GE's CEO Immelt's Arrogance in CNBC Interview

Here is a link to a video clip of yesterday's CNBC interview by Erin Burnett of her boss, GE CEO Jeff Immelt. While it is the fourth part of a longer interview played on the network throughout Friday, the juicy parts of this segment begin about midway through the clip.

Let me state what I feel is the problem with Immelt's attitude in the interview segment. As I wrote here, last March, Immelt has already been paid roughly $15MM in cash salary and bonuses. This does not even counting his deferred and retirement compensation, which, according to Forbes, as of 2005, was already totaling some $53MM. In the latter part of this interview segment, he casually dismisses discussion of his pay, insisting he is not in it for the money. Yet Immelt has failed to even keep GE's total return on a par with the S&P500 Index during his 5+ years at the helm of the firm. Taken in total, the interview depicts him as effectively ignoring his lavish overcompensation, and his underperformance, and, instead, focusing on how much fun he's having just meeting folks, facilitating the work of GE staff everywhere, and having a swell time.

Well, of course he's not in it for the money. Not now. I guarantee you, he was sure fixated on the money six years ago, when he took over the reins from Jack Welch.

How arrogant for Immelt to have failed to even keep pace with the S&P500 Index for over five years, as depicted in the Yahoo-sourced chart on the left (please click on the chart to view an enlarged version), and be lavishly compensated. Then airily wave off any thoughts that he should be criticized for his pay level.



To see GE's stock price over Immelt's entire tenure, here's a longer-term view of GE and the S&P500. As can be seen from late 2001 onward, the index ended the period up, while GE is down. Need one say more?

I won't try to quote his alleged motivations for running GE- you can hear them yourself in the video clip. Suffice to say, they are all of the motherhood and apple-pie variety. It's sickening. Having grabbed the gold, if not platinum, ring, Immelt now deflects any suggestion that he's overpaid. In fact, when Erin Burnett brings the subject up, Immelt sort of bridled at 'defending' or 'justifying' his pay, saying something like,

'If I have to spend a third of my time justifying my compensation, I'll quit and go do something else.'

That's not the exact quote, but it's close. And this, on the heels of his recounting what a merry, fun-loving, joy-producing time he's having as he reduces the value of GE's shareholder's equity.

On the subject of Bob Nardelli's exit package from Home Depot, Immelt wisely kept silent. You can see where he's going with that. If he says Nardelli deserves all of the money, Immelt looks like the arrogant, insensitive, greedy CEO that he is. If, on the other hand, he says Nardelli should give some of the package back, he needs to offer a reason. And then he's on record with the comment, would definitely be used against him, should he finally be shown the door by GE's board for continual failure to earn shareholders the market rate of total return over six years.

Honestly, I think Immelt is preparing for a quick, painless exit. It's almost as if he is saying,

"C'mon, I dare you. Pester me. So I can look noble and harried, and then get the hell out of Dodge while the gettin's good."

Sort of the B'rer Rabbit approach. Please don't hound me into quitting, 'cause I will. I really will. I'll take my total compensation that's north of $50MM since I became CEO and skulk off.

Puuullllleezzzzzz!!!!

Such drama. He's probably secretly envious of Nardelli. That stiff got off lucky. He was handed a headache known as Home Depot, screwed it up some more, and got paid to leave. Poor Jeff has to stay and try to clean up his mess! His old pal Bobby is out on the playground, being looked over by the Private Equity Gang for possible membership.

On this point, Burnett coyly hinted that maybe Jeff could duck the entire Congressional witch hunt on executive compensation that is coming, and simply join the private equity world, where, she solemnly intoned, he'd probably be paid hundreds of millions of dollars. Immelt could barely contain his grin at that point. But he pretended not to know or care what he'd be "worth." Question is, though, given Nardelli's and Immelt's failures to even match the S&P as CEOs, who'd actually pay them to underperform in the private equity world?

I suspect the only way those two will actually get jobs in that sector is to pay to play. You know, put their sizable compensation kitties up as a stake, to be allowed into any deals. Nobody has actually saying they could do better elsewhere than their miserable records running publicly-held companies.

Meanwhile, Jeff has to try to get GE running in some semblance of mediocrity, if not better. Sadly, given how forgiving and supine the company's board has been, mediocrity would probably be sufficient for that group.

It is truly a sad day for publicly-held firms. No wonder private equity is hunting with such abandon. With guys like Immelt sporting such an arrogant attitude while mismanaging GE, can you blame the private equity guys for offering low-ball premiums to victimized shareholders? Not to mention the media, especially Immelt's own captive network, CNBC, lobbing softballs at him, and joining him in denial about how he's overpaid for failing to deliver even average market value to his shareholders for over more than half a decade now.