GE (GE) CEO Jeff Immelt voluntarily gave up a $12 million bonus. His salary was also frozen at $3.3 million.
While the announcement may play well with shareholders, the question is whether Immelt’s action is an admission that he managed the company poorly over the last year or a symbolic move to offset the resentment that the fall of GE’s stock has caused.
Immelt has been and will be criticized for keeping GE as a large conglomerate of unrelated businesses. NBCU, which has almost nothing in common with the rest of the firm has done fairly well.
Immelt has been slow in dumping some under-performing assets, particularly in the industrial segment of the firm. It is hard to blame him for the recession taking the wind out of the sails of GE’s health care and infrastructure operations. The company’s trouble in financial services may represent poor risk management, but that would put GE in the same club as a number of other firms including bank holding companies and brokerages.
What Immelt may be blamed for, and not unfairly, is that he continued to set expectations for the company at a relatively high level , even as the first waves of the economic downturn were beginning, in his conversations with the press and investors. Better to talk conservative and outperform than talk big and disappoint.
Douglas A. McIntyre