GE CEO Vows to 'Fix the Business' After Difficult Year -- 2nd Update
April 25 2018 - 12:07PM
Dow Jones News
By Thomas Gryta
IMPERIAL, PA. -- General Electric Co. Chief Executive John
Flannery told shareholders he was "keenly aware" of the pain caused
by a dividend cut and the troubles of the past year, and said the
best way to make amends was to "fix the business."
GE shareholders gathered Wednesday at a company facility here
and elected a smaller, revamped board after a difficult year at the
industrial conglomerate. Several investors stood up to voice their
concerns about the company's direction and leadership. The share
price has tumbled more than 50% to $14.
"2017 has been immensely disappointing to those of us on the
board, the GE leadership team, employees across the business," said
CEO John Flannery, a company veteran who took the reins in August
and is working to turn around the maker of everything from jet
engines to lightbulbs.
"I strongly feel we have very very good businesses that need to
be the center of gravity of the company going forward," Mr.
Flannery told the crowd. "It is a lot of change, change is not easy
in any organization...the company is going to come out
stronger."
A year ago, the company was worth more than twice its current
value and former CEO Jeff Immelt was pushing GE as a "digital
industrial" company. Now, Mr. Flannery is selling assets and
considering new structures for the company, including breaking
apart its major divisions.
Some shareholders used the gathering to express their
frustration. Several unions and a group of retiree advocates
protested outside, including workers from the company's Erie, Pa.,
locomotive plant and other operations in the Northeast.
GE retiree Bill Freeda spoke at the meeting about "promises
broken to tens of million shareholders and retirees." He blamed the
company's issues on Mr. Immelt, who retired last summer after 16
years as CEO, and the board of directors. He called for an internal
investigation for wrongdoing. He referenced the use of a spare
backup plane for the CEO, which the Journal revealed last year.
Mr. Flannery said the board takes such issues seriously and
would investigate any evidence of wrongdoing. "It is important for
us to distinguish between performance outcomes and misconduct," he
said.
Retirees also voiced objections to trimmed benefits and lost
savings.
"You have a responsibility to the company but you have a
responsibility to what made this company," said GE retiree Ron
Flowers. "I understand there was some bad decisions. It wasn't on
locomotives. We are still going strong."
As part of its strategic review, GE is preparing for an initial
public offering or spinoff of its century old transportation unit,
the Journal has reported. The unit manufacturers freight
locomotives.
GE holds it shareholder meeting in a different location each
year and this year's is in a 125,000-square-foot site off a highway
in a recently built industrial park 3 miles from Pittsburgh's
airport.
The company setup an overflow tent outside for attendees but
ultimately didn't need it as about 225 shareholders entered the
meeting. About 450 had registered to attend.
The property is on the site of a former coal mine and now is
home to GE's additive manufacturing business, which is essentially
3-D printing with high-strength metal. The division is part of the
company's Aviation unit.
Despite the media circus -- with multiple television crews
broadcasting live from outside -- there weren't any major issues on
the agenda. The most notable was the reauthorizing of KPMG as the
auditor, continuing a 109-year streak as the company is facing
accounting probes from federal regulators. Two big proxy advisory
firms had recommended voting against the ratification of KPMG, but
shareholders voted to support it.
Write to Thomas Gryta at thomas.gryta@wsj.com
(END) Dow Jones Newswires
April 25, 2018 11:52 ET (15:52 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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