The news many have expected to come from General Electric (GE 27.94) for some time, and which some critics have vociferously called for, was announced earlier today. Specifically, the company has named a new CEO to replace Jeff Immelt, who took over as CEO in 2001 and will be retiring from the company on December 31, 2017.
Shares of GE, which are down 11.6% in 2017, are trading 3.2% higher in pre-market action.
The stock price, frankly, has been the albatross around Mr. Immelt's neck. When he officially took over as CEO on September 7, 2001 (just four days before 9/11), GE shares were trading just shy of $40.00. Today, they are trading below $30.00.
GE's stock suffered a heavy hit in the wake of 9/11, but it was the financial crisis that really sent the stock price reeling, knocking it under $6.00 per share in March 2009. It has been a slow, arduous climb ever since that hasn't been helped by the crash in oil prices either.
During his time as CEO, Mr. Immelt has led a major transformation of the company, shedding its financial operations and legacy businesses like GE Appliances, and orienting General Electric around a digital industrial portfolio tied to the power, aviation, transportation, healthcare, and oil and gas markets.
It hasn't been an easy process and shareholders have grown frustrated that the promises of a modern operational structure have been slow to deliver stronger growth. Even so, GE has managed to return $143 billion to investors in dividends during Mr. Immelt's time as CEO, which the press release notes is more than in the entire prior history of the company.
The company appears well situated to capitalize on future growth opportunities, and if the stronger growth materializes, Mr. Immelt's successor(s) will likely get the credit that Mr. Immelt would arguably be due.
In some respects, then, this is an opportune time for a new CEO to take over, and one will effective August 1, 2017. Enter John Flannery, current President and CEO of GE Healthcare, who has been named to succeed Mr. Immelt. Mr. Flannery will subsequently become Chairman of the Board effective January 1, 2018, after Mr. Immelt retires from the company at the end of the year.
This succession plan, the company said, is part of a transition process that was set in 2011. Mr. Flannery has some excellent credentials and a strong track record of leadership at GE, much like Jeff Immelt did when he was tapped in 2000 to succeed legendary CEO Jack Welch.
The company Mr. Flannery will be leading is much different than the one Mr. Immelt took over in 2001. Investors seem to be enthused by the appointment and the prospect of better days ahead for GE and especially its stock price.