GE chief attacks executive ‘greed’

By Francesco Guerrera in New York

Published: December 9 2009 21:25 | Last updated: December 9 2009 21:25

Jeffrey Immelt, General Electric’s chief executive, said on Wednesday his generation of business leaders had succumbed to “meanness and greed” that had harmed the US economy and increased the gap between the rich and the poor.

Mr Immelt’s attack on his fellow corporate chiefs – made in a speech at the West Point military academy – is one of the strongest criticisms by a top executive of the compensation and business practices that prevailed before the financial crisis.

“We are at the end of a difficult generation of business leadership ... tough-mindedness, a good trait, was replaced by meanness and greed, both terrible traits,” said Mr Immelt, who succeeded Jack Welch, one of the toughest leaders of his generation, at the helm of the US conglomerate. “Rewards became perverted. The richest people made the most mistakes with the least accountability.”

Several executives, especially in financial services, have apologised for their companies’ role in the crisis but Mr Immelt’s remarks went further, linking bad leadership to growing inequality.

“The bottom 25 per cent of the American population is poorer than they were 25 years ago. That is just wrong,” he said. “Ethically, leaders do share a common responsibility to narrow the gap between the weak and the strong.”

GE wants to win a large slice of the infrastructure projects funded by governments around the world in an effort to kick-start their economies.

Mr Immelt said business should welcome government as “a catalyst for leadership and change”.

Mr Immelt also issued a mea culpa over his inabilty to foresee the financial turmoil, which slashed GE’s profits and put its financial arm, GE Capital, under pressure, saying he should have been a better listener.

“I felt like I should have done more to anticipate the radical changes that occurred,” he said.

The GE chief now gathers GE’s top 25 executives to twice-monthly Saturday sessions to talk about the company and its future.

In the speech, Mr Immelt indicated GE would continue to shrink GE Capital, which accounted for around half of the company’s profits as reently as two years ago. He said it was wrong for the US economy to have “tilted toward the quicker profits of financial services” at the expense of the manufacturing industry and research and technology investments.