NEW YORK – General Electric announced on Monday that it is embarked on an ambitious restructuring plan which includes a 50-percent dividend cut, a reduction in the number of board seats and a narrower focus on aviation, energy and health care.
The initiative was presented by John Flannery, who became GE’s chief executive on Aug. 1, replacing Jeff Immelt after 16 years at the helm of the industrial conglomerate.
“This is the opportunity of a lifetime to reinvent an iconic company,” Flannery told investors and Wall Street analysts at a meeting in New York.
Founded 125 years ago, the Boston-based company employs roughly 300,000 people worldwide.
GE plans to sell off a unit that makes train engines and another unit, Current, that is in the lighting business, and will consider getting rid of its controlling stake in oil-and-gas company Baker Hughes, Flannery said.
The board of directors is to be reduced from 18 members to 12, the CEO said.
Another aspect of the overhaul is a 50 percent cut in the dividend paid to stockholders, from 96 cents a share to 48 cents, which Flannery said would save GE more than $4 billion a year.
“We’ve been paying a dividend in excess of our free cash flow for a number of years now. We just don’t think it makes sense for our company going forward,” the CEO said.
Though reorganization and cost-costing will entail job losses, GE has yet to say how many positions stand to be eliminated.
GE shares were down 5.6 percent on the New York Stock Exchange at mid-day Monday.