Under Pressure From Trian, GE Vows to Boost Industrial Profits -- Update
March 22 2017 - 10:23AM
Dow Jones News
By Thomas Gryta and Austen Hufford
General Electric Co. promised to cut $1 billion in costs from
its industrial operations this year, and to more closely tie top
executives' bonuses to profits in its core industrial business.
The changes outlined Wednesday follow discussions with activist
investor Trian Fund Management, which has been pressuring the
conglomerate to boost profits.
GE executives recently acknowledged the company was unlikely to
reach a long-term goal to deliver $2 a share in industrial profits
in 2018.
For 2017, GE expects an industrial operating profit of $17.2
billion and industrial structural costs of $23.9 billion in
2017.
If both goals are met, bonuses for the company's executive team
will be increased 20% while if the goals are missed, bonuses would
fall 20%.
In recent years, the conglomerate has refocused on its
industrial businesses, shedding low-margin units like home
appliances and striking a big oil-and-gas deal with Baker Hughes
Inc. last fall.
Trian said it was pleased with the new framework and that GE
should continue "simplifying and streamlining" its organization to
achieve financial goals.
"We will continue to hold management accountable to its
commitments," Trian said.
GE expects industrial structural costs to be $22.9 billion for
2018, down from $24.9 billion in 2016.
Shares of GE rose slightly to $29.42 in early trading
Wednesday.
Write to Thomas Gryta at thomas.gryta@wsj.com and Austen Hufford
at austen.hufford@wsj.com
(END) Dow Jones Newswires
March 22, 2017 10:08 ET (14:08 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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