General Electric Co. (NYSE: GE) has dismissed its chief financial officer and added a new board member. In a final move, new Chairman and CEO John Flannery might want to consider dumping some of the conglomerate’s longer-serving or weaker board members.
GE added Ed Garden of Trian Partners to the board. Trian has lobbied for changes at the fading American corporate institution. CFO Jeff Bornstein is out, and news of that has pressured GE stock. Vice Chairs Beth Comstock and John Rice are also gone.
GE still has board members who do not belong. Among them is Andrea Jung, who has been on the board since 1998 and is the CEO blamed with crippling Avon Products. Rochelle Lazarus has been on the board since 2000, which dates back to the start of former CEO Jeff Immelt’s tenure, and James Tisch has been a board member since 2010.
Whether these three board members stay will be an acknowledgement of whether GE really wants to overhaul its governance and break with its past.
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Some on Wall Street still want blood from GE. The company’s stock is down 26% this year to below $24. The news about Bornstein helped push it lower. Is the CFO really at the heart of GE’s operations problems, or just a convenient scapegoat? Flannery has eliminated corporate jets and executive cars, a strange attempt to make GE seem more frugal.
Among the things that are clear about the board’s past decisions is that they stuck with Immelt far too long. If the stock price is a fair proxy, it has dropped 4% in the past five years, while the S&P has staged an unprecedented rally that has driven it up 116%.
Will Flannery, Garden and most of the rest of the board keep on its weakest members? That will be a bigger break with the past than the elimination of corporate cars.
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