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last updated 8 January 2015

The economy: GE’s chief to advise Obama

Continuing his recent overtures to the business community, President Obama has tapped General Electric CEO Jeffrey Immelt “as his chief advisor on how to help American companies create more jobs,” said Zachary Goldfarb and Perry Bacon in The Washington Post. Announcing the appointment last week, Obama said Immelt “understands what it takes for America to compete in the global economy.” Immelt will head a panel of outside advisors called the Council on Jobs and Competitiveness; it replaces the now-disbanded Economic Recovery Advisory Board, which was led by former Federal Reserve Chairman Paul Volcker.

“It’s hard to imagine someone who has more experience” in global competition, said Daniel Indiviglio in TheAtlantic.com. But Immelt’s new White House role bristles with potential conflicts of interest, as well. If the panel tackles corporate tax reform, will Immelt push to eliminate loopholes that benefit large businesses at the expense of smaller ones? And what of GE’s record as a jobs exporter? When Immelt was named CEO in 2001, 54 percent of GE’s workforce was U.S.-based. Today, the majority is based overseas. Federal support for manufacturing, which Immelt supports, raises still more questions; few companies would benefit more from it than GE.

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After taking flak for awarding a lucrative severance package to former Chief Executive Mark Hurd, Hewlett-Packard’s board has undergone a “massive overhaul,” said Brandon Bailey in the San Jose Mercury News. Four directors are departing. They’ll be replaced by five new directors from outside the company. In addition to the Hurd imbroglio, in recent years HP has been rocked by the fractious tenure of former CEO Carly Fiorina and a scandal over HP’s investigation of employee leaks to the media.

A Paris court last week convicted former Vivendi CEO Jean-Marie Messier and Warner Music Group CEO Edgar Bronfman Jr. of criminal charges including misleading investors, said Heather Smith in Bloomberg.com. The charges stem from the acquisition spree Messier led as Vivendi’s CEO from 1996 to 2002, when the former water company transformed itself into a media conglomerate. Messier was fined $200,000; Bronfman, a former Vivendi executive, was fined $6.8 million. Neither faces prison time; both will appeal.

The two top executives of Viacom, the parent company of MTV Networks, received total pay of nearly $150 million in fiscal 2010, more than doubling their 2009 take, said Meg James in the Los Angeles Times. CEO Philippe Dauman raked in $84.5 million in salary, stock, and other benefits; Chief Operating Officer Thomas Dooley took in $64.7 million. The price of Viacom common stock increased 22 percent in the period, partly on the strength of MTV’s hit series Jersey Shore.

Danielle Chiesi, who was heard on prosecution tapes insisting that “insider trading was as good as sex,” pleaded guilty in the Galleon insider-trading probe last week, said Scott Shifrel in the New York Daily News. Chiesi, 45, admitted using inside information “to make better trades for her employer,” Bear Stearns. She obtained some of the information from an IBM executive with whom she was having an affair and passed it on to billionaire Raj Rajaratnam, founder of the Galleon hedge fund, whose trial on insider-trading charges starts in February. She faces up to 15 years in prison.

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