GE CEO Immelt leaves US$31b pension shortfall for successor

New York

IT'S a problem that Jeffrey Immelt largely ignored as he tried to appease General Electric Co's most vocal shareholders.

But it might end up being one of the costliest for John Flannery, GE's newly anointed CEO, to fix.

At US$31 billion, GE's pension shortfall is the biggest among S&P 500 companies and 50 per cent greater than any other corporation in the US. It's a deficit that has swelled in recent years as Mr Immelt spent more than US$45 billion on share buybacks to win over Wall Street and pacify activists such as Nelson Peltz.

Part of it has to do with the paltry returns that have plagued pensions across corporate America as ultra-low interest rates prevailed in the aftermath of the financial crisis. But perhaps more importantly, GE's dilemma underscores deeper concerns about modern capitalism's all-c…