Jeff Immelt on Pay, his AAA Rating and Taking the Train

Posted by: Diane Brady on February 5, 2009

General Electric CEO Jeff Immelt predicted this morning that the shift in the financial services sector and government’s role in business “will be with us for the rest of our careers.” While Immelt said that state aid, tax incentives and infrastructure spending are good ways to create jobs right now, he expressed concern about the long-term impact of massive public spending. “Great countries don’t have a trillion-dollar trade deficit,” he argued at a breakfast hosted by The Wall Street Journal. “The notion that the U.S. could go from a manufacturing-oriented economy to a service-oriented economy wasn’t sustainable … The best jobs we have in this country are export jobs.”

The GE chief gave President Barack Obama a “B+/A-” for his performance so far on the job, but argued against new provisions to cap pay at $500,000 in firms accepting bailout funds. “What’s in the best interest of citizens right now is having Jamie Dimon running JPMorgan,” said Immelt, “and he’s worth more than $500,000.” Immelt added that if government is going to be a shareholder, it should be selfish in seeking a high return on its investment. “Some of these angry declarations are not in their selfish best interest.” In GE’s case, he said, taxpayers would earn $400 million to $500 million this year from the government move to insure its debt.

Immelt acknowledged that business leaders have to respond to public anger, both in the U.S. and abroad. “If you’ve worked your whole life, nose to the grindstone, you look up and say ‘what the hell is going on?’ The role of people like me is to be accountable.” When going to Washington, he now takes the train, though he joked that they had to show him how to get a ticket and he did travel first-class on Amtrak.

Given massive stimulus worldwide, Immelt said that the downturn could “very well be arrested” this year. “Governments around the world are firing as many bullets into this thing as they can,” he said. “My own view is that the government always wins.” The key is whether the initiatives in the U.S., at least, help to create “some sense of destiny of what this country can be.” Immelt argued that much of the effort should be focused on energy where “all you have to do is commercialize the technology we already have” in areas ranging from electric cars to nuclear energy. “Solving healthcare in the next two decades will be hard,” he said. “Energy is doable.”

As for the perennial question over GE’s high dividend and pressure on the AAA rating amid the turmoil, Immelt pointed to the company’s continue cash flow and acknowledged that “debt and equity markets have already priced us down” as far as the rating is concerned. “We run this company to be AAA and we’ll continue to do so,” he said, affirming that maintaining the dividend is “the decision we’ve made for 2009.”

Immelt refused to speculate on whether he would have a 20-year run on the job, as his predecessor Jack Welch had predicted. “You need to do this job like it’s a 20-minute job,” he said. “The second you lose your edge, you should step away … Everything we used to do weekly, we’re now doing daily; everything we used to do monthly, we’re now doing weekly.”

And where would he put his money right now? Infrastructure and emerging markets. “I still believe in the power of demographics,” he said. “Our global business should grow substantially faster than our business in the U.S.” Americans may be depressed, he notes, but in areas like India, the Middle East and South America, business is still going on. “There’s some business out there. You just have to go find it.”

Reader Comments

EVR

February 5, 2009 12:24 PM

Based on Mr. Immelt's comments to justify bloated executive pay in corporate America, perhaps he has lost his edge. Hopefully, GE's Board of Directors will exercise their fiduciry duty in the future to address the insular and bankrupt rationale for current executive pay.

Squeezebox

February 5, 2009 12:31 PM

No executive is worth more than a half million, not even the legendary Jack Welch. If Immelt is that good, let him take his pay in stock, and he's not allowed to sell it until he retires.

Willard

February 5, 2009 1:11 PM

That's ok if Jamie Dimon doesn't like running JPmorgan at a CEO salary cap, let him go find another job. Besides it's not as if they will never see the millions in bonuses, it's just that this way they have to actually work for it. I think it's a GREAT plan since I can't afford to line a fat CEO's pockets with my taxes. Again, as Obama said, "there's a time for big bonuses and this is not the time". What I find appalling is that the President is the one that has to make this clear with the loans... the CEO's, that are soooo smart, should have suggested it themselves. Too F'n greedy! Thank you President Obama, for looking after my best interests. It's something George Bush, Dick Cheney and the rest of that administration never did. Thankfully we have someone in office that has some common sense. Donald Trump applauds you too.

Andre

February 5, 2009 3:06 PM

I am truely amazed at the comments over a mere $500,000
salary. Consider this! A person playing sports make more than a CEO running the worlds largest corporations.

John

February 5, 2009 3:34 PM

NOBODY, not even sports players, (particularly sports players), is worth more than $500,000.00 a year in compensation, and that much is already pushing it to the limits of reason!

Lowell Sisco

February 5, 2009 3:55 PM

What is $500,000 after taxes(cabinet members,don't bother paying) maybe $300,000 net. These leaders are worth a whole lot more than just the money. Why would you punish the private secter leaders for what the govenment wanted them to do?

Shekar

February 5, 2009 4:55 PM

These are the stalwarts who brought us to where we are today. If other people can lead a comfortable life with less than US$ 100,000 just because these guys see large numbers on financial statements does not give them the right to dip into those numbers. They belong, rightfully so, to the shareholders. Executives get paid to do a job. If they want to make more money let them buy shares in the companies that they so believe in to make their loot.

John

February 5, 2009 5:00 PM

General Electric, under the leadership of both Jack Welch (Neutron Jack), and Jeff Immelt, sold off, closed down, and otherwise disposed of much of it's core manufacturing busineses, at the expence of thousands upon thousands of American jobs, so that it could put more of it's resources in it's financial operations (seen as bigger profits with less effort), fewer employees, buildings, equipment, and so forth, by just pushing money around they made a killing, for awhile, but look at the mess that kind of thinking made, now that is their most troublesome operation, and they deserve all the compensation and perks they have received for leading the company to it's lowest point in it's more than 100 year history???

Rodney

February 5, 2009 8:36 PM

"It's in the best interests of taxpayers to have Jamie Dimon running JPMorgan," Immelt said. "They should want to have the best people on Earth running these banks. Capping pay is not conducive to that outcome.


Well golly GE Mr. Immelt. It was people like you and Jamie Dimon that ran their companies in to the ground requiring my assistance. Hell I could’ve done that for less 1 tenth what you’re making.

As an added bonus due to yours and other CEO’s incompetence, you also cut your workforces and/or their salaries by 10-20%, did away with 401 contributions, and 3 thousand dollar deductibles for medical. All so you can keep your 20 million dollar paycheck.

Maybe people like you should consider “who the best people on earth” actually are. Like maybe the folks that actually build your little airplane engines.

For once I agree with Barry. “Shameful”.

Diane

February 5, 2009 8:48 PM

I agree with the idea that executives should take the bulk of their compensation in stock -- stock that can't be cashed in until well after the performance targets have clearly been met.

Steve Tea

February 6, 2009 3:59 PM

Immelt has demanded double digit growth from GE since the day he took over. The business delivered at the expense of GE reputation.
Sherrin gave a webcast telling the business what a great position it was in, the problem was his body language tells us the company has it back against the wall. There are too many people unaccountable in the company, this company is not the same since Welch left. Immelt should take the responsibility of the companies failure.

Jonathan Clark

February 10, 2009 12:32 PM

Jeff must be getting his ass kicked by his wife and daughter for buying GE shares at $20 a few weeks ago

Joe the guy who makes less than $250K

February 14, 2009 11:36 PM

$500K salary cap is just BS!!! It is a scam to calm down public angers towards greedy CEOs. If the government is now part of the board in these companies, let the board of directors to take a vote on how much CEOs and executives should be compensated based on factual data and market levels to retain and attract talents. This salary cap might look fair to people who never had a day in their lives of running a business. The realty is that most of these troubled firms need talented and long-term driven leadership to fix problems and make the business more sustainable. A senior level engineering manager can make $500K in a mid-sized company, does that mean he can now run a Fortune 100 company just because he/her has reached the upperlimit of the pay scale? Imagine the cascading effect on this $500K salary cap, that means middle to top management teams in these companies have to take significant pay cuts just to make the pay scale work. Most of these executives won't stay in for that, there are companies are happy to pay them 5 times more to do the same jobs. That means you are left with a less talented and less competitive organization for a business that is already facing an extreme challenge for survival. Does uncle Sam really want to run these business into graves and put a socialist agenda to an economy is already in depression?

John Cunningham

March 17, 2009 1:21 PM

I retired from GE: If I performed twice as good as Mr Immelt, I would have been fired on the spot. He took office with GE stock at $60/share, the Co. had Billions in cash,& no debt. A few days ago GE stock was @$5.06/share, GE had no cash on hand, & GE owed Buffett $Billions in debt at 10% interest. I wonder what Jack saw in Jeff??? GE needs a new CEO & new board of Directors.......They offered Jeff $Millions as a Bonus for 2008, What was that for???

John Cunningham

March 17, 2009 1:21 PM

I retired from GE: If I performed twice as good as Mr Immelt, I would have been fired on the spot. He took office with GE stock at $60/share, the Co. had Billions in cash,& no debt. A few days ago GE stock was @$5.06/share, GE had no cash on hand, & GE owed Buffett $Billions in debt at 10% interest. I wonder what Jack saw in Jeff??? GE needs a new CEO & new board of Directors.......They offered Jeff $Millions as a Bonus for 2008, What was that for???

Ray Overton

March 24, 2009 8:06 PM

As the CEO of one of the largest organizations worldwide, Mr Immelt's reported compensation package is worth about $10.5 Million. This amount would cause some members of the media to throw fits on the air about executive compensation. Some might even be employees of Mr. Immelt including Chris Matthews (compensation - $5 million), Keith Olbermann ($7.5 million), Brian Williams ($10 million) and the tops of the list, Matt Lauer ($13 million). I don't have a problem capping compensation for executives with companies receiving bail out funds so long as that limitation also filters down to the "talent" the company employs as well. I believe there would be an entirely different tone to this discussion if Mssrs. Matthews, Olbermann, Williams and Lauer were held to the same standard. Afterall, they are GE employees.

Ray Overton

March 24, 2009 8:06 PM

As the CEO of one of the largest organizations worldwide, Mr Immelt's reported compensation package is worth about $10.5 Million. This amount would cause some members of the media to throw fits on the air about executive compensation. Some might even be employees of Mr. Immelt including Chris Matthews (compensation - $5 million), Keith Olbermann ($7.5 million), Brian Williams ($10 million) and the tops of the list, Matt Lauer ($13 million). I don't have a problem capping compensation for executives with companies receiving bail out funds so long as that limitation also filters down to the "talent" the company employs as well. I believe there would be an entirely different tone to this discussion if Mssrs. Matthews, Olbermann, Williams and Lauer were held to the same standard. Afterall, they are GE employees.

jams

October 29, 2009 8:06 PM

Ithink the SEC needs to take a really good look at G.E.Trailer leasing formly Tip they would be surprised on the paperwork they dont have and at how much they have old equipment on the books for beware stock holders

jams

October 29, 2009 8:06 PM

Ithink the SEC needs to take a really good look at G.E.Trailer leasing formly Tip they would be surprised on the paperwork they dont have and at how much they have old equipment on the books for beware stock holders

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