Lights Out: Pride, Delusion, and the Fall of General Electric

by Thomas Gryta

While Immelt said that he encouraged debate, meetings often lacked rigorous questioning. One executive recalled being in a board meeting in which Keith Sherin was presenting the quarterly financial results to the group. The Power business had missed badly, but little specific detail was provided on what went wrong. This executive braced for the reaction from the directors, but it never came—none of them asked what went wrong. When Flannery committed to renewing and shrinking the board of directors, it included half a dozen current or former CEOs, the former head of mutual fund giant Vanguard Group, the dean of New York University’s business school, as well as a former chair of the Securities and Exchange Commission. The seventeen independent directors got a mix of cash, stock, and other perks worth more than $300,000 a year. The terms had been even more generous when GE still made appliances; the company allowed directors to take home up to $30,000 worth of GE products in any three-year period. The company matched the directors’ gifts to charity, and upon leaving the board, a director could send $1 million in GE money to a charity. Some directors admitted to having been sold by Immelt’s sweeping optimism, even if they knew he wasn’t the best deal-maker. But they knew he had a hard job, was playing with a tough hand, and had survived multiple major crises. Plus, they liked him. Immelt said that he did his best to keep directors informed, noting that he required them to make...