Jeff Immelt is perhaps the perfect paragon for the failures of the now passing age of globalization.
Immelt is stepping down from his position as chairman and chief executive of General Electric, the massive company he has led since September of 2001. Jack Welch, his legendary predecessor, had overseen the company as its value rose from about $14 billion in when he took the reins in 1981 to nearly $500 billion when he retired 20 years later. Its stock price increased 400 percent. Annual revenue soared from $18 billion to an eye-popping $130 billion.
When he took the top job, Immelt promised that “GE will always outperform any market that we’re in.”
That certainly has not applied to the market for GE shares. During Immelt’s tenure, it share price fell about 30 percent–making it the worst performing comp-any in the Dow Jones Industrial Average. Total shareholder return, which assumes the reinvestments of all dividends, has been just 17.0 percent. The company lost $150 billion in market value.
For comparison, the Dow is up 121 percent since Immelt’s first day as GE chief executive. It would have been up even more if not dragged down by the under-performance of GE. Twenty-one of the 29 other companies in the Dow have at least doubled over those years, according to Erik Holm at MoneyBeat. Holm twists the knife a bit further by pointing out that even if you include the dividends paid to shareholders, GE has the worst cumulative return of any company in the Dow.
The broader market has performed even better. The S&P 500 is up 124 percent. Total shareholder returns have been 207.63 percent.
Immelt came in as an evangelist for globalization and technology. These were the forces that were going to drive GE’s growth, he told Business Week in an interview published just before he formally succeeded Welch. He promised that the company would thoroughly globalize, including hiring more “global leaders” and fewer “Americans with passports.”
Immelt was also a supporter of Obamanomics. He supported the Obama administration’s attempt at economic stimulus, the passage of Obamacare, and environmental regulations. He has long been one of corporate America’s most vocal supporters of policies aimed at curbing climate change, particularly through caps on carbon emissions. In 2011, President Barack Obama appointed him to head a new panel on job creation, which would be remembered for its lack of achievement if it were remembered at all. During the Bush and Obama administrations, GE became perhaps the company known as the embodiment of “crony capitalism.”
“Immelt is a classic example of a rent-seeking CEO who may know what’s good for his own company but not what produces economic growth and private sector job creation,” Fred Barnes wrote in 2011.
Except, as GEs share price shows, Immelt does not appear to have known what was good for his company. Beyond the embrace of globalization, environmentalism, and big government, Immelt transformed BE. He sold off many of GEs businesses–plastics, appliances and media businesses–because he believed they were not core to its operations. He shed its insurance business back in 2005. GE sold off its once-profitable financial services business after this collapsed in the financial crisis, requiring a bailout from the Federal Deposit Insurance Corp., rather than attempt to manage it with greater supervision. Critics say these moves took the company in exactly the wrong direction.
Immelt himself did very well as the head of GE. He has been awarded GE stock worth more than $75 million. His accumulated pension benefits amount to $82 million, according to Fortune. A GE policy that will allow him to receive most of his unvested stock and stock options grants will inflate that by another $39 million. All told, his retirement will be worth almost $211 million according to Fortune–not counting the cash he’s been paid over the years. In recent years, GE paid him an annual salary of around $3.8 million and cash bonuses of more than $5 million.
Perhaps even more than his personal views on globalization, it is this accumulation of personal wealth while GEs shareholders suffered such outsized losses that make Immelt the perfect symbol of the economic and political system that Trump was elected to overturn.
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