Wednesday, September 19, 2007

GE's Immelt To Be Next (Democratic) President's Secretary of Commerce

Last week's Friday Wall Street Journal carried a page-one article extolling GE CEO Jeff Immelt's tackling of global warming with his firm's "ecoimagination" program. A program so important, it even has its own manager- Lorraine Bolsinger.

I won't go into details- you can find the article and read it. But suffice to say, Immelt's got a lot of unhappy power generation customers on his hands. Mostly coal-fired utilities and such.

Even within GE, many are angry at him for pushing to make ecological footprints of the company's businesses on a par with growth and profits.

Let me be just a wee bit cynical here, and suggest what is really going on.

Could Immelt be showcasing himself to be the next (Democratic) President's: Secretary of EPA, Commerce, or (gasp) Treasury?

Perhaps realizing he's already ruined GE in terms of long run growth prospects and lackluster under-performance during his current CEO tenure, he will go green. He can complain that "big business" just does not "get it."

Wouldn't a John Edwards or Hillary Clinton eat that up? Good cover, just like Bob Rubin was for Bill Clinton. A bona fide corporate chieftain joins the eco-camp and demands that business come to heel under the newly-green hobnail boot of the Federal government.

Thereby becoming highly useful cabinet material for a green Democratic President. Or even a moderate Republican.

By pretending to grapple with ecological issues at GE, involving customers, the EPA, talking about carbon caps and trading, etc., he actually benefits from failure to make much headway. He can cite his futile efforts as having given him depth and breadth of experience in the politics of corporate pollution and eco-business, while aspiring to go into 'public service,' where, thanks to his travails at GE, he will now realize the real source of power is to effect corporate eco-change.

Failing to nab the EPA job, which would be a power portfolio in a Democratic administration, Immelt could easily try for Commerce or Treasury, citing Carlos Gutierrez or John Snow as recent precedents.

With his tens of millions of dollars of cash compensation from GE, and much more in deferred compensation, Immelt is well-positioned to leave GE considerably wealthier, personally, than he has made his shareholders. No need for further headaches trying to lift GE out of the dumpster of long term, consistent total return under-performance. Just declare victory, or frustrating eco-defeat, and head off to Washington.

In the wake of Immelt's departure, GE will perhaps fall to a group of private equity firms, newly-emboldened by the Fed's newly-cheap funds, and be split up into its constituent parts. Which, as I have argued in prior posts involving GE, would be a natural and beneficial end to the company, as it is currently structured, in terms of shareholder returns.

Admittedly, it's a wild card scenario. But if something like this happens, you read it here first.

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