Entrenched Corporate Leader: Jeff Immelt (GE)

Jeff Immelt, Chairman & CEO of General Electric (GE-NYSE) has to be one of the more entrenched CEO’s in corporate America.  And rightfully so.  How many "respectable or top CEO" surveys with more than a few names on it don’t include Jeff Immelt?  It doesn’t matter that he does not own anywhere close to 1%, after all he didn’t have anything to do with the founding of the company in the late 1800’s and a 1% stake would be worth more than $3.5 Billion. 

Filling the shoes of Jack Welch is as far from what would be an easy task, particularly after the exponential rise seen under Mr. Welch.  Out of three internal candidates to fill Welch’s shoes, he was the choice.  He can’t be put at fault for what happened after taking the helm, because his official changing of the guard date was September 7, 2001 (we all know what happened 4 days later).

Since he took the helm, the company has now hiked dividends 6-times and it sits on a total $25 Billion share repurchase program.  The company is a leader in aircraft engines, home utilities, commercial financial, news & entertainment, alternative energy, major infrastructure and much more.  The company has spun-off Genworth (GNW) and is close to selling its plastics unit for what may be more than $10 Billion. 

Since he has been there it hasn’t been an easy time, but the stock is actually up more than 50% from its lows in 2002 to 2003 on a dividend adjusted basis.  There have been no calls for him to leave at all, and it understandable as to why.  Any company out there would want to snatch him up in a hurry.  It doesn’t even matter what his pay package is, and frankly it could go up considerably and no one would complain.  Could you imagine if a private equity group snatched him out of the company? 

So in a world where Congress is trying to evaluate getting involved in corporate pay packages, by all means shareholders would not want his pay under scrutiny.  Since he is barely over 50, he has a long road ahead in the company and there aren’t many who would accuse him of being the reason that the stock has been mostly rangebound for the last two-years.

Jon C. Ogg
March 28, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.