Client Id: 77 THOMSON REUTERS STREETEVENTS EDITED TRANSCRIPT GE - General Electric Co Annual Shareholders Meeting EVENT DATE/TIME: APRIL 25, 2018 / 2:00PM GMT THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us ©2018 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. Client Id: 77 APRIL 25, 2018 / 2:00PM, GE - General Electric Co Annual Shareholders Meeting CORPORATE PARTICIPANTS Jason Oliver John L. Flannery General Electric Company - Chairman & CEO CONFERENCE CALL PARTICIPANTS Craig Williams David Almasi Dennis Rocheleau Janet Gray John Huber Kevin Mahar Martin Harangozo Patricia Zerega Ron Flowers William Freeda Michael Barbera Christine Gilband Tom Bobrowicz Scott Slawson Linda Hoover H. Alan Young David Bjorkman Craig Kroll Jack Richards Paul Reinmann Thomas Hattier John Betchkal Melody Jackson Mike Freido Diana Driver Martin Donnellon Hal Waters PRESENTATION John L. Flannery - General Electric Company - Chairman & CEO 2 THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us ©2018 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. Client Id: 77 APRIL 25, 2018 / 2:00PM, GE - General Electric Co Annual Shareholders Meeting Good morning, everyone. Thanks so much for coming. On behalf of the -- thank you. Thanks, again, for coming. This is an amazing facility. I hope you got a chance to see that. I just like to say on behalf of the board and the management team, I'm pleased to welcome you to the 2018 Annual Meeting of GE Shareowners. I'm John Flannery, the Chairman and CEO. I want to thank you for -- and I hope you got a chance to see this incredible facility. This is really the future of manufacturing in many ways. We're inventing a whole new business for ourselves in additive manufacturing and how we use it in the company. It's more commonly known as 3D printing. I'd like to start first by introducing the GE Board of Directors who're with us here today. And I'll ask the directors to stand briefly as I introduce them so you can see who they are. So Sébastien Bazin, Chairman and CEO of AccorHotels, director since 2016; Geoff Beattie, CEO of Generation Capital, a director since 2009, Geoff is the Chairman of our Audit Committee; Jack Brennan, Chairman Emeritus of Vanguard, a director since 2012, Jack's our lead director and Chair of the Management Development and Compensation Committee; Frank D'Souza is CEO of Cognizant Technology Solutions, a director since 2013; Ed Garden is the Chief Investment Officer and Co-Founder of Trian Fund Management, Ed's been a director since 2017; Risa Lavizzo-Mourey, Former President and CEO of the Robert Wood Johnson Foundation, a director since 2017, and Risa is the Chair of our Governance and Public Affairs Committee; Jim Mulva, CEO -- Former Chair and CEO of ConocoPhillips and a director since 2008, and Jim is the Chair of our Finance and Capital Allocation Committee. And then, lastly, Jim Tisch, President and CEO of Loews, and Jim's been a director since 2010. We also have 3 new director nominees who will join the board after today's meeting. I'd like to introduce them as well, starting first with Larry Culp, who is the former President and CEO of Danaher; Tom Horton who's the former Chairman and CEO of American Airlines; and Leslie Seidman is the Former Chairman of the Financial Accounting Standards Board. I'd also like to acknowledge 8 directors of ours who are not standing for reelection and thank them for their service: Andrea Jung, Shelly Lazarus, Susan Hockfield, Marijn Dekkers, Mary Schapiro, Jim Rohr, Peter Henry and Steve Mollenkopf. You'll note that we're nominating a much smaller board this year. It was really based on a decision made by the board after its own self-assessment and also a lot of input from our investors. I'd like to report on the operations and give you just a few minutes of an update on the company. Before we talk more about the transformative work we're doing across GE, I'd like to address some of the questions that I know and thoughts that are probably on your mind today. Behind me, you can see the relevant numbers for 2017. But beyond the numbers, I know that the questions that are foremost on your mind in hindsight, what is our assessment of 2017? How are we holding people accountable? What are we going to do to fix the underlying issues and position GE's business for success in the years ahead. And I just want to assure you, I've spent countless hours asking myself these same questions. This -- 2017 has been immensely disappointing to those of us on the board, to the GE leadership team, to our employees across the business. And I know it has been very much so for all of you in this room. And I'd start first with just a quick assessment of 2017 as we move forward, I think, just a moment on that. Well, a majority of our business has really had a very good year in 2017, but the Power and the Oil & Gas markets were in difficult cycles for us. Our operating rigor and execution should have been better. And in the end, we were slow to recognize some of the market developments in our Power business, in particular. The net effect in the end was a substantial drop in our earnings and the cash flow with the company. And we also had to take a large charge in a runoff insurance business in GE Capital. So as a result of those developments, we had to reduce the dividend of the company, and we've made significant costs and job reductions across all of the businesses, in general. I can't underscore in the role I'm in how tough those decisions are and really how seriously we take them, as a management team, as a board. We're keenly aware of the pain that our performance has caused and the dividend cut has caused with investors, with retirees, with families. We know how much you rely on this, and these were decisions taken really with extreme deliberation. At the end of the day, as we look at it, for the company to succeed in the long run, we have to make sure that we have a competitive cost position, that our businesses are positioned competitively and that we have a capital allocation model that's balanced in light of all the factors. So that's a look at 2017. Secondly, it's how we held people accountable. That's the natural question to come up in these circumstances. I'd say we've made important changes at all levels of the company, really to hold our teams accountable to all of you for the performance. And I'd start at every level. At the board level, we've reduced the size of the board, as I mentioned earlier. We've added new members with key background and experience. We've realigned 3 THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us ©2018 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. Client Id: 77 APRIL 25, 2018 / 2:00PM, GE - General Electric Co Annual Shareholders Meeting our committee oversight. We created a new Finance and Capital Allocation Committee, really to help focus on how we're investing across the company, where the money is going, how we drive returns for shareholders. So substantial changes at the board level. We also made very substantial changes in the senior leadership of the company, both at the GE level, at my level, and also at the -- inside the GE Power business. The senior leaders of the company directly felt the effect of our performance in 2017 in their wallets in the form of no bonuses and -- as we should have. That's what we deserved for 2017. I think, moving forward, which is most important and most on my mind is how do we fix the businesses, improve the performance and move forward with a plan to have them flourish. The most impactful thing we can do right now is just that. How do we make GE simpler and stronger and move ahead? And I assure you, we'll not let up on this until the job is completed here. I'll walk through more in a minute a little bit of detail on that. But first of all, I just want to come back is the philosophy. I strongly, strongly feel we have very, very good businesses that need to be the center of gravity of the company going forward. So the way we're going to run the company really built around the business strength. We're making a lot of our resourcing and our portfolio decisions to make sure that those businesses can lead and flourish in the industries that they're in. We're dramatically reducing, and you saw this in some of our numbers, our structural costs, increasing our visibility, executing on cash, running the company for cash.
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