Jeff Immelt Buys 50,000 GE Shares: Whoop-Dee-Doo

General Electric (GE) seemingly tried to make news Monday when it filed that CEO Jeff Immelt bought 50,000 shares of the stock at $8.26. But for a CEO that makes $3,300,000 a year in salary alone, a 50,000 share purchase that amounts to just $413,000 doesn't really provide shareholders with much consolation. Now we all know that Immelt already owns quite a few shares of GE, but maybe if he put at least a million into the stock at these supposedly outlandishly-low levels, investors would feel confident that their CEO believes in the company.

Unfortunately, Immelt's purchase has already proven to be ill-timed, with shares closing out the day at $7.60. But by only purchasing 50,000 shares, Immelt has only lost $33,000 so far on the trade, which is less than a day's worth of pay for him when you include stock and pension benefits with his cash take home.

click to enlarge

*This chart omits stock and pension compensation that more than doubled his salary in each of these years.

Remember when a CEO like Bob Nardelli of Home Depot got ridiculed after the stock declined by just 20% during his tenure? When CEOs like Nardelli or Chris Galvin of Motorola announced their departures, the stocks of their respective companies shot up the most in years. GE is now down roughly 80% since September 2001 when Immelt took over. It's unfortunate for Immelt, but will his only chance of ever seeing a gain on his 50,000 share purchase yesterday be when he gets fired or announces his resignation?

Comments

[Rolly:]

If Immelt wants to help GE's image, he should resign and spend full time on Obama's financial advisor board. The worst thing Jack W ever did was to leave this dud in charge of his great company. Proof of his inferior perfomance is that with all the trouble the company is in, he goes off to Washington to help Obama mismanage the economy. He seems to have equal performance in that capacity as he did in GE.

Mar 03 07:48 PM

[Teutonic Kn...:]

You notice it follows the same pattern:

These resume builders with an Ivy League bachelor's followed by an MBA from that "H" business school near Boston, MA. After years in the lush green lawn, quaint idyllic campus with Gothic-style architecture and marble floors, these corporate elites are but corporate socialites that had become outdated and out-molded.

Mar 03 09:25 PM

[thedozer:]

At least Obama has a team of economic all-stars for an advisory board

Mar 03 11:15 PM

[Maxe Paul:]

GE in Australia were known as the loan sharks of last resort with outlandish interest rates often twice as high as anyone else. It was a great day for us when they packed up and left because they were losing money on the exchange rate, good ridence.

Mar 04 06:19 AM

[Alan Young:]

Are they still paying this guy $3.3M a year? It's the corporation (and the stockholders) who need a golden parachute now.

Mar 04 08:16 AM

[joshuaodonnell:]

He didn't buy more shares because he still doesn't know if GE will end up being a viable company, even though he outwardly told everybody that it will end up being one of the most profitable companies in the world...

He doesn't want to risk more than a certain amount of money to salary. Cmon, atleast he's learned not to put salary into stock..look at what happened to Dick Fuld at Lehman..

Mar 04 09:15 AM

[Joshua Morg...:]

he was buying at 32 also...

cnbc separated at birth?

thereformedbroker.com/.../

Mar 04 09:28 AM

[Trader Rick:]

On Mar 03 09:29 AM roxio50 wrote:

> The most idiotic article I have ever seen.
> GE will be here long after you guys are gone.
> Don't tell me that you buy stocks that go right up after you bought.
>
> If you did you would need to write article such as this one as you
> would be wealthy and retired, which you are not.
> You talk like you know to time the market.

If this is the most idiotic article you have seen you must be really new to this site.

Wait a few minutes and I'm sure you will find stupider ones.

Mar 04 11:52 AM

[Rick Krementz:]

The article missed the point: Immelt is REQUIRED to buy shares. His contract says he has to keep a an equity interest of six times his salary, and with the catastrophic share price, even with all the grants, he was non-compliant.

My calculations actually show he is still under the ratio, and will have to buy more - in order to stay employed.

Immelt should go.

BTW, Teutonic Knight, Harvard Business School is in Boston proper. I've got an "H", too.

Mar 04 12:28 PM

[drbob66:]

Useless article.

Other directors bought a total of 80,000 shares today. Is that enough for you guys? No, probably not...I'm sure you know more about their business than they do.

Mar 04 02:44 PM

[logicalman:]

we were also way too busy doing all those fun things,and letting other pros. take care of our financial thingies...handle it!!!!! wake up!!!!


On Mar 03 11:20 AM User 368653 wrote:

> Come on guys. Give him a break. The fact that Immelt took over in
> Sept 2001 should only tell you one thing: Bush was terrible president
> and Osama was successful in meeting his objectives. This is not a
> microeconomics issue, rather a macroeconomic one.
>
> The availability of credit hid from us how bad the economy really
> has been doing since 9/11. It hid the fact that incomes fell over
> all since the attacks, because people were still able to buy their
> big screen TV's, have the biggest SUV's and lawn mowers on the block.
> Now the reckoning day is here. Let this be a lesson to everyone,
> to be watchful of our policy makers and understand how policy impacts
> our future well being. We all need to point our fingers at ourselves.
> We were too busy doing the "cha-cha-cha", watching reality TV, "Desperate
> Housewives", "CSI" and "Lost", playing our Wii's, sending 1000's
> of BS text messages and buying iTunes, instead of tending to the
> garden.

Mar 04 04:10 PM

[golferboy426:]

I'm an ex GE er from the Welch era and stupidly watched my 410k go from about 500k to about 60K. I had faith in the GE management. I can't believe how stupid I was. My retirement is ruined

Mar 04 04:31 PM

[Ken D:]

Okay, Immelt inherited a mess from the beloved Jack Welch. Turns out Welch is like Alan Greenspan -- his performance does not stand the test of time. Read the story on GE's cash coverage of debt -- $32 million on enterprise value of $625 million. Immelt let the debt get too far out of line. He played with fire and now the GE holders are getting burned.


On Mar 03 09:07 AM j.p wrote:

> No good investor buys all at once...I'm sure he will buy more next
> quarter.
>
> You guys keep complaining about Immelt's performance, but can you
> name any specific mistakes? I thought not. GE's stock is being punished
> because of its finance arm...which is still profitable btw...and
> people's fear of banks.

Mar 04 05:50 PM

[Titus Andro...:]

Waawaawaa:( All i hear is a bunch of crybabies! Man up and get a grip. Im 63 years old with just shy of 30 years investing in GE. 2010 will be a blitzkrieg of bulls! You just gotta have the b@llz! Buy it up while its cheap. Oh yea, anyone who thinks this is Immelt's doing, is WRONG! It is a global issue that will be resolved in a couple of years...and yes I do know everything!

Mar 04 06:30 PM

[Josh Wong:]

It sucks and at this point it doesn't really matter whether or not it was actually Immelt's fault, it happened on his watch and he's gotta go. At this point, arguing "blame" here is a non-issue. Do what it takes to bring the stock back up.

Mar 04 08:24 PM

[BAC long te...:]

50,000 shares is not much for Immelt! He makes like $3 million plus a year, not including bonuses. I be impress if he threw in and purchased like $6 million dollars worth; now at around 1,000,000 shares. That would be a statement!

Mar 04 09:32 PM

[Fliujniligui:]

Immelt is ingenuous. Only buying 400000$ shares at once in one company means he put about 12% of his annual gross wage in this company. He is bright because he did ill-time the market and he probably know, or learned, that whatever low price it is, he can't forecast the bottom and that buy buying only 12% of his wage at a time, he can buy another 12% at another time at a lower price. Do not criticize him for his skill in managing the risk by avoiding market timing impact and dollar cost averaging. He did prove by doing this that he can run GE. I will buy 5% of my wage of GE at 5$.

Mar 04 10:10 PM

[Really Old ...:]

Been trading GE for over 40 years. Not too worried. Immelt is a member of Obama's advisory group. GE is into jet engines, locomotive engines, medical equipment, ship generators, wind turbines, electric transmission, etc, etc. Look around your house and you'll find something made by GE. I'm betting that GE gets some of the government's business over the next four years that Obama is in office. Also, GE's financial arm does a lot of commercial loans to companies they do business with. For example, the engines on a 777 jet cost about 22 mil. each. Big aircraft production companies usually buy such equipment over a long term contract from manufacturers like GE. GE has such contracts all over the world. Unless those companies all file for bankruptcy GE will keep getting paid on its loans. As far as this article goes, I don't see a useful purpose for investors in its comments. Recently another financial commentator said (not a quote).....Well sure GE has over 40 billion in reserves, and it's true they run their financial arm better than most banks, and yeah the other parts of the company are making money, and yes the FDIC has made a guarantee to cover 130 billion of their debts (when they only had 80 billion) but they could reduce their dividend and I just don't like the stock.......Well dropping the dividend to about 4 percent thereby saving 9 billion to prolong the liquidity of the company is smart and the dividend is still better than what you'd get in a bank. Thanks for listening, and if the stock goes lower I'm going to buy even more cuz all of life is a gamble, and if Im right, long term I'll make a ton of money. Good Night.

Mar 05 01:03 AM

[useruseruser:]

Well Wobatus

How can you compare lifestyles and investment choices of someone making 50K per year to someone making to 3.3 Million a year??

What are you smoking? What kind of fantasy world do you live in to make such an absurd assumption?

You appear to just be another apologzier for the overall attitude that thinks being rich is a god given right to some. With no regards for the consequences for how the riches were made. Ever hear of Externalities?
All that free air water and land that companies have been able to pollute for FREE for so friggen long and not pay for it? Isn't that just stealing but no one ever talks about that. What about CEO's who made their riches doing things illegally without being caught? Enron was a TREND not an isolated incident. Or When CEO's legislate away regulations to make production of less quality products that potentially harm us (GM foods, etc) What about all the money made that way? Isnt that a form of stealing?

There is no distinction made about HOW ones riches are made. Its as if every rich company is given a clean slate REGARDLESS of their history.

What about companies like Shell contracted the corrupt Nigerian army to kill native people who didn't want to sell their land for oil.

Why is there not criminal charges being brought more often?

This stuff the REAL stuff is swept under the rug by the SO CALLED Liberal Media.. what a crock.

Oh sure they 'mention' it but there is no investigative journalism done.
Mentioning it as if its just normal, in this oops crazy world!

Because they make the rules for themselves.

Sure some people made their money honestly and they deserve that. That is a good thing about capitalism if applied Democratically. However mix evil greedy people with capitalism or socialism for that matter, stealing in many forms will happen. As we are all witnessing now.

People like you trying to defend a class of people who make anywhere from 100 to 400 X what their average employees makes is just saddening to me.

That you can be so blinded by your co-dependent patriotic allegiance to a system that you ignore the evil cancer of greed that has taken over.

You defend 'capitalism' in its current degenerative form as if it is the best system in the world while the same people you glorify are stealing from all of us in plain sight. (ok maybe not all of them but come on)

The doublestandard is so blatatant yet you can't see it. Or maybe you do and thats why your writing your crap to make the very people who have been taken advantage of feel guilty for being ripped off.

Why don't you get a clue?

Oh wait, your probably already retired and couldn't give a s**t for the average person working his effing a$$ off in this economy trying to make ends meet.

I agree with Titus Andronicus. Immelt is just a symptom of a larger problem.



>>>>>&g... one makes $50k a year, it's like buying $6,250 worth of shares, not $826 worth, and that is before taxes. It would be a HUGE chunk of one's take home pay for the year. Get a clue.

Immelt is getting unfairly tarred by Jack Welch's legacy. Likely yours too.

Mar 05 04:02 AM

[useruseruser:]

Wait Wobatus, I got you wrong..

I re-read your comments.. I agree with you on some part that this article is a bad smear on a guy who doesn't neccesarily deserve it..

but I think my post maybe helps explain where this guys anger at the bad apples in positions like Immelt is coming from.

btw. its too late for me to care about spelling.

Mar 05 04:14 AM