GE Gives Activist Trian a Seat on the Board -- Update
October 09 2017 - 10:17AM
Dow Jones News
By Thomas Gryta and David Benoit
General Electric Co. named activist investor Trian Fund
Management's co-founder Ed Garden to its board, the latest move by
new CEO John Flannery to change the direction of the struggling
industrial giant.
The move comes a week after GE's longtime leader, Jeff Immelt,
resigned from the company's board. Since taking over, Mr. Flannery
has been moving aggressively to revamp the conglomerate, replacing
its finance chief and two other senior leaders on Friday.
The new GE chief is under pressure to share his plans to cut
costs and boost profits at a company whose shares have fallen more
than 20% so far this year, missing out on a broad stock market
rally.
Trian first invested $2.5 billion in GE in 2015 in what was
portrayed as a collaborative partnership. But the investor has been
unhappy with GE's stock performance and cost-cutting efforts under
Mr. Immelt, who stepped down as CEO on Aug. 1.
For Trian, getting on GE's board comes a day before the largest
proxy battle in history as it wages a high-profile fight for its
co-founder Nelson Peltz to take a board seat at Procter &
Gamble Co.
"Over the last 90 days, I've met with numerous investors and I
value their input and views," Mr. Flannery said in a statement,
adding that he looks forward to working with Mr. Garden.
Mr. Garden, who had worked closely with Mr. Immelt and former
CFO Jeff Bornstein, is currently on the board of Bank of New York
Mellon and Praxair PLC.
"Like other GE shareholders, I am disappointed by the recent
performance of GE's stock," Mr. Garden said in his own statement.
"I continue to believe that GE represents an attractive long-term
investment opportunity with significant upside."
Trian will now have access to GE's board deliberations and
detailed financial results, just as the more-than-300,000-person
company is conducting a strategic review of its business portfolio
and deciding how to cut costs and spend its cash.
Some GE investors and analysts have questioned whether change
was needed at the board that supported Mr. Immelt in his 16-year
tenure. Some questioned whether the latest changes meant that GE's
longstanding dividend could be altered to free up cash.
"The dividend remains a top priority," said GE spokeswoman
Deirdre Latour. Mr. Flannery has said no change would come to the
payout, which the company puts at the top of its capital allocation
list.
Mr. Garden replaces former Deere & Co. CEO Robert Lane, who
is retiring from GE's board after 12 years. The board will have 18
members.
Cara Lombardi contributed to this article.
Write to Thomas Gryta at thomas.gryta@wsj.com and David Benoit
at david.benoit@wsj.com
(END) Dow Jones Newswires
October 09, 2017 10:02 ET (14:02 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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