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General Electric (GE) has announced that Jeff Immelt will retire from the US industrial giant after 16 years as chairman and chief executive.

Mr Immelt will leave on 31 December and will be replaced by John Flannery.

In keeping with the company's tradition, Mr Flannery has been promoted from within GE where he was most recently in charge of healthcare.

Speculation about Mr Immelt's future had grown recently following reports of a clash with a major investor.

Trian Fund Management had raised concerns with GE about the company missing financial targets over a number of quarters.

GE has agreed to cut $2bn worth of costs and to align executive bonuses with cuts and profit goals.

Documents filed earlier this year showed that Mr Immelt's remuneration had fallen as a result of missing targets.

He was paid a total $27.5m for 2015, down 35% from the previous year's total of $32.9m.

Mr Flannery, 55, who described Mr Immelt as "one of the greatest business leaders of our time", has been with GE since 1987 and has worked all over the world including India and Argentina.

GE said the leadership announcements were the result of a succession plan that has been run by the GE board of directors since 2011.

In addition, chief financial officer Jeff Bornstein has been promoted to vice chairman of GE.