General Electric’s (GE) annual shareowner meeting is tomorrow (Weds.) in Detroit. I urge those that haven’t voted to do so as soon as possible today to ensure votes are counted. To help make readers better informed and to generate discussion, I prepared two write-ups surrounding GE’s annual meeting: (1) a review of each item for vote on its proxy, and (2) a look at why GE is undervalued. [Hyperlinks visible in full article view.] It’s unmistakable to me the market has been efficient in valuing GE shares when considering GE’s deficient corporate governance and management. Please continue reading even if you have read the above two linked articles.
However, shareowners have limited recourse since a majority of shares are owned by institutional investors that often either vote in-line with management or simply aren’t putting clients’ interests first when voting proxies. Another matter is the inadequate shareowner proposal system, which limits shareowners’ rights, is non-binding, and has been hijacked by corporate and private lawyers. Finally, there is almost no accountability of directors (shareowners pay costly indemnity insurance for their own directors) and at GE, to make matters worse, executives do not appear to be held accountable by the board (instead they have been compensated very well throughout while shareowners continue to exercise great patience that is showing signs of wearing thin).
With that being said, a start is to vote the proxy items. Low vote turnout by individuals fuels companies’, lobbyists’, and academics’ arguments that certain proxy reform measures aren’t needed simply because shareowners would essentially not be reading them anyway or would not care. One such critical matter is the disclosure of CEO pay to median worker pay. I will share thoughts on next steps following the vote results.