Why is GE’s Jeff Immelt advising anyone on jobs?
Once again the President proves he is out of touch with market economics by making what looks like more of a political decision than a sound business decision when rescuing the economy. Anyone who has been holding GE stock over the last decade is not very fond of a CEO who has helped drive their equity into a ditch. And yet … Immelt is the President’s choice for a jobs advisory panel? We can do better … and the young President should.
The President announced today that he has named GE CEO Jeff Immelt to his new economic advisory panel.
Signaling a shift to a new phase of the administration’s response to the nation’s economic woes, President Barack Obama will sign an executive order Friday establishing a new Council on Jobs and Competitiveness that will be led by General Electric CEO Jeffrey Immelt. The signing coincides with a visit to a GE branch in Schenectady, N.Y., the birthplace of the company.
The new panel will replace the President’s Economic Recovery Advisory Board, and will have a new mission: to find “new ways to promote growth by investing in American business to encourage hiring, to educate and train our workers to compete globally, and to attract the best jobs and businesses to the United States,” according to the White House.
But Erick Erickson gets it right in questioning this as a good move.
Since Mr. Immelt took over GE, we’ve seen its financial business bailed out by the federal government, its total number of workers decline, and its stock underperform the Dow and S&P 500 by 60%.
In other words, Mr. Obama wants to put in charge of job creation a man who has done his level best to contribute to high unemployment of the middle class, while subsidizing failed leftwing pundits at MSNBC.
Erick is actually going easy on the GE CEO. While the shareholders have gotten the shaft … Immelt has gotten the keys to the kingdon.
“The stock, which was $40 and change when Immelt took over, has collapsed to around $16. Even if you include dividends, investors are still down about 40%. In real post-inflation terms, stockholders have lost about half their money”, the article said.
Despite such a loss in value, Immelt has been paid about $90 million in salary, cash and pension benefits. This amount does not include the $5.8 million cash bonus he was “awarded” in 2009, or the bonus he skipped in 2008. Regardless Immelt still went home with $3.3 million in base salary during fiscal 2009 and total compensation of $9.9 million. For the last three years, Immelt has earned $33.5 million in compensation, or an average of $11.16 million per year.
UPDATE: The share price of $16 dollars a share was at the writing of that article. It is today about $19.77 a share.
Now, we’re not opposed ever to CEO’s making a good salary, but when shareholder value declines, and a company needs to turn to a bailout to survive (not to mention Government loans for its struggling capital arm) when future prospects for the company are dim given the company embarking on little more than it’s green agenda .. Immelt is hardly the man I would turn to to advise me on economic growth.
As Forbes noted in December … this is the same guy who just “narrowly avoided bankruptcy” for this historic company.
One fellow who isn’t on anybody’s list for honoring is Jeff Immelt at General Electric. His predecessor, Jack Welch, frequently was. Given that
- GE is the oldest company on the DJIA (Dow Jones Industrial Average)
- GE is one of the most widely held of all corporations
- GE is one of the largest American corporations in revenues and employees
- GE is in a plethora of businesses, globally
- Mr. Immelt is paid several million dollars per year to lead GE
it is worthwhile to think about why he’s not an honoree – whether he should be – and if not, whether he should keep his job!
Since Immelt took the helm at GE, the company’s value has actually declined. He’s not likely to win any awards with that performance. Amidst the financial crisis, he had to make a very sweet deal with Berkshire Hathaway to grab some cash (in exchange for preferred shares) in order to keep GE out of bankruptcy court. That deal has enriched Mr. Buffett’s company at the expense of GE investors. GE has exited several businesses, such as its current effort to unload NBC via a deal with Comcast, but it has not created (or bought) a single exciting, noteworthy growth business! Under Mr. Immelt, GE has become a smaller, lower growth company that narrowly diverted bankruptcy. That isn’t exactly a ringing endorsement for honors!
Immelt has taken GE on the wrong track, as both value and employees have declined and now he’s advising the President on economic growth.
Quick … what do Immelt and Treasury Secretary Tim Geithner have in common? Hmmm? Have no fear … the nation is in the best of hands.
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I was hoping to see your pick, Jim. As for Mr. Welch, one might remember that he was called "neutron Jack", because he fired thousands of employees (a great way to generate jobs). And he got filthy rich in the process, like many other CEOs who improved the company's bottom line by firing employees.
So Barry's been focused like a laser beam on jobs for more than a year now, and this is what we get? The media would be pissing nails if this were Bush; but the Messiah works in mysterious ways, so the media suspends judgment and they wait like parents at the 2nd grade play for their little moron to spit out the right lines and save the show.
Let's see, GM, GE, Goldman Sachs – why do I think of Daimler Benz, Siermens, et al in Germany in the 1930s? Was Jonah Goldberg was right in calling it Liberal Fascism? Just askin'.
Besides the fact that it might be ludicrous for Obama to ask Immelt to head this Council when he has run his own company into the ground these past few years, I am, once again, amazed at the open hypocrisy of this administration in having an individual head up a government advisory board whose company is benefiting from government contracts. GE is receiving “green industry” contracts as well as those for producing technology for electronic medical records under Obamacare. As a professional in the private sector, I would be cited for ethical violations if I accepted a position on an organization’s Board of Directors as I was also accepting referrals from this organization to my business. It is an outright conflict of interest.
And while we're on the subject of GE and what it runs …. OLBY IS GONE FROM (MS)NBC. One of the happier days of my life. All it took was an hour of GE having given up NBC to Comcast. I think it just goes to show further that Immelt isn't as great a CEO as some might think, even in the "everyday decisions" department.
PV: you're right on the money.
Why does the phrase "the inmates are running the asylum" come to mind?
(OkieJim…I too was so happy to hear about Keith Olbermann. I try and watch a mix of commentators to keep myself "fair and balanced", but KO, CM and Rachel Maddow are 3 that I just can't tolerate.)
Don't forget, GE announced the closing of the last remaining flourescent light bulb factory in this country late last year. Light bulb manufacturing has now moved almost exclusively to China.
And, GE is still insisting that the government purchase a second engine (made by GE, of course) for the Pentagon's Joint Strike Fighter jet (to the tune of billions) that the Pentagon has repeatedly said it doesn't need and doesn't want. I wonder if Imult will "create jobs" by forcing the government to purchase said engines.
A case of "You scratch my back, I'll scratch yours."
Political incest at its best!
GE moved its light bulb manufacturing to China for the usual reason: lower labor costs that bring more money to the bottom line which is good for GE shareholders like me.
sigh…. No thin veils anymore. Not really sure this changes anything. Just sort of surprised that they make some kind of formal announcement. Must be that Immelt wants to get into politics some day.
Looking for optimism? Not here!