The next year, a somewhat repentant Jeffrey Immelt would give an apology of sorts in an address at West Point. Corporate America, he told the corps of cadets, had wrongfully “tilted toward the quicker profits of financial services” at the expense of manufacturing and R&D, leaving America’s poorest 25 percent “poorer than they were 25 years ago.”
American business, Immelt added, had replaced “tough-mindedness, a good trait” with “meanness and greed, both terrible traits.”
“Rewards became perverted,” Immelt went on. “The richest people made the most mistakes with the least accountability.”
Unfortunately, and sadly, Immelt would never take his own analysis to heart. As a rich GE CEO in his own right, he continued to make mistakes and suffer no particular consequences.
One example: After the Great Recession, Immelt froze the GE worker pension system and offered workers a riskier, less generous 401(k). In the five years after the pension freeze, notes the Institute for Policy Studies, the GE pension deficit widened from $18 billion to $23 billion at the same time Immelt’s personal GE retirement assets were nearly doubling to $92 million.
Immelt didn’t do particularly good by Americans outside of General Electric either. In 2010, on his watch, GE paid not a penny of federal corporate income tax on profits of $14.2 billion.
Corporate tax avoidance like GE’s helps increase the federal budget deficit. Immelt fancies himself a deficit hawk. But instead of looking into the corporate mirror and vowing to clean up GE’s tax act, Immelt spent the Obama years arguing that America’s federal budget deficit required cuts in Social Security and Medicare to fix.
“If we want to slow — or better yet, reverse — accelerating income inequality,” the Harvard business historian Nancy Koehn noted a few years ago, “the most powerful lever we have to pull is that of outrageous executive compensation.”
How many more outrageously compensated executives will retire off into lush sunsets, the Jeff Immelt story virtually begs us to ask, before we start yanking that lever?