Stockholder rails against Immelt's bonuses, options

| Thursday, April 11, 2013, 12:01 a.m.

While the rest of us were ‘‘losing our shirts on GE stock ...”

That's the most arresting clause in the mail General Electric Co. sent out for its annual meeting. Not a management phrase for sure. It's from a disgusted stockholder.

Timothy Roberts of Louisville wants GE to end, “permanently,” all stock options and bonuses.

If Chairman Jeffrey Immelt and his $20 million-a-year crew do a good job, raise their salaries, says Roberts. But no more sweeeteners while ordinary shareholders suck lemons.

This call to revolution in GE's boardroom has about a snowball's chance. Still, it's included — it legally has to be — with other dissident proposals in the proxy statement for the annual meeting April 24 in New Orleans.

But similar “cries from the crowd” have been outvoted before, easily. Big company shareholders seem to go along with paying top executives like royalty, in theory to keep them from jumping ship. It assumes that other companies are clamoring for them.

The rewards are supposed to relate to performance, however. And it's embarrassingly true that $100 invested in GE stock in 2007 was worth only $69 at yearend 2012.

You might not know it from what Immelt takes home. In 2012 he parlayed a $3.3 million salary and $4.5 million bonus into total compensation of $25.8 million. His three vice chairmen, on salaries between $1.8 million and $2.2 million, ended up with $20 million to $25 million total compensation. The company's top lawyer pulled down $16.2 million.

Not that GE bombed in 2012. It takes some hunting to find in a bipolar annual report — a glossy magazine in front, dry as dust in 100-plus pages of backup data — but the world's seventh largest company earned $13.6 billion on $147 billion sales last year. Profits were down a bit from 2011 (but up in per-share terms) and sales were just about even. Despite fluctuations sector to sector, GE's overall results haven't really moved much in the Immelt era.

A little graph of the firm's last five years of stock market performance shows that the recession whacked GE shares more than half in 2008 and '09. They recovered slightly in 2010 and '11 and a bit more last year. They were still 30 percent off the 2007 level, though. The Dow Jones Industrials and Standard & Poor's 500 Stock Index also took a beating. But they did limp upward 14 percent and 9 percent, respectively. So mighty GE has done more poorly than the market as a whole.

What about now? Immelt's letter to shareholders projects “another typical year” in the “Reset Era,” as he calls it.

Among the firm's vast array of businesses — jet engines, locomotives, medical machines and more — there's virtually no mention in the report of “green” energy. Or of nuclear power. Instead, a feeling of back to earth — deep in the earth. Notably America's vast supply of natural gas from shale formations far below, for electric power and vehicle fleets. GE announced a deal just the other day to buy Lufkin Industries, maker of oil field equipment, for $3.1 billion.

“The top priority,” writes Immelt rather surprisingly — in the era of CEO Jack Welch this was a growth company — “remains growing the dividend. ... A high dividend yield is appealing to the majority of our investors.” GE stock currently yields 3 percent-plus. It beats bank interest. But old shareholders got used to better.


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