The American Spectator

Print Email

Text Size

The Investor

(Page 2 of 2)

If GE could turn back the clock and play hardball with Welch at contract time in 1996, I don't think it would do it. Since 1996, GE has doubled its earnings and increased cash flow 65%. Welch picked three top officers as possible successors, and he and the company settled on Jeffrey Immelt. Everyone thinks Immelt has done a great job in a tough environment and, though GE didn't benefit, 3M and Home Depot hired the two "losers" as their CEOs. Truly, Welch has a golden touch and the company was wise not to risk losing it.

Look how the shareholders did directly. Between the end of 1996 and when Welch stepped down at the end of August 2001, its stock price rose from $16.35 to $40.98 (and had been as high as $60). Shareholders also received ever-increasing quarterly dividends.

If GE could terminate the contract now, even with all this whining and complaining, I don't think it would do it. Having Welch available, with all his knowledge and connections, has to be helpful to Immelt as he faces a phenomenally difficult business environment in his first year on the job. And if GE did terminate the agreement, someone else would step up and take him on the same terms. In a heartbeat.

As a long-time investor in GE, we were lucky to have him, and lucky we've still got him.

topics:
Business, Environment, Russia