Why CEO Jeff Immelt Spent His Bonus on GE Shares

Photo of Trey Thoelcke
By Trey Thoelcke Published
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

CEO Jeff Immelt of General Electric Co. (NYSE: GE) has demonstrated his confidence in the industrial conglomerate by investing his entire 2013 cash bonus in GE shares. Immelt picked up almost 105,000 shares Monday, at a cost of more than $2.64 million. This followed a purchase of 40,000 shares last week for about $1 million.

Immelt said in a letter to shareholders:

I am investing right alongside of you. I have invested my entire bonus in GE stock. Like the rest of our leaders, I believe in GE.

This comes in a transitional time for GE. Immelt has been working on unit consolidation, including the ongoing spin off of GE’s consumer finance unit. 24/7 Wall St. recently named GE the best conglomerate for the rest of 2014 for its upside potential and dividend yield near 3.5%. It seemed a more attractive option against the likes of Berkshire Hathaway Inc. (NYSE: BRK-A), 3M Co. (NYSE: MMM) and United Technologies Corp. (NYSE: UTX). We see GE in better shape once it is reclassified as just an industrial conglomerate, and see major acquisitions as unlikely in the near term.

We also pointed out when UBS named GE as one of its top industrial stocks even at record highs in the market. UBS has a price target that is even higher than the consensus estimate, and the firm also likes the solid dividend and strong growth potential, particularly in the second half of this year, when commercial construction is expected to increase.

So Immelt has put his money where his mouth is and made one of the largest insider buys by a chief executive in the past year. Shares were up almost 3% in late morning trading Tuesday, at $25.73 in a 52-week range of $21.11 to $28.09.

Chief executives sometimes spend their own money on company stock as a way to shore up investor confidence. If that is what he has done, then it seems to have worked — at least for the moment.

Photo of Trey Thoelcke
About the Author Trey Thoelcke →

Trey has been an editor and author at 24/7 Wall St. for more than a decade, where he has published thousands of articles analyzing corporate earnings, dividend stocks, short interest, insider buying, private equity, and market trends. His comprehensive coverage spans the full spectrum of financial markets, from blue-chip stalwarts to emerging growth companies.

Beyond 24/7 Wall St., Trey has created and edited financial content for Benzinga and AOL's BloggingStocks, contributing additional hundreds of articles to the investment community. He previously oversaw the 24/7 Climate Insights site, managing editorial operations and content strategy, and currently oversees and creates content for My Investing News.

Trey's editorial expertise extends across multiple publishing environments. He served as production editor at Dearborn Financial Publishing and development editor at Kaplan, where he helped shape financial education materials. Earlier in his career, he worked as a writer-producer at SVE. His freelance editing portfolio includes work for prestigious clients such as Sage Publications, Rand McNally, the Institute for Supply Management, the American Library Association, Eggplant Literary Productions, and Spiegel.

Outside of financial journalism, Trey writes fiction and has been an active member of the writing community for years, overseeing a long-running critique group and moderating workshop sessions at regional conventions. He lives with his family in an old house in the Midwest.

Continue Reading

Top Gaining Stocks

CBOE Vol: 1,568,143
PSKY Vol: 12,285,993
STX Vol: 7,378,346
ORCL Vol: 26,317,675
DDOG Vol: 6,247,779

Top Losing Stocks

LKQ
LKQ Vol: 4,367,433
CLX Vol: 13,260,523
SYK Vol: 4,519,455
MHK Vol: 1,859,865
AMGN Vol: 3,818,618