Friday, February 27, 2009

Outrage of the Day II

The news is out that GE will soon be cutting the its dividend. Its not official official, but it appears to be official for all intensive purposes. Previously in Outrage of the Day I discussed that GE's CEO, Jeffrey R. Immelt was appointment to Obema's Economic Recovery Advisory Board. Apparently being appointed to Obema's Economic Recovery Advisory Board is more important than running GE, which is the job that he is being paid to perform. If Immelt wants to serve on Obema's Economic Recovery Advisory Board he should immediately resign since that is not what he is being paid to do.

Since my prior post the stock of GE has continued to decline from $11.10 to today's $8.51. So far, Immelt seems to have done what other failing executives have done: deny, deny, deny, and deny. Argus, a firm that rates companies wrote, on January 26th (a mere month ago), that: "We suspect the company would support its dividend payment over its credit rating, given CEO Jeff Immelt's vociferous commitment to the dividend. However, GE believes that is not a choice it will have to make and remains committed to retaining both." Obviously there is a credibility gap with GE management.

Furthermore, management seems to have a lack of concern for how this will look to shareholders and the world in general. I have yet to see any press release announcing that the executives will somehow "share the pain" and reign in their compensation as a result of their poor performance. At least the executives at Ford Motors, finally realized that they needed to forgo some of their compensation.

In the old days, when a ship was sinking, it was expected that the Captain would be the last off the ship after seeing to the welfare of the passengers and crew. Executives today, take all the lifeboats for their own us, are first off the ship, and don't even bother to inform the passengers and crew that the ship is sinking. No wonder our country is in financial ruin.

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