It’s a problem that Jeffrey Immelt largely ignored as he tried to appease General Electric Co.’s most vocal shareholders.This is really, really bad. Almost half a million people are covered under GE's pension. When this falls, it will fall HARD.
But it might end up being one of the costliest for John Flannery, GE’s newly anointed CEO, to fix.
At $31 billion, GE’s pension shortfall is the biggest among S&P 500 companies and 50% greater than any other corporation in the U.S. It’s a deficit that has swelled in recent years as Immelt spent more than $45 billion on share buybacks to win over Wall Street and pacify activists like Nelson Peltz.
Part of it has to do with the paltry returns that have plagued pensions across corporate America as ultra-low interest rates prevailed in the aftermath of the financial crisis. But perhaps more importantly, GE’s dilemma underscores deeper concerns about modern capitalism’s all-consuming focus on immediate results, which some suggest is short-sighted and could ultimately leave everyone -- including shareholders themselves -- worse off.
And it wasn't just a few months ago there was news all over the place that GE was a good buy.
A "good-bye" is probably a better way of putting it.