Essays on Empowering Leadership in Management Teams: General Electric Case Case Study

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The paper "Empowering Leadership in Management Teams: General Electric Case" is a brilliant example of a case study on management. Jeff Immelt, took control of GE from its legendary leader, Jack Welch, in 2001, Immelt presided over the slowest development year in decades and a stock value half of what it was in 2000, with not a single solid recuperation to be found. What's more, the organization had been managing terrible press and a crotchety disposition from investors over Welch's liberal severance bundle. One examination demonstrated GE's corporate slipping from twelfth to twentieth place in 2002, due to poor management. ” The atmosphere at the April 2003 stockholders’ meeting was adversarial, Immelt’ s compensation was under scrutiny, and GE’ s corporate governance practices were in question.

Immelt needed to decide what to do next. According to a Wall Street Journal article published in November 2003, Immelt sought counsel that summer from Warren Buffett. During the last several years, Buffett had championed the thought that official pay ought to be attached to long haul execution and that investment opportunities could just work on the off chance that they were joined by measures deflecting administrators from controlling stock costs for here and now pick up.

The buffet had also pushed for companies to expense options, thus raising the visibility of such pay practices. Over a steak dinner in Omaha, Nebraska, according to the article, Buffett advised Immelt to stay away from tying compensation to the stock price, instead of basing it on “ simple targets. ” Shortly after the meeting with Buffett, the remuneration council of GE's board, led by Andrew C. Sigler, reported a radical move in how Immelt was to be rewarded.

Gone were the investment opportunities, customer rights, and limited stock units. While in 2002 Immelt had gotten practically $9 million in investment opportunities and confined stock units, in 2003 he was to get 250,000 performance share units worth $7.5 million. Each performance share unit was convertible into a GE share in 2008, provided certain cash flow and shareholder-return conditions were met. Critics hailed the move as a step forward and in keeping with better corporate governance.


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