* U.S. recovery hurt by lack of corporate confidence -CEO
* Keeps focus on dividend hikes, buybacks
* Immelt muses on risks of size
By Scott Malone
BOSTON, March 11 Political uncertainty in the
United States could prompt Corporate America to throttle back on
capital spending, the chief executive of General Electric Co
warned in his annual letter to shareholders.
"The U.S. faces more major 'political storms' this year: the
fiscal situation, repeated debt-limit controversy and tax
reform. We fear that this uncertainty will impact capital
investment," CEO Jeff Immelt said.
U.S. President Barack Obama, a Democrat, and the
Republican-controlled House of Representatives have been
fighting for more than two years over ways to reduce the
nation's long-term debt, and a series of standoffs has spooked
some business leaders despite the strong run of the U.S. stock
The uncertainty caused by those standoffs has prompted
companies to hold off on major capital spending, said Immelt,
head of the largest U.S. conglomerate.
"The U.S. is improving, driven mainly by housing and the
consumer, but capital investment remains sluggish," he wrote.
"As a result, the U.S. continued its weakest recovery since the
That leaves GE more confident in its growth in big
developing markets, including China, Africa and the Middle East,
IMMELT PAY RISES
The company said in a filing with the U.S. Securities and
Exchange Commission that Immelt's total compensation last year
rose almost 20 percent, boosted by a $12.1 million payout from a
long-term bonus plan that is paid on a three-year internval.
Immelt's total compensation reported to the SEC of $25.8
million also included a $3.3 million base salary, a $4.5 million
bonus, a $5.4 million rise in the value of his pension and other
deferred compensation, and $574,507 in other compensation, which
included personal use of corporate aircraft.
The increase, the company's compensation committee noted,
reflected Immelt's "outstanding leadership."
FOCUS ON DIVIDEND, BUYBACKS
GE, the world's largest maker of jet engines and electric
turbines, regards boosting its dividend as a "clear priority"
over the next few years and plans to make "significant progress"
toward its goal of buying back shares to reduce its share count
to 10 billion, the level before the company sold additional
shares during the financial crisis, Immelt said.
GE currently has 10.4 billion shares outstanding, according
to Thomson Reuters data.
"GE will generate $100 billion for allocation over the next
few years, including cash from existing operations, dividends
from GE Capital and dispositions," Immelt said. That money will
be devoted to buybacks, dividend hikes and some acquisitions, he
GE also on Monday said that former U.S. Securities and
Exchange Commission head Mary Schapiro would stand for election
to GE's board of directors at the company's annual meeting in
New Orleans next month.
Schapiro stepped down as SEC chairman in December.
Three directors will not seek re-election to the board:
Former Procter & Gamble Co CEO A.G. Lafley, Penske
Automotive Group CEO Roger Penske and former senator Sam
DANGERS OF SIZE
During Immelt's nearly 12 years at the helm of GE, the
Fairfield, Connecticut-based company has sold off operations
including insurance and plastics. It plans to sell its remaining
stake in the NBC Universal media business to Comcast Corp
In the letter, Immelt mused that even for a company like GE
that benefits from scale, size holds risks.
"Size can breed a perversion of bureaucracy, a sense of
entitlement and a distance from reality," he said.
The company's shares have risen 25 percent over the past
year, sharply outpacing the 14 percent rise in the Dow Jones
industrial average and returning to levels not seen since
the financial crisis.
But on Monday they fell less than 1 percent to $23.60 as one
analyst cut his rating on the shares to "neutral" from "buy,"
saying they appeared to be close to their fair value.
"At this point, we think a lot of the good news is priced
into the stock and we see more potential for outperformance
elsewhere in our sector," Nomura Equity Research analyst Shannon
O'Callaghan wrote in his downgrade note.