Yesterday, Jeff Immelt, the 16-year CEO of GE was given his walking papers as the conglomerate has underperformed during his entire tenure. An insider, John Flannery, a 30 year GE veteran, will take the helm and will likely reverse course on Immelt’s agenda.
Further prompting the GE Board to make the change was pressure from activist investor Tiran Fund Management, who pressed Immelt to slash costs and boost profits, prompting him to develop a two year cost savings program and retooling of the Company’s bonus program. This playbook is so familiar. A CEO long overdue to step down and let fresh blood ignite change, comes under pressure from activists, makes changes, but usually too little too late for a behemoth like GE.
So where was the Board? Yet again, Directors are asleep at the switch, and only deal with executive succession when pressed by outside forces. Of course the losers are shareholders, not Jeff Immelt who was paid $21.3 million in 2016 (a 35% decline…really!), and will pocket a $211 million retirement check.
