Back to green they don't go down easy do they...
to be fair .. employees tend to also be shareholders as well ..but the higher ups tend to have a high percentage of overall employee owned stock...
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GE shows how to make shareholders richer and retirees poorer
General Electric Co. has been patting itself on the back about its success in driving down the cost of its retiree benefits.
In its annual report for 2015, issued Feb. 26, the industrial giant reported that it slashed its total obligation for health and life insurance benefits to current and future retirees by $3.3 billion last year alone. That follows cuts by about $1.4 billion in previous years (h/t to The Street.com for noticing the item).
As its 2015 annual report states, GE has increased its stock dividend handsomely from 2013 to 2015 while gifting shareholders with multi-billion-dollar share buybacks. In this chart, 2013 is in gray, 2014 in black, and 2015 in green. (GE)On the face of it, this is a textbook example of how a big corporation shifts resources from employees to shareholders, a major element in America's rising income inequality. Workers haven't been taking it lying down. The company's squeeze on retiree benefits already has generated two lawsuits — one from retired salaried workers that seeks class certification, and a second from GE labor unions that say the company's cutbacks violate labor contracts.
The first case, brought by retirees Evelyn Kauffman and Dennis Rocheleau in Milwaukee federal court, observes that as recently as 2012, the company committed itself in an employee handbook to maintaining its retiree healthcare plan "indefinitely." Two months after issuing that commitment to workers, the company announced that it would be ending the plan, which provided retirees with "Medigap" insurance to fill in the shortcomings of their Medicare plans.
The company did say that it reserved the right to change or terminate the benefit "at any time and for any reason," but the workers contend that it qualified its intentions by specifying that its decision could be "due to changes in federal law or state laws," among other reasons. That suggested that it wouldn't do so arbitrarily.
"GE made a real promise to its salaried workers and it had no reason to eliminate this benefit," the workers' lawyer, Thomas Geoghegan, told me. "Its costs weren't rising in any significant way, and GE wasn't in any financial trouble. This was gratuitous."
GE has rewarded shareholders well over the last year, rising more than 18% while the S&P 500 has fallen 4.18% (Ycharts)Federal Judge Lynn Adelman noticed the same thing, observing in December that GE didn't end the retiree benefits for any of the reasons it specified in the handbook. Those reasons all "involve a force majeure, something outside [GE's] control such as a change in the law," Adelman wrote. Rather, the company "appears to have terminated the Plans to save money."
Indeed, GE's profits and margins have been quite healthy over recent years, as is shown by the chart below. (The brief profit crash in early 2015 was the result of charges related to the Synchrony spinoff.)
to be fair .. employees tend to also be shareholders as well ..but the higher ups tend to have a high percentage of overall employee owned stock...
---------------
GE shows how to make shareholders richer and retirees poorer
General Electric Co. has been patting itself on the back about its success in driving down the cost of its retiree benefits.
In its annual report for 2015, issued Feb. 26, the industrial giant reported that it slashed its total obligation for health and life insurance benefits to current and future retirees by $3.3 billion last year alone. That follows cuts by about $1.4 billion in previous years (h/t to The Street.com for noticing the item).
GE made a real promise to its salaried workers, and it had no reason to eliminate this benefit. ... This was gratuitous.
Thomas Geoghegan, attorney for retired GE workers
While GE was reducing its obligations to its long-term employees, it was also rewarding its shareholders. Over the past two years, they've received a raise of 13 cents per share in annual dividends, totaling $1.5 billion more per year. They also got a share buyback worth $3.3 billion last year alone, not including the value of GE's spinoff of Synchrony, its old GE Capital unit.Thomas Geoghegan, attorney for retired GE workers
The first case, brought by retirees Evelyn Kauffman and Dennis Rocheleau in Milwaukee federal court, observes that as recently as 2012, the company committed itself in an employee handbook to maintaining its retiree healthcare plan "indefinitely." Two months after issuing that commitment to workers, the company announced that it would be ending the plan, which provided retirees with "Medigap" insurance to fill in the shortcomings of their Medicare plans.
The company did say that it reserved the right to change or terminate the benefit "at any time and for any reason," but the workers contend that it qualified its intentions by specifying that its decision could be "due to changes in federal law or state laws," among other reasons. That suggested that it wouldn't do so arbitrarily.
"GE made a real promise to its salaried workers and it had no reason to eliminate this benefit," the workers' lawyer, Thomas Geoghegan, told me. "Its costs weren't rising in any significant way, and GE wasn't in any financial trouble. This was gratuitous."
Indeed, GE's profits and margins have been quite healthy over recent years, as is shown by the chart below. (The brief profit crash in early 2015 was the result of charges related to the Synchrony spinoff.)
