General Electric parted ways with its CEO after struggles in its power sector and waning stock value placed the company in worse financial standing.
After only about a year on the job, John Flannery has been ousted from his position as chief executive of GE. The unanimous decision from the board of directors comes after GE has toiled with weak demand for its power plant turbines and the company’s shares began trading at their lowest levels since the Great Recession.
Much of the controversy surrounding Flannery’s performance, who had led the company since August 2017, revolved around GE’s 2015 acquisition of the energy business of France’s Alstom SA. The purchase, intended to bolster GE’s power sector, backfired as worldwide demand for power generation dropped. Additionally, flaws in its gas turbines forced an electric utility company to temporarily close down two of its power plants in Texas until GE was able to make repairs.
GE’s power sector struggles follow what has a been a long fall for the once-paramount company. An original member of the 1896-created Dow Jones Industrial Average, the company was removed from the prestigious index in June after a steady decrease in its stock value. (RELATED: EPA Officials Leak Details Of Mercury Rule Rollback)
The Boston-based company named Larry Culp — a member of GE’s board of directors — as the new CEO, effective immediately.
“GE remains a fundamentally strong company with great businesses and tremendous talent. It is a privilege to be asked to lead this iconic company. We will be working very hard in the coming weeks to drive superior execution, and we will move with urgency. We remain committed to strengthening the balance sheet including deleveraging,” Culp said in a statement. “I am excited to get to work.”
Investors expressed excitement for the leadership change. Upon the announcement, GE’s stock price jumped over 14 percent in premarket trading.
Correction: An earlier version of this article incorrectly stated that the faulty GE turbines in two Texas plants were wind turbines. The equipment in question are, in fact, gas turbines.
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