GE CEO Jeff Immelt's 8 Year "On The Job Training"

Yesterday's Wall Street Journal reported on GE CEO Jeff Immelt's recent remarks on his management of the firm for the past 8+ years.

Here's one of Boss Immelt's gems,

"I should have done more to anticipate the radical changes that occurred."

For perspective, here's Forbes' view of Immelt's total compensation as GE CEO. For five years, which is only slightly more than half of his reign, it's over $72MM.

Now, Jeff hasn't said he'd return any of that compensation. Pay that, by Forbes' analysis, is roughly twice the median for comparable conglomerates.

The Journal piece provides some details,

"Those changes include big losses and asset write-downs at GE's giant finance unit, GE Capital, forcing Mr. Immelt to back-track on promises to shareholders. In February, GE reduced its dividend 68%, the first such cut since 1938. A month later, the company lost its coveted Triple-A credit rating, which it had maintained since 1967."

With those sorts of changes, you'd think Immelt would show some humility, beyond his comment, that he is "humbler and hungrier," and give some of his unjustified compensation back to his shareholders.

The article goes on to note,

"For his part, Mr. Immelt says he has changed his management style in response to the crisis and recession. Two Saturdays a month, he meets one on one with one of his 25 top executives. He is pushing more decisions-making to lower organizational levels. And the one-time applied-math major is now more comfortable with ambiguity."

Perhaps this is Immelt's way of sharing his owners' pain? You know, they have ambiguity with respect to how bad each year's performance at GE will be, and, now, Immelt has agreed to be similarly ambiguous about telling them how bad he thinks it will be.

As the nearby price chart of GE and the S&P500 Index clearly shows, from late 2001, Immelt has mismanaged GE's shareholder wealth such that the added wealth earned by holding GE equity since 1962 was totally erased by last year. By simply noting the slope of the lines for GE and the S&P from late 2001, when Immelt became GE's CEO, to now, it's clear Immelt has destroyed far more value for GE shareholders than the S&P sustained during the same period.

The Journal piece says Immelt has laid off 30,000 employees and trimmed expenses for the annual executive retreat.

But Jeff isn't giving back any money that he's looted from GE shareholders since September, 2001, when he replaced Jack Welch as CEO.