healthcare in 2014, overseeing a turnaround of that business, the company said.

“John is the right person to lead GE today. He has broad experience across multiple businesses, cycles and geographies,” Immelt said in the company statement. “He has a track record of success and led one of our most essential businesses.”

The announcement caps a long career for Immelt, who joined the company in 1982 and who has navigated several crises during his tenure as GE’s top executive.

He replaced Jack Welch, GE’s legendary chairman and chief executive, just days before the Sept. 11, 2001, terrorist attacks in the United States.

Immelt later steered GEthrough the global financial crisis and oversaw the sale of the bulk of its sprawling finance arm, GE Capital. Though focused on its industrial businesses, GE has retained some financing operations related directly to those businesses.

Under Welch, GE aggressively expanded in the finance business through its GE Capital arm, becoming one of the largest lenders in the United States and regularly generating strong profits.

But, that business — and the regulatory demands that came with it — became much less attractive and a riskier bet after the financial crisis in 2008.

GE Capital was called a “systemically important financial institution” in the years that followed — the official name for a lender that the government considers too big to fail. The designation cut into potential profits by imposing additional restrictions and requirements upon its operations.

Since announcing plans to sell off the bulk of that business two years ago, GE has sold about $200 billion of GE Capital noncore businesses, including a number of its finance operations in Europe.

The systemically important designation was removed from GE Capital last year.

The wider company has come under pressure in recent years since, since Peltz’s Trian took a 1 percent stake in GE in 2015. The investment was worth about $2.5 billion, with Peltz saying at the time that the company’s stock was “undervalued and underappreciated” and could be transformed to “allow its world-class industrial businesses to drive attractive shareholder returns.”

But, GE’s stock price slumped late last year and Trian said that it “intensified its dialogue” in March with GE’s senior management “regarding new initiatives to help ensure that GE can meet its financial commitments.”

After discussions with Trian, GE said it would seek to reduce costs by more than $2 billion in its industrial arm by the end of 2018 and improve profit. GE also said it would seek to link bonuses for senior managers to achieving those cost-cutting and profitability goals.

Still, during Immelt’s tenure, the company has not shied away from making headline-grabbing moves.

Three years ago, it made a $13.5 billion deal to take over the power business of the French giant Alstom.

The move was part of efforts to extend GE’s reach in providing electrical utilities with generating equipment and power-grid distribution systems. GE and competitors like Siemens see big opportunities in that sector as the world moves away from coal and toward cleaner natural gas, solar power and wind energy.

And in October, GE agreed to merge its oil and gas division with another services provider, Baker Hughes, as it sought to create an entity that could profit from a recovery in oil prices.

The 125-year-old GE has also sought inroads in software, quietly opening a software center in California in 2011. Immelt had said he wanted GE to be a “top 10 software company” by 2020.