General Electric CEO Jeffrey Immelt has purchased 50,000 shares of the struggling conglomerate’s stock to demonstrate his confidence in its health even as the Fairfield company’s shares plummeted to trade at a 16-year-low.
Immelt paid $8.26 on each share of GE, spending roughly $413,000. GE’s vice chairman Michael Neal, who is also head of the company’s ailing GE Capital lending arm, also purchased 50,000 shares, paying $7.90 per share.
Immelt’s stock purchase “reflects his confidence in the company and our ability to manage through the crisis and return to long-term growth,” said GE spokesman Russell Wilkerson in an e-mail. He said several members of GE’s board also bought stock Monday.
GE shares fell hard Monday, dragged down by continuing concern over the company’s near-term future and a broader sell-off of financial stocks. GE often trades in line with bank shares since GE Capital represents a large portion of its business.
Earlier Monday, GE stock hit a low of $7.51. The shares last sank below that level in April 1993.
GE cut its quarterly dividend 68 percent on Friday, the first time in 70 years it has reduced the shareholder payment. Many analysts and investors say GE could also lose its top “AAA” credit rating this year because of financial troubles at GE Capital, which has suffered from mounting loan losses during the financial crisis.
Immelt declined a bonus and nearly $12 million in performance awards earlier this month because of GE’s falling share price and lower earnings. Immelt bought 317,000 shares last year and after Monday’s purchase, he directly owns 1.7 million GE shares and holds another 23,000 in a 401(k) plan.
Yet despite the confidence-building move Monday, Immelt took a loss on the shares he bought – $33,000 of his investment evaporated by the time the stock market closed.
At 11 a.m. today, GE shares traded at $7.02, down 58 cents, or 7.6 percent. (AP)
