Under Pressure From Trian, GE Vows to Boost Industrial Profits -- Update

By Thomas Gryta and Austen Hufford 

General Electric Co. promised to cut $1 billion in costs from its industrial operations this year, and to more closely tie top executives' bonuses to profits in its core industrial business.

The changes outlined Wednesday follow discussions with activist investor Trian Fund Management, which has been pressuring the conglomerate to boost profits.

GE executives recently acknowledged the company was unlikely to reach a long-term goal to deliver $2 a share in industrial profits in 2018.

For 2017, GE expects an industrial operating profit of $17.2 billion and industrial structural costs of $23.9 billion in 2017.

If both goals are met, bonuses for the company's executive team will be increased 20% while if the goals are missed, bonuses would fall 20%.

In recent years, the conglomerate has refocused on its industrial businesses, shedding low-margin units like home appliances and striking a big oil-and-gas deal with Baker Hughes Inc. last fall.

Trian said it was pleased with the new framework and that GE should continue "simplifying and streamlining" its organization to achieve financial goals.

"We will continue to hold management accountable to its commitments," Trian said.

GE expects industrial structural costs to be $22.9 billion for 2018, down from $24.9 billion in 2016.

Shares of GE rose slightly to $29.42 in early trading Wednesday.

Write to Thomas Gryta at [e-mail] and Austen Hufford at [e-mail]

(END) Dow Jones Newswires

March 22, 2017 10:08 ET (14:08 GMT)

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