Cramer: GE’s whole board of directors should go on the Wall of Shame

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CNBC’s Jim Cramer was looking for some reassurance when he and his “Squawk on the Street” colleagues Carl Quintanilla and David Faber interviewed the CEO of General Electric on Tuesday.

“While I’m very interested in his plans for the future, I did want some sort of ‘truth and reconciliation’ before I’d be willing to recommend the stock, even down here,” the “Mad Money” host said, borrowing a phrase from the legendary human rights activist Archbishop Desmond Tutu. “FYI, GE’s now 12 points below where it was when the former CEO, Jeff Immelt, came on the show and assured us everything’s fine.”

In that February interview, Immelt pushed back against Wall Street analysts who had put “sell” ratings on General Electric’s stock, saying that GE would have “a really good year.”

“That was just nine months ago! And look, this is a huge conglomerate that should be able to forecast at least somewhat … what it might earn,” Cramer said. “Turns out the negative analysts that Immelt showed just disdain for were spot on and dead right.”

Due to GE’s cash problems and poor performance, its new CEO, John Flannery, announced a widespread restructuring plan on Monday to slash the dividend in half and shed under-performing divisions.

But when Cramer asked Flannery about his company’s past transgressions on Tuesday, the new CEO didn’t seem interested in reconciling with the mistakes GE made in the past.

“What matters to him is the future, not the past. Normally, I’m all for that kind of attitude, but as someone who believed that GE was doing much better than it was, I need to know two things: was the old management misleading us or were they misleading themselves?” Cramer said.

Cramer argued that such major pitfalls should have been evident to GE’s leadership, particularly its board of directors, who signed off on all of the company’s shoddy transactions.

Flannery did announce on Monday that he would replace much of the company’s board, but said that he would leave its lead director, former Vanguard CEO Jack Brennan, in place.

“I’m so tempted just to put GE’s whole board on the Wall of Shame for agreeing to offer $30 billion in buybacks and dividends last year with money the company so desperately needs now,” the “Mad Money” host said. “I want to put them up there on that Wall of Shame for not holding management accountable for its sins.”

By not addressing GE’s past mistakes, Cramer said Flannery runs the risk of unearthing more wrongdoing as he tries to push forward and remodel the company.

More importantly, Cramer said he would risk alienating GE’s shareholders, who need to know what went wrong to make them lose so much by way of the stock’s drastic declines.

“If we don’t try to understand how things went so wrong at GE, if we don’t unearth all of the accounting issues and the misinformation or, conceivably, outright dishonesty that was presented to us, how the heck can we trust this company to get anything right going forward?” Cramer wondered.

As Flannery embarks on his self-proclaimed “massive heavy lift” in 2018, the “Mad Money” host remained disappointed by the CEO’s refusal to reflect.

“At the very least, the board owes us an explanation,” Cramer said. “After all, how can we tell that Flannery’s going to fix everything when we don’t even know what needs to be fixed? Hence my position on General Electric’s stock: until we get some truth, there will be no reconciliation.”





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