(CN) – In a lawsuit filed Thursday, a General Electric investor seeks to hold former CEO Jeff Immelt and the company’s board of directors individually responsible for GE’s nearly 50 percent decline in value over the past year.
Richard Gammel filed a derivative action on behalf of General Electric Company against former CEO Jeffrey Immelt and other members of the board of directors in New York County Supreme Court. Gammel is represented by Richard Acocelli in New York City.
General Electric, once a titan of American industry that pioneered the light bulb and the jet engine, has only disappointed investors in the decade since it was bailed out by the government during the 2008 financial crisis.
GE’s stock has performed worse than any other company in the Dow Jones over the last 10 years, and in the last year has lost nearly 50 percent of its value, while the Dow overall is up over 20 percent.
It sold off its appliance business in 2016, and recently announced a plan to sell its iconic light bulb business.
In November 2017, GE slashed its coveted dividend in half, and in January, the company said it was taking a $6.2 billion charge related to decades-old costs incurred by its financial services business.
Gammel’s derivative suit filed Thursday seeks to hold Immelt and other GE directors individually accountable for the company’s shocking decline, focusing on its most recent failings.
“Defendants failed to disclose that the company’s various operating segments, including its power segment were underperforming company projections, with order drops, excess inventories, and increased costs,” the complaint states. “As a result, the company overstated GE’s full year 2017 guidance and defendant’s statements about GE’s business, operations and prospects are false and misleading.”
GE posted a huge third-quarter earnings miss in 2017, its biggest in 17 years, reporting earnings of $0.29 per share, way below estimates of $0.49 per share. The miss lead many analysts to believe that new CEO John Flannery, who replaced Immelt in August 2017, may need to consider dismembering the company entirely.
In addition, Gammelt cites recent news reports that Immelt routinely had a second, completely empty corporate jet follow his plane around the globe just in case the first plane experienced a mechanical malfunction, a practice that wasted millions of dollars.
“Despite the board’s supposed lack of knowledge of the extra plane, the complacency of the board and its failure to ask questions has been extensively criticized,” according to the complaint.
Immelt has denied any knowledge of the “chase plane” that allegedly accompanied his every flight for years, and publicly said, “I just did not have time to personally direct the day-to-day operations of the corporate air team. I had every right to expect that it was professionally run.”
Gammelt seeks to amend GE’s bylaws to require stronger board supervision of operations, and the disgorgement of all profits and compensation paid to the defendant executives.
In 2015 alone, Immelt received nearly $33 million in total compensation, according to the complaint.
GE did not immediately respond Friday to a request for comment.