By Ted Mann
General Electric Co. invited activist investor Nelson Peltz to
address a gathering of its senior executives last summer, the
company said Monday, an unusual engagement between an establishment
company and a corporate agitator.
The speaking event which was attended by GE Chief Executive
Jeffrey Immelt brought an investor known for finding value by
breaking up complex corporate entities into contact with the top
executives of a company whose share price continues to lag
peers.
"Mr. Peltz was a guest speaker at a dinner for corporate
officers as part of our regular annual officers meetings," GE
spokesman Seth Martin said. GE currently has 192 senior leaders.
"We always have external speakers at these meetings. This was a
discussion about the markets broadly, not about GE."
The meeting was first reported by the Fox Business Network. Mr.
Peltz wasn't immediately available for comment.
Activist investors are increasingly vocal with public campaigns
advocating change at companies from Sotheby's and Abercrombie &
Fitch Co. to Dow Chemical Co. and PepsiCo Inc., which is currently
engaged in a battle with Mr. Peltz's Trian Fund Management LP.
Activists haven't publicly targeted GE which has a market
capitalization of over $250 billion. GE's size and complexity have
been seen as hurdles. And Mr. Immelt is actively repositioning the
company in ways to satisfy investors' concerns and that could
revive the company's languishing share price, which hasn't traded
above $30 since the financial crisis.
GE's shares are down 9.3% this year while the broader S&P
500 index is up 0.6%.
One reason for the share performance, analysts believe, is GE's
large finance arm which subjects the industrial giant to the risks
of the credit industry. Last week, the company took a major step
toward reducing its reliance on financial earnings, filing for a
first time share sales of 20% of its North American retail finance
operations, with the aim of spinning off the entire operation next
year.
Mr. Immelt says GE can reduce its share of earnings coming from
GE Capital, the finance arm, to 30% by the end of 2015, from nearly
half today.
He has also embarked on an aggressive cost cutting program to
reduce overhead and improve profit margins in his industrial
businesses. The company returned $18.2 billion last year to
shareholders in the form of dividends and share buybacks. GE
increased its dividend 16% in 2013, the sixth increase in four
years, according to its most recent proxy report.
Write to Ted Mann at ted.mann@wsj.com
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