At GE, the pullback started in 2011, when then-Chief Executive Officer Jeff Immelt announced that the pension would be closed to new employees. Cuts to the supplemental health benefits followed. Meanwhile, Immelt began ramping up GE’s buybacks, spending $23 billion in 2015 and $22 billion in 2016, and ignoring pension obligations.
‘Horrible Leadership’
GE “is a monumental example of bad governance and horrible leadership,” Ken Langone, a former director of the company said on CNBC Wednesday. “Do you realize the number of people that have retired from GE that have seen most of their net worth wiped out?”
For 72-year-old Garland Steele, who worked 28 years at GE, the impact of the reduced benefit is one thing. He and his wife, facing at least $7,000 more in medical costs every year, can manage by cutting back on things like traveling and eating out.
As for what he described as GE’s betrayal? That’s more difficult. His generation, Steele said, was “very loyal” to the 126-year-old company.
“We had a contract,” he said. “It used to be if you had a contract, people stuck to it, and these people didn’t.”
Retirees Thought GE Would Take Care of Them Forever. It Didn’t
By ----THEN VS. NOW
Jack Welch, the CEO and chairman of General Electric, is credited with growing GE's value by 4,000 percent between 1981 and 2001. His unbridled success fueled his standing as a business guru and innovator. Welch’s optimism, now seen in hindsight, contrasts with analysts’ remarks now on the company’s free fall.
What Welch said then
“Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion.”
“Common mission trap for companies: Trying to be all things to all people at all times.”
“If the rate of change on the outside exceeds the rate of change on the inside, the end is near.”
What market analysts say now
"The recent news (of a potential breakup) helps confirm the fact that GE is too complex in its current form. The conglomerate structure incentivizes wasteful and duplicative spending, while stifling the true earnings power of the underlying businesses." — Scott Davis of Melius Research as quoted by Investor’s Business Daily, Jan. 2018
“There is no vision here, no view of what the people at GE are working to build.” — John M. Mason, founder/CEO of New Finance LLC, on new CEO John Flannery’s comment that getting dropped from the Dow won’t “define us today or in the future.” June 2018.
GE has been "brushing things under the rug and leveraging aggressive accounting" for several decades…One could infer the prior management basically did this to drive the adjusted EPS (earnings per share) up as much as possible to pay themselves as much as possible." — Deutsche Bank’s John Inch, February 2018 to CNBC.
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