Ex-General Electric CEO Jeff Immelt on guiding the company through crisis and why leaders need to be ‘masters of chaos’

jeff immelt
Former GE CEO Jeff Immelt.

  • Jeff Immelt succeeded Jack Welch as the CEO of General Electric just after 9/11.
  • With Welch known as one of the best CEOs in the history of business, Immelt had big shoes to fill.
  • Immelt shared how he overcame challenges and what he would have done differently with The Profile.
  • See more stories on Insider’s business page.

Jeff Immelt’s first day as CEO at General Electric was on September 10, 2001. The next day, the terrorist attacks on the World Trade Center and the Pentagon shook the world, the financial markets, and GE’s business. The airplanes, one of them powered by GE engines, crashed into the WTC towers, which were insured by GE Capital.

At the time, GE was heavily invested in commercial aviation, insurance, and media – all three of which were rocked by September 11.

“It was the first terrorist event I had ever seen – that most Americans of my generation had ever seen,” Immelt told The Profile. “I think what you learn in a crisis is that good leaders absorb fear. They’re not accelerators of fear – they know how to manage a sense of calm while still being really clear about the challenges ahead.”

And unbeknownst to Immelt at the time, the challenges ahead were many. The terrorist attacks would be the first of a number of crises that Immelt had to grapple with in his time as CEO. He was at the helm of the company through the bursting of the dot com bubble, the Fukushima Daiichi nuclear disaster, the fall of Enron, and the 2008-09 financial crisis.

“You learn to hold two truths,” Immelt said. “You learn to say, ‘Things can always get worse, but here’s a dream that I have for the future, and I’m not going to give up on that.’ You learn how to make decisions even when you don’t know all the facts. In a crisis, you just got to make decisions.”

Read more: Wall Street legend Jim O’Shaughnessy talks Bitcoin, the psychology of stocks, and what young people should know about investing

Unfortunately, many of the decisions that Immelt made in his 16 years at the helm of GE did not pan out in his favor nor were they particularly popular. At one point during his tenure, he characterized his role as CEO in this way: “I feel like I want to vomit all the time.”

“I never felt sorry for myself, but it was just the pressure and the consequences of all the decisions, how little was known,” he said. “That period of time – it was just relentless.”

Immelt succeeded Jack Welch, who was largely considered to be one of the best CEOs in the history of business. He had led GE through two decades of extraordinary corporate prosperity, so when he named Immelt as his successor, the pressure to perform was immense.

Even though Welch was no longer CEO, his legacy loomed. He was regarded by many as the greatest leader of his era by people both inside and outside the company.

During the summer of 2001, Immelt went on a golf trip with his friends before it was publicly announced he was CEO. In the locker room, a member asked him what he did for work, and he simply said, “I work at GE.” The man looked at him and said, “GE, huh? I feel sorry for the poor son of a bitch who’s taking Jack Welch’s place.”

Shareholders blamed Immelt for his inability to turn the company around and for allowing GE to lose $150 billion of market value under his watch. In his new book, “Hot Seat: What I Learned Leading a Great American Company,” Immelt doesn’t make excuses: He takes responsibility for his missteps and lists the thorniest mistakes he regrets making in his time as CEO. They include failing to generate more shareholder value from GE Capital, missing an opportunity to reset the company in the early 2000s, and not developing a deep enough bench of rising leaders.

“It’s a complicated story, and I didn’t want to seem defensive, so I wanted to let the reader be the judge,” he said. “I thought it was important for people to see the totality. That’s why I decided to write the book.”

In this conversation, Immelt shares what he’s learned about leading in crisis, how he’s taken responsibility for the consequences of his decisions, and why he believes the next generation of founders and CEOs need to be masters of chaos.

(Below is an excerpt of the interview, but I encourage you to listen and watch the full interview here)

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Just to paint the picture here: Your predecessor Jack Welch was largely considered to be the best CEO in history.

IMMELT: Fortune magazine had named him the best manager of the previous century in the year 2000. That’s a pretty tough act to follow, but he was just very well known. He was a celebrity CEO – kind of like Elon Musk and Jeff Bezos all wrapped up into one. He had done a good job, and he’d done it for a long time. He was very charismatic, and so that was a pretty daunting task. That was the person whose shoes I was stepping into. That was my task in 2001.

When you were offered the job as CEO, did you ever think, “Those are really big shoes to fill. Maybe I’m not the right person for this?”

You know, I was a realist. There was no way not to think that his image would cast a shadow. That’s just the real world. But I never really wanted to be him. I was a very different person, and I felt like that the job that the company needed was going to be different, and you have to make a choice of how much to honor the past versus how much to push forward.

So when I was at GE, I was never critical of him for over really 16 years, but I always wanted to do things my way and work on things I felt were gaps inside the company. You just have to be really comfortable with that judgment without dwelling on it for too long.

I was in Tokyo in 2014, and I was being interviewed in front of 2,000 people by the Nikkei press. We were in the green room, and the person interviewing me says, “What was it like following Jack Welch?” And I was like, “I’ve been asked that question in 100 languages, 30,000 times over the last few years.” We kind of laughed about it, so we go out on stage, and the first question was, “What was it like following Jack Welch?” So you just get used to making it part of your repertoire even though I never really carried it as a burden in terms of what I thought was important to the company.

What was your relationship to Welch when you became CEO?

I had immense respect for Jack, but when someone’s that powerful inside the company, it’s hard to have a mentorship relationship. I had other mentors, but not him. We had about eight months of overlap where I got a chance to ask him a ton of questions, and he was very helpful then. And then I think over the first four or five years, we had a good relationship, but I think the financial crisis kind of changed the nature of our relationship and made it a little more difficult.

Even through the arc of my career, every tough problem I ever encountered, I would ask his opinion – even when I didn’t really like him that much or when he didn’t really like me that much. I would always ask him for his opinion because he had great judgment, and he knew the company. We both cared about the company in different ways.

From the outside, things looked great. Under Welch, GE had been the most valuable company on earth for a period of time. Can you discuss the reality of the business that you inherited?

The business model was kind of an old-line industrial company that generated a lot of cash. That cash would go to a financial service company. We had a 50% stale industrial company, and 50% financial.

The perception didn’t quite match reality. We understood that as we were taking over, and I had conversations with the board. And that’s what we said about re-investing in the industrial company to try and rejuvenate the business while still growing financial services. That’s the decision we made. That’s one of the challenges that every leader runs into – it’s how do you match perception with reality?

Looking back now, do you wish you had been more clear and transparent about the reality of the business at the time?

There was a window of time after 9/11 when I think people after a crisis have a chance to reset their companies and their narrative. There was probably a window at that time when I had a chance to kind of reset: lower earnings, less financial services, and a really clear path of how much our industrial businesses needed to be invested in in order to get them positioned for the 21st century.

It’s a long-winded way to answer your question, but the answer is yes. There was a window. I do look back on that as something I wish I had done.

The 2008 financial crisis shook GE to the core. You had missed your earning numbers three weeks after you promised to hit them. And then Welch went on CNBC, where he said that if you missed earnings again, he would “be shocked beyond belief, and get a gun out and shoot you.” What was your reaction in that moment and how did you handle that?

Yeah, I was really hurt because, in 2008, I had very carefully never looked backward or pointed a finger at him. It doesn’t matter who you are or what you’re doing, there are like five moments in your life when you just need a friend. You screwed up, you know you screwed up, and you need somebody to give you their hand and not smack your butt. And he chose to smack my butt, not give me his hand – and you remember that.

I never thought it would be a good thing for the company to see us bickering in public, so I never did that, but we had a very direct, private conversation. It was a line of demarcation in our relationship for sure. Even after that, when I had a really tough decision to make, I always called him – even when we weren’t friends. I thought he had a good perspective that I could learn from and listen to.

Let’s be clear – I knew I goofed up. I knew that, but I was trying to recover, and I needed a friend. I just needed a hand. And what he did was just the opposite of that. He made a two- to three-day story become a one-month story. It was unnecessary roughness.

In your time as CEO, it was crisis after crisis after crisis and a lot of turbulence in your professional life. How did you manage to have a solid personal life?

I’ve always been good at compartmentalizing. I’ve always been good at focusing on staying in the moment to focusing on what needs to happen and trying to separate that from other things that I’m working on.

The fact of the matter is that I have a really great wife and a great daughter. And they were always really unaffected by what I was doing. Clearly, they read things and heard things, but they were always into the person and not the business person. That was a blessing.

There were days when hundreds of thousands of people hated me, but one person loved me, and that was enough to keep persevering into the future.

Shares plunged nearly 30% since you took over the company. How do you respond to the people and the shareholders who feel genuinely angry at you for the decisions you made as CEO?

Look, the share price is important. It was $38 when I started as CEO, and it was $30 when I left. I understand that. I completely understand that, and I don’t run from that.

What I try to point out is that we generated almost $300 billion of cash and earnings over those 16 years. We had great businesses. We generated good leaders. In other words, the team really worked hard through different crises and did their best. That’s the best I can offer – a more complete story of what happened.

In the book, you have a section in which you list several of the thorniest mistakes you believe you made during your time at GE. Can you share the one mistake you regret the most?

We had good leaders, many of which are CEOs of companies today, but we ran the company for efficiency. We had eight big P&Ls. Having lived in Silicon Valley for a period of time, what I would’ve done differently is run the company with 100 P&Ls to give leaders more focus, accountability, and to make them more innovative earlier on.

A question from a Profile reader: “Although Jeff takes public responsibility for the overall volatility during his tenure at GE, if given the chance to do it over, what 3 things would he have done differently?”

I would’ve simplified the company even further, faster. I would’ve shed more businesses and doubled down. I would’ve made the company deeper. I would’ve actually driven the digital initiative even harder. I would’ve been even more determined and more dogmatic in that regard.

In this uncertain world we live in, you advise a lot of young founders in your capacity as a venture partner at NEA. How do you advise them to learn to become masters of chaos?

There’s this notion of holding two truths at the same time. Knowing that the world is unfair, that it’s really tough, and that just when you think things can’t get worse, they can. You also need to keep your head up and know that the best opportunities may come your way during COVID, or after 9/11, or during the financial crisis. What every young leader can do is understand that you can hold two truths at the same time. You must hold two truths at the same time. But only a select few can do that.

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General Electric extends 2-day decline to 14% as JPMorgan’s Stephen Tusa sticks with $5 price target

Larry Culp GE CEO
Larry Culp, CEO of General Electric.

  • Shares of General Electric have plummeted as much as 14% over the past two days after the company held its analyst day.
  • Investors are souring on the company’s plan to combine its GE Capital Aviation Services unit with AerCap as well as its reverse stock split.
  • JPMorgan analyst Stephen Tusa thinks the downside in General Electric is not over, as he sticks with his $5 price target.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

General Electric investors are souring on the company’s plans revealed at analyst day earlier this week, with the stock falling as much as 14% over the past two-days.

The company announced plans to combine its GE Capital Aviation Services unit with AerCap in an effort to reduce its debt burden by about $30 billion. On top of that, the industrial company said it plans to initiative a 1-for-8 reverse stock split to bring down its nearly 9 billion share count.

JPMorgan analyst Stephen Tusa thinks there’s more downside left for General Electric. Tusa reiterated his Neutral rating on the company and maintained his $5 price target in a note on Thursday, representing potential decline of 59% from current levels.

Tusa argues that General Electric bulls can no longer point to the GE Capital Services unit as a source of value for the stock since the company is merging the unit with AerCap.

“Starting yesterday, there are no longer GE Capital assets around which Sell Side Bulls can argue there is enough value/equity to support related debt,” Tusa said. The average sell side price target for General Electric is $13, Tusa noted.

Some investors have cheered General Electric’s decision to offload GE Capital Services, as it is now a pure play industrial company. But Tusa still sees weakness in those businesses as well.

“We continue to see structural concerns in the key Power markets, and now structural weakness at Aviation, combined with still relatively high financial leverage, and numerous tail liabilities for both GE and GE Capital Services, all hurdles to a speedy turnaround,” Tusa said.

ge chart.JPG
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CEOs like Google’s Sundar Pichai and Microsoft’s Satya Nadella are among the most overpaid CEOs, according to a new report

Google CEO Sundar Pichai speaks during the Google I/O 2016 developers conference in Mountain View, California
Google CEO Sundar Pichai speaks during a developers conference.

  • As You Sow has released its seventh annual report detailing the 100 most overpaid CEOs.
  • The top 30 CEOs on the list includes Alphabet’s Sundar Pichai and Microsoft’s Satya Nadella.
  • Nine companies have made the list every year, including Walt Disney, Goldman Sachs, and IBM.
  • Visit the Business section of Insider for more stories.

CEOs like Alphabet’s Sundar Pichai and Microsoft’s Satya Nadella are among the top 100 most overpaid CEOs, according to a new report from As You Sow.

It’s no secret that CEOs of S&P 500 companies make good money. However, As You Sow’s list doesn’t rank by the size of a CEO’s salary. Instead, the corporate responsibility non-profit uses different metrics to identify whether or not a CEO is being overpaid.

To do this, the study took three main factors into account: the amount of extra dollars a CEO receives based on past company performance and pay, the number of shareholders who voted against a CEO’s pay package, and the ratio comparing the executive’s compensation to the company’s median employee pay. The latter was weighed less heavily.

Coincidentally, the highest salary on the list happens to belong to the most overpaid CEO: Alphabet’s Sundar Pichai, who receives a pay of $280,621,552, according to the report. To compare, the median pay of Alphabet workers sits at $258,708, which is a CEO to worker pay ratio of 1,085 to one.

Pichai is being paid an excess of $266,698,263, according to As You Sow.

Another tech giant, Microsoft, also made the list in 24th place. Satya Nadella, the head of Microsoft, earns $42,910,215. According to the study, Nadella is being paid an excess of $27,896,691.

The median pay of Microsoft’s employees is $172,512, which is a CEO to worker pay ratio of 249 to one.

Several social media companies are seen as giants in Silicon Valley, but only one was included in the report: Mark Zuckerberg, Facebook’s CEO, in 73rd place. Zuckerberg has a pay of $23,415,973, which, according to the study, contains an excess of $9,479,977.

To compare, the median employee pay at Facebook is $247,883. This amounts to a CEO to worker pay ratio of 94 to one, lower than both Microsoft and Alphabet’s.

However, the list wasn’t just dominated by tech leaders. Bob Iger, the former CEO of the Walt Disney Company, Lachlan Murdoch of Fox Corporation, and Miguel Patricio of the Kraft Heinz Company were all listed among the top 30 most overpaid CEOs.

And according to the study, companies that have consistently graced the list are performing worse than those that have never been mentioned. As You Sow has published this report annually since 2015, and nine CEOs have made the list every year, amounting to a total pay of $2 billion. However, these nine businesses have seen a lower annualized shareholder return compared to S&P 500 companies that have never made the overpaid CEO list.

These nine companies include: Discovery, Walt Disney, Comcast, AT&T, Goldman Sachs, IBM, McKesson, Ralph Lauren, and Regeneron.

This consistent overpaying of CEOs can signal several concerns, specifically “poor accountability, weak governance, and lack of concern for shareholder interests,” the study notes.

However, this overcompensation issue may soon be changing as more shareholders are beginning to vote against these hefty CEO paychecks, according to Rosanna Landis Weaver, the report’s author.

“We might be going into a spring where we see higher votes against pay, particularly at companies that try to insulate their executive compensation from the effects of the COVID-19 pandemic,” Weaver told Insider.

These were the top 30 most overpaid CEOs, according to As You Sow’s new report:

30. Norwegian Cruise Line – Frank Del Rio

Pay: $17,808,364

Excess: $6,617,002

Median worker pay: $16,925

29. Walgreens Boots Alliance – Stefano Pessina

Pay: $19,156,202

Excess: $7,266,357

Median worker pay: $34,074

28. HCA Healthcare – Samuel Hazen

Pay: $26,788,251

Excess: $14,094,249

Median worker pay: $56,012

27. Netflix – Reed Hastings

Pay: $38,577,129

Excess: $23,649,474

Median worker pay: $202,931

26. AT&T – Randall Stephenson

Pay: $32,032,925

Excess: $19,313,311

Median worker pay: $98,630

25. McKesson – John Hammergren

Pay: $17,400,207

Excess: $5,240,500

Median worker pay: $38,026

24. Microsoft – Satya Nadella

Pay: $42,910,215

Excess: $27,896,691

Median worker pay: $172,512

23. Linde – Stephen Angel

Pay: $66,149,325

Excess: $52,644,326

Median worker pay: $40,601

22. Coty – Pierre LaubiesĀ 

Laubies was replaced halfway through 2020, the Wall Street Journal reported.

Pay: $16,211,992

Excess: $5,574,670

Median worker pay: $43,242

21. Mylan – Heather Bresch

Pay: $18,509,260

Excess: $7,524,895

Median worker pay: $43,367

20. Qualcomm – Steven Mollenkopf

Pay: $23,065,052

Excess: $9,744,629

Median worker pay: $90,259

19. Marathon Petroleum – Gary HemingerĀ 

Heminger retired from the company in April 2020.

Pay: $24,129,164

Excess: $11,768,410

Median worker pay: $27,507

18. General Electric – H. Lawrence Culp Jr.

Pay: $24,553,788

Excess: $13,339,908

Median worker pay: $50,471

17. Centene – Michael Neidorff

Pay: $26,438,425

Excess: $13,257,871

Median worker pay: $68,987

16. Activision Blizzard – Robert Kotick

Pay: $30,122,896

Excess: $15,867,848

Median worker pay: $94,308

15. Fiserv – Jeffrey Yabuki

Yabuki stepped as CEO mid-2020, Marketwatch reported.

Pay: $27,601,026

Excess: $13,842,124

Median worker pay: $65,254

14. Comcast – Brian Roberts

Pay: $36,370,183

Excess: $23,330,783

Median worker pay: $78,869

13. Fidelity National Information Services – Gary Norcross

Pay: $27,658,117

Excess: $13,926,647

Median worker pay: $59,235

12. T-Mobile – John Legere

Legere stepped down as T-Mobile’s CEO at the end of April 2020.

Pay: $27,756,690

Excess: $13,798,277

Median worker pay: $62,195

11. Advanced Micro Devices – Lisa Su

Pay: $58,534,288

Excess: $40,542,122

Median worker pay: $96,874

10. Fox Corporation – Lachlan Murdoch

Pay: $42,111,103

Excess: $28,735,479

Median worker pay: not provided

9. Las Vegas Sands Corporation – Sheldon Gary Adelson

Adelson died this year and was replaced by Robert Goldstein as CEO.

Pay: $24,680,118

Excess: $11,976,674

Median worker pay: $42,228

8. Universal Health Services – Alan Miller

Pay: $24,473,240

Excess: $12,397,998

Median worker pay: $38,931

7. Intel – Robert Swan

Swan was replaced by Pat Gelsinger as CEOĀ of Intel this month.

Pay: $66,935,100

Excess: $53,244,455

Median worker pay: $96,300

6. The Kraft Heinz Company – Miguel Patricio

Pay: $43,297,480

Excess: $31,390,609

Median worker pay: $42,689

5. The Walt Disney Company – Bob Iger

Iger stepped down as CEO of the Walt Disney Company in February 2020.

Pay: $47,517,762

Excess: $34,885,856

Median worker pay: $52,184

4. Howmet Aerospace – John Plant

Pay: $51,712,578

Excess: $39,321,473

Median worker pay: $55,497

3. CVS Health – Larry Merlo

Merlo retired from his CEO post this month.

Pay: $36,451,749

Excess: $24,311,079

Median worker pay: $46,140

2. Discovery – David Zaslav

Pay: $45,843,912

Excess: $33,823,935

Median worker pay: $79,343

1. Alphabet – Sundar Pichai

Pay: $280,621,552

Excess: $266,698,263

Median worker pay: $258,708

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