General Electric’s top executive on Wednesday touted the ability of the company’s revamped board of directors to provide a fresh perspective for the firm during a critical turnaround effort, despite the lack of experience on the leadership slate.
The majority of the individuals who sit on the board were appointed in 2016 or later, and several assumed their positions in 2018. The group provides “very fresh perspective at the expense ... of experience,” CEO Larry Culp said at GE’s annual shareholder meeting.
“They want to be part of the journey, they want to be part of the story we want to write,” he told attendees. The board can “have honest, candid, tough conversations.”
It’s also a more diverse group then the industrial conglomerate had in the past, with 40 percent more women holding posts. Among the newest members is Catherine Lesjak, the former chief financial officer of HP, PreferWest CEO Paula Rosput Reynolds and Leslie Seidman, former chairman of the Financial Accounting Standards Board.
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Culp and the board are attempting to turn around the struggling Boston-based firm, which has seen its stock rise 25.4 percent through the start of the year. Still, shares have fallen more than 64 percent since 2017 -- or roughly $200 billion in lost market value.
The main focus in 2019 is paying off its large debt load, Culp reiterated on Wednesday, as well as revamping the firm’s struggling power business.
“We need to get the debt level down,” he said. “We’re not as nimble, we’re not as agile…as these businesses deserve with the balance sheet where it is today.”
GE recently sold its biopharma business for $20 billion, cash that will be put directly towards paying down the balance sheet. The company is also moving roughly $25 billion in assets out of GE Capital. Still, Culp continues to expect the firm to lose as much as $2 billion in 2019.
“That is our reality as we deal with some legacy issues in the business and at the same time invest in the future,” he said.
While Culp has moved quickly to try to improve GE’s operations, some analysts are questioning the pace of recovery.
The company, for example, previously said that restructuring costs would be “second-half loaded,” an announcement that is “odd and certainly unforeseen,” according to Gordon Haskett’s John Inch. Others have also questioned the sale of the biopharma sector to Danaher, given its strong financial performance.
Shareholders on Wednesday voted to approve KPMG as GE's auditor, one that comes as the federal government probes the firm's accounting practices. Some investors sought to force the company to cut ties with KPMG after more than a century.
GE previously reported profits of 14 cents per share in the first quarter of 2019, higher than Wall Street expected.