General Electric Co. said longtime leader Jeff Immelt will step aside as chief executive on Aug. 1, ending a 16-year run atop the conglomerate that he reshaped after the financial crisis but has struggled recently to boost profit.
GE said Monday that Mr. Immelt will be replaced by the head of the company's health care business, John Flannery, and remain as chairman of the board until Dec. 31. Mr. Flannery, 55 years old, is a 30-year veteran of GE who spent much of his career in the company's once sprawling financial business.
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Mr. Immelt will stay on as chairman of the board through the end of his retirement from the company on Dec. 31. Mr. Flannery, 55, is a 12-year veteran of GE.
GE shares, which had fallen 12% year to date, rose 3.7% to $28.96 in premarket trading.
The change comes as GE has been under pressure by activist investor Trian Fund Management to slash costs and boost profits in the company's core industrial business. Mr. Immelt recently laid out two-year cost saving target and revamped GE's executive bonus program under pressure by Trian. Some Wall Street analysts had recently openly wondered about when Mr. Immelt might retire, but the CEO gave no sign he was ready to step aside.
Mr. Immelt, who turned 61 earlier this year, has steered GE through the financial crisis and divested the bulk of the company's once-massive lending business. While the share price is little changed from when he took over in 2001, the conglomerate has refocused on its industrial businesses, shedding low-margin units like home appliances and striking a big oil-and-gas deal last fall.
GE said the leadership change has been in the works for years, with the board deciding on the timing in 2013 and voting Mr. Flannery CEO Friday. Last month, Mr. Immelt told analysts the board had been working on succession plans but didn't indicate a decision was imminent.
Mr. Flannery is a veteran of the GE Capital business, served as the head of GE's India business and was the former leader of its deals team. On Mr. Flannery's watch, GE spun off its consumer credit business, Synchrony Financial, sold its appliance business, and purchased of the energy business of Alstom SA.
He stepped in to lead the health-care business in 2014 when the unit was struggling and some analysts called for GE to spin it off or sell it. Instead, Mr. Flannery and GE have doubled down. The unit, which makes imaging and diagnostic equipment, has been expanding into life sciences. GE Healthcare's revenue rose to $18.29 billion in 2016, back to levels it sustained in the beginning of the decade, while increasing operating profit.
Mr. Flannery was one of several business units heads that were seen as potential successors. Mr. Immelt had told people close to him for years that he didn't want to repeat the divisive and protracted succession process that put him in the top job when he took over from Mr. Welch. Instead, he wanted his eventual departure to be quick and seamless.
Chief Financial Officer Jeffrey Bornstein, another potential CEO successor, will remain in that role and become vice chairman, GE said.
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(END) Dow Jones Newswires
June 12, 2017 07:44 ET (11:44 GMT)