When your company is one of the only stocks weighing down the Dow Jones Industrial Average -- with a $68 billion loss of market value this year -- it's time to clean house. Why procrastinate?
General Electric Co. bookended last week with news of a leadership shakeup. First, it said Jeffrey Immelt was retiring as chairman about three months ahead of schedule (he had already turned over his CEO duties to John Flannery in August). That news was followed by an announcement late Friday that CFO Jeffrey Bornstein is also leaving, as are two vice chairs, Beth Comstock and John Rice.
Jamie Miller, the head of GE's locomotive business, will step into Bornstein's role, creating more of a clean slate at the top for Flannery. The new CEO is tasked with trying to turn around an iconic company whose lagging performance has lured the attention of activist investor Nelson Peltz's Trian Fund Management LP.
GE has become the definition of a conglomerate discount. Its forward price-earnings ratio of about 15 as of Friday's close is lower than 71 percent of the S&P 500. Flannery is tasked with wringing out $2 billion of costs by the end of next year.
Also, apparently GE has a thing for J names, but kudos for elevating a woman (Miller) to the C-Suite. She ran one of GE's most profitable businesses, even if it was a small contributor to overall revenue. Let's see what this leadership refresh can do.
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