General Electric Company (NYSE:GE) is looking at possible further cuts in the banking arm, people with knowledge of the matter cited. The company wants to focus more on industrial business, which has better returns potential. In the recent times, General Electric was been trying to ensures that most of its profits come from the industrial business compared to the lending arm.
General Electric Company (NYSE:GE) has been shrinking its financing arm and it seems the company wants to do more. The financial business has weighed down the overall performance of the company and investors are not happy. According to the sources, the lending business isn’t worth the provocation it generates from investors, which is shrinking it further is necessary.
As General Electric downsizes its lending arm, the company has been trying to boost returns in its industrial unit. The idea is to bolster the performance of the industrial business to the point that it is able to contribute 75% of total profits by 2016. The industrial segment of GE accounted for 55% of revenue in 2013.
In letter to be published on March 16, General Electric Company (NYSE:GE)’s CEO, Jeff Immelt, says that the company is first and foremost an industrial entity. He further says that the size of the financial unit, also known as GE Capital, will depend on its returns, competitiveness, regulatory impact on the whole company.
In a proxy filing, General Electric Company (NYSE:GE) revealed that the pay of Immelt went up in 2014 because of a number of reasons. Specifically, the board noted that the CEO performed very well last year, especially in hitting the target in tilting earnings away from financial operations toward industrial manufacturing.
Pay hike for CEO
For the nice job, the board hiked Immelt’s salary to $3.75 million and awarded him $5.4 million in cash bonus. As a result, the CEO’s earnings jumped 8% in 2014 compared to the previously year.
Need for change at the top
Although General Electric Company (NYSE:GE) maintains that Immelt is doing a great job, analysts have noted that analysts are now more interested in seeing a change of guard at the top.