US industrial conglomerate General Electric, which major shareholder Trian Fund Management has been pressuring to conduct a more thorough restructuring, appointed the hedge fund's chief investment officer to its board on Monday.
Edward Garden will replace Robert Lane, who is retiring due to health reasons after a dozen years as a director, GE said.
The surprise move comes one day before shareholders at consumer products company Procter & Gamble will decide whether to elect Trian chief executive Nelson Peltz to its board.
Trian, which invests $14 billion in assets for pension funds, endowments and wealthy investors, has owned a roughly 1 per cent stake in GE since 2015.
Four months ago, GE said longtime chief executive Jeff Immelt would step down and that John Flannery, a 30-year company veteran who had run its healthcare business, would succeed him.
Lacklustre performance
The company’s lacklustre stock performance was seen to have prompted Immelt’s departure, which came months before analysts had expected, but the shares have continued to fall. They were down 3 per cent in Monday morning trading.
“Like other GE shareholders, I am disappointed by the recent performance of GE’s stock,” Garden said. “But I continue to believe that GE represents an attractive long-term investment opportunity with significant upside.”
The most recent wave of executive departures was announced last week and includes chief financial officer Jeffrey Bornstein. Jamie Miller, chief executive of GE Transportation, will become chief finance officer next month.
Although Trian is an activist investor that demands change at companies, it is also known for working behind the scenes with management to improve performance. It rarely pushes out a chief executive the way some other activists do, and it often sticks around, often for years, as transformations occur.
After discussions with Trian, GE in March set a $2 billion cost-reduction target and linked the bonuses of its senior management to meeting profit-related goals.
– (Reuters)
