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GE freezes pension plan for 20,000 employees – Fox Business, Foxbusiness.com


GE issues another rebuttal

General Electric is still trying to defend itself against accusations of accounting issues. SEC said they are monitoring the situation.

General Electric is making sweeping changes to its pension plan for approximately 20, 000 employees, sending shares higher ahead of Monday’s opening bell.

(Change)

Ticker Security Last Change%
(GE GENERAL ELECTRIC COMPANY 8. 57 – 0. 14 – 1. (%)

Seven hundred employees who became executives before 2011 will have their supplementary benefits frozen, and no changes will be made for retired employees. The changes will reduce GE’s pension deficit by about $ 5 billion – $ 8 billion and net debt by approximately $ 4 billion – $ 6 billion.

“Returning GE to a position of strength has required us to make several difficult decisions, and today’s decision to freeze the pension is no exception, ”Kevin Cox, chief human resources officer at GE, said in a press release.

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“We carefully weighed market trends and our strategic priority to improve our financial position with the impact to our employees. We are committed to helping our employees through this transition. ”

The company said it will use some of the money it has received from the sale of its BioPharma, BHGE and Wabtec transactions to pre-fund up to $ 5 billion of its Employee Retirement Income Security Act payments for 2021 and 20212. Retired employees who have not started receiving monthly payments will have the option to receive a one-time lump-sum payout.

General Electric, once an industrial icon, is in the midst of trying to engineer a turnaround after shares lost more than half their value amid a slew of problems last year. The battered company has undertaken a massive restructuring plan aimed at reducing debt by selling off non-core assets. In August, the company wasaccused by whistleblower Harry Markopolos, who alerted authorities about Bernie Madoff’s Ponzi scheme, of hiding its problems through fraudulent accounting.

GE’s Troubled Timeline:

2019:

  • January: GE altered its agreement with the rail-transport company Wabtec in order to receive $ 2.9 billion of cash in exchange for giving up more equity.
  • March: Warns it could have a negative free cash flow of up to $ 2 billion this year.
  • June: Reports strong first-quarter results, bolst ered by its aviation unit.

2018:

  • June: GE was booted from the Dow Jones Industrial Average and announced a massive restructuring, shifting its focus to aviation, power, and renewables.
  • October: CEO John Flannery gets the boot and was replaced by Larry Culp. The company then took a $ 23 billion goodwill charge for its power business. Culp said he would sell assets to raise cash and pay down debt. The SEC and the Justice Department said they would investigate the writedown. The investigation is ongoing.
  • End of the year: GE sold a $ 4 billion stake in the oil-services provider Baker Hughes and announced it would sell a majority stake in the software provider ServiceMax to the private-equity firm Silver Lake. It was able to bring down debt by $ 21 billion in the fourth quarter.

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