The book’s authors paint a damning portrait of Immelt’s 16 years at the helm of GE, where a rubber-stamp board of directors allowed him to hemorrhage money almost unchecked. The funds that had been doled out to shareholders as fat dividends - and had covered its managers’ lavish perks and pay - had largely been borrowed on the strength of the company’s golden credit. For years, GE’s profits had been a mirage built on whirlwind mergers and accounting sleight of hand. It turned out the problems at Power were not unique. GE was unceremoniously booted off the Dow. In Flannery’s first year on the job, more than $140 billion in value vanished from GE’s stock price - bigger by far than the losses incurred by the epic collapses of firms like Enron and Lehman Brothers. Disgraced CEO Jeffrey Immelt would travel with not one private jet but two - just in case - and would stock his planes with both lobster and steak as he drained the company’s coffers. By the turn of the 21st century it was valued at $600 billion, encompassing media, plastics, aerospace, energy, digital, financial services and more.īut in the months after the retirement of Jeffrey Immelt, Flannery’s predecessor, all its apparent wealth began to evaporate. GE grew from the nation’s premier power and lighting company into a behemoth. The company was a charter member of the Dow Jones Industrial Average, on board at its creation in 1907 and the only one that remained there 110 years later. Morgan and several partners, General Electric’s corporate pedigree had been peerless. “Did you f–king know about this?” he demanded.įounded in 1892 by Thomas Edison, J.P. “The accounting tricks that looked like profits were actually just borrowing from the company’s future earnings.”Īt that earlier meeting, Flannery wheeled on his CFO and tried to tamp down his rising panic. Power’s “solid profits … were illusory,” write Thomas Gryta and Ted Mann in “ Lights Out: Pride, Delusion, and the Fall of General Electric” (Houghton Mifflin), out July 21. Flannery and Bornstein had both devoted their entire careers to GE, like most of those present for this moment at the annual summer meeting for top executives in Crotonville, NY, a leafy campus where the company’s professionals spend months being indoctrinated in the corporation’s proud culture.īut what should have been a celebration felt more like a wake.ĭays earlier, the two men had met in Schenectady to examine the books at GE Power, the century-old company’s most venerable and profitable division - and had found a dry well where they expected cash.
It was August 2017, less than a month after John Flannery, the brand-new CEO of General Electric, had taken the reins.
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