Good morning, and welcome to GE's 2015 annual meeting. I'm Jeff Immelt, chairman of the board of GE, and here with me today are Jeff Bornstein and Brackett Denniston. Each year, we hold our annual meeting in a town that's important to GE and its shareowners. This year, it's Oklahoma City, and we're very proud to be here. We have over 1,000 employees in the state of Oklahoma. We do business in Oklahoma City because we like the community and its people. This week, we made a donation to the Oklahoma Center for the Advancement of Science and Technology to support STEM education and accelerate workforce readiness. At a time when Oklahoma City is looking to the future, we also want to acknowledge the past and the enormous tragedy that this community faced 20 years ago.
The city has recently been through a tough but important anniversary, and our thoughts this week have been with the victims of the 1995 bombing, and we applaud your strength. In 2013, GE broke ground with a tremendous facility here in Oklahoma City. With an investment of $125 million and a strong commitment from our partners, we began the construction of GE's first oil and gas technology center. Its construction is based on our belief that innovation is at the heart of our strategy in oil and gas, and we will continue to invest in technology and stay close to our customers. It is here in Oklahoma City that we're creating the future of our oil and gas business. While the market for oil and gas companies has become tougher in the short term, this won't stop GE from thriving.
We will navigate this period in the same way we've taken advantage of past cycles through our strength as a diversified company and by investing in technology at the right moments. We're in this business for the long term. We compete aggressively because other businesses have come out winners in similarly tough cycles. Our aviation business invested in next-generation aircraft engines after 9/11 at a time when our competitors did not. Now we have a $134 billion backlog in aviation. Just a couple of years ago, our transportation business invested in new locomotive technology ahead of demand and ahead of our competitors. As a result, we've been able to capture the majority of the market and will ship more than 2,000 Tier 4-compliant locomotives over the next two years. We've positioned GE to compete as a connected industrial company.
We stand at the intersection of the physical and analytical worlds. We blend the best elements of speed, scale, and flexibility, and we use our breadth to capitalize on volatility coming out of each cycle with a stronger hand. We are executing. In 2014, we grew industrial earnings per share by 10%, and in the first quarter of 2015, grew by 14%. We continued to deliver solid organic growth and margin expansion. We finished last year with cash flow of over $15 billion, while returning $11 billion to you in dividends and buyback. Meanwhile, we continue to invest $15 billion each year in new products, new factories, new systems, and new companies. For 2015, we're on track for industrial earnings per share of $1.10-$1.20, up substantially from 2014. Since our last meeting, we announced some significant changes to the GE portfolio.
We plan to acquire Alstom, a European engineering leader, an excellent complement for our power and grid business. This investment will generate an excellent return. We announced the sale of our appliance business to Electrolux, this allows us to focus on our core strengths and should also benefit our employees and customers. Two weeks ago, we announced a significant strategic change for GE Capital. In the future, we'll focus only on financing businesses connected to GE's industrial markets and sell the remainder of GE Capital. We've already achieved a large part of this goal through the Synchrony split and the sale of our commercial real estate business. Executing this plan should allow us to deliver $90 billion in dividends and buyback over the next few years. Going forward, every piece of GE creates value from the GE Store.
The GE Store leverages our broad horizontal strength in technology, globalization, services, and shared processes. Our collective intellect makes GE more valuable to investors, you should see this in expanding growth, margins, and returns. Improving and sustaining execution requires running the company differently. We're in the midst of a culture change that's redefining the way we make decisions, work together, align with customers, and hold ourselves accountable. We're focusing on speed, efficiency, and market impact, calling this the culture of simplification. We already see that this is helping us drive better operating performance. As we continue to change, we won't lose touch with the values that make GE. There's really five core GE beliefs. Customers determine our success. This is a statement of fact. Great teams win in the market. Stay lean to go fast. Scarcity drives teamwork. We're driven by purpose, not bureaucracy. Learn, adapt to win.
Good companies make mistakes quickly, they learn and adjust, winning has to be our goal. Empower and inspire each other. The days of centralized command are in the past. Our teams have the expertise to accept empowerment and drive results. Deliver results in an uncertain world. This is our commitment to you. GE beliefs drive performance and shape careers. As investors, you can see the big changes in portfolio or product launches. You can't always see how we run the company day to day, the fact is we think very differently about business leadership today. We have the ambition to lead the next generation of industrial progress. We're a different company, a deeply interconnected one, a company in motion, a company well-positioned to seize this moment and lead the future. Now to our order of business.
I'm advised that this meeting is properly convened, that we have a quorum, the proposed resolutions presented in the proxy statement are filed as part of these proceedings. We've received proxies representing over 75% of the 10 billion outstanding shares eligible to vote, the Management Proxy Committee has voted these shares in accordance with shareowner wishes. It's now my privilege to introduce the director nominees and members of your board of directors who are here with us today, I'm going to ask the directors to stand briefly as I introduce them so you can see who they are Sandy Warner, former chairman of the board, JPMorgan Chase, a director since 1992. Sandy is chairman of the audit committee. Jim Cash, emeritus James E. Robinson Professor of Business Administration at Harvard Business School, a director since 1997.
Andrea Jung, president and chief executive officer of Grameen America, a director since 1998. Shelly Lazarus, chairman emeritus of Ogilvy & Mather, a director since 2000. Shelly is chair of the governance and public affairs committee. Bob Swieringa, former dean, S.C. Johnson Graduate School of Management, Cornell University, a director since 2002. Bob Lane, former chairman and CEO of Deere & Company, a director since 2005. Jim Mulva, former chairman and chief executive officer, ConocoPhillips, a director since 2008. Jeff Beattie, former chief executive officer of The Woodbridge Company, a director since 2009. Jeff is chairman of the risk committee. Jim Tisch, president and chief executive officer, Loews Corporation, a director since 2010. Marijn Dekkers, chairman of the management board, Bayer, a director since 2012. Jack Brennan, chairman emeritus and senior advisor of The Vanguard Group, Inc., a director since 2012. Jack is our lead director and chair of the management development and compensation committee.
Frank D'Souza, chief executive officer, Cognizant, a director since 2013. Mary Schapiro, vice chair of the advisory board, Promontory Financial Group, and former chairman, SEC, a director since 2013. Jim Rohr, executive chair and former chief executive officer, The PNC Financial Services Group, a director since 2013. I would like to acknowledge one director who's not standing for re-election, Ann Fudge, who is not with us here today. Ann has been a director for 16 years, and we'll always remember her wisdom and judgment, and we'll miss Ann. I'd also like to ask Dan Heintzelman, John Rice, and Keith Sherin to stand briefly. They are vice chairman of GE. I'd like to give our board a round of applause, please, on behalf of investors. Now on to the second item on the agenda, our report on company operations.
I'll ask Jeff Bornstein, our CFO, to help us go through the company. Jeff, why don't you start, and then I'll finish.
Great. Thanks, Jeff. There's a lot going on in the world. The world continues to be a slow growth environment with lots of volatility. Some things are better. The U.S. economy seems to get slightly better each successive quarter. The underpinnings of a lot of our big segments in the case of air and rail travel and transportation are very strong globally. In the U.S., our healthcare business gets stronger each of the last three quarters, and we feel really good about the demand there, and that's improving dramatically. Many things are as they were. Europe continues to be slow growth. Mining still continues to be very challenged. China is growing at 6% or 7% GDP. Some things are tougher. Oil and gas has definitely put a challenge on the oil and gas industry. It's had our customers rethink their CapEx spending.
We think we have a great plan and a great business in our oil and gas business, but that's definitely a headwind we're working with. Foreign exchange has introduced more volatility into the world, particularly as the euro is devalued versus the dollar. Having said all of that, we think we have a great set of industrial franchises and service businesses, and we have the tools to grow even in this environment. I thought I'd just recap quickly our 2014 performance, and particularly versus what we told investors we would do. In industrial segment growth, we committed to grow operating earnings 10%. We did that. We said we'd grow organically 4%-7% on revenue. We grew 7%. We said we'd improve operating margins 50 basis points. We did that.
We said we'd return more than $10 billion to shareholders with dividends and buybacks, and we delivered $11 billion. At that point in time, we talked about reshaping the company, 75% industrial, 25% financial services over time. I'll come back to that because we've pivoted on that strategy here recently. Just a few key indicators on the right to give you a sense of the strength of the company. Our backlog grew last year to more than $260 billion of future revenue. Cash and liquidity in the company is very, very strong. The dividend is very attractive. The big initiatives that we've had that have driven the growth in the company, despite the low growth and volatility in the world, globalization, very strong. Our service franchise, very strong.
We continue to reinvest in the business in both new products, new capability through our research and development, and remaking the cost structure of the company to both improve profitability and improve the competitiveness of our business and products. Here's just a quick look at our industrial earnings over the last several years. In 2014, we delivered $0.96 a share of industrial earnings. That was up 10%, as Jeff mentioned. Our plan this year is $1.10 to $1.20. That would be up roughly 20% year-over-year, very strong. We think we've got a set of industrial franchises relative to our peers that have a very good growth trajectory over the next few years, and I'll come back to that in a moment.
Two Fridays ago, we announced to the world that we're taking a different tack with GE Capital, that we were going to refocus GE Capital down to its core vertical companies that complement our industrial companies, our aviation leasing business and our aviation and jet engine business, energy finance, and our healthcare businesses. In that process, we're going to reduce the investment in GE Capital from just under $400 billion at the end of 2014 to less than $100 billion in 2017, 2018. The businesses that you'll be left with will be those businesses that are synergistically aligned to our industrial businesses and provide real competitive advantage, and importantly, from a capital allocation perspective, generate a return that's well in excess of our cost of capital. That's what you see on the right side of the page. We arrived here for a number of different reasons.
One is it's obvious to us from a capital allocation perspective that going forward from a wholesale funded finance company is not going to be in a position to generate a return on capital that's attractive to shareholders. We want to get that capital back and redeployed to shareholders and to reinvest in our businesses. We've also seen several proof points, including Synchrony, our credit card business in the U.S., which we IPO'd in 2014, our sale recently of Australian Consumer Business, that many of our assets are more valuable outside the company than they're being valued inside the company by shareholders. Third, this is probably the most attractive financial service market to be a seller of assets in recent memory. Interest rates are virtually zero in the U.S. and Europe.
There's enormous amounts of liquidity around the world, banks and investment funds are raising enormous amounts of capital with very few options to put that capital to work. We think the timing is absolutely right to maximize value for investors. We have more clarity now regulatorily on the off-ramp from de-designating from being a systemically important financial institution. We've got an approach that we think is shareholder-friendly, allows us to execute this with a level of friction cost that we think is plausible for shareholders. Over time, as Keith Sherin and the team execute this plan, we see an opportunity to return about $35 billion of capital from GE Capital back to the company, and ultimately back to you. Between now and 2018, our view is we can deliver $90-plus billion back to shareholder, and we'll do that a number of different ways.
One is through the dividend. We are very focused and supportive of the dividend. It's one of our single biggest priorities. We plan for the dividend to remain where it is today, probably through 2016. We expect it from there to grow as earnings grow into the future. Soon, hopefully at the end of the year, we will finalize the split off of our credit card business to shareholders. It'll act like a buyback. We think that'll reduce the share count in GE and return $20 billion of capital to shareholders. As Keith and the team deliver against the plan to shrink GE Capital and return $35 billion of capital back to GE, it gives us the opportunity with the buyback to retire between 1 billion and 1.5 billion shares of GE stock outstanding.
I'll show you in a moment, we think that creates real value for the company. Lastly, we'll be opportunistic around M&A, where we see opportunities to enhance our industrial franchises, and we can do it at really attractive returns for shareholders. We'll be opportunistic around bolt-on acquisitions as the opportunities present themselves. Here's a little bit of a walk that we shared with investors two weeks ago on kind of how you go from where we thought we'd be this year to where we think we're going to be in 2018. We told investors we thought we'd earn $1.70 to $1.80 in 2015, $0.60 of that coming from GE Capital. Once we effect the exchange of our credit card business, Synchrony, we'll lose $0.17 a share of earnings. We'll get back $0.10 as we retire roughly $20 billion worth of shares.
In the plan that Keith and the team are executing, where we shrink GE Capital to just the core, return $35 billion of excess capital, we use those proceeds to buy back the company stock, we'll lose $0.25 a share of earnings from GE Capital from those businesses we sold, but we'll get $0.25 back in accretion with a lower share count outstanding. It's about our industrial businesses growing at high single digits, low double digits over the next few years through 2018. Where we end up is exactly where we otherwise thought we would be in 2018 from an EPS perspective. Instead of being there with a 75% industrial company mix and 25% financial services, we'll be greater than 90% high-valued industrial earnings and less than 10% financial services.
We think that's enormously more value creating for investors. It's a significant de-risking of enterprise risk, we think, for the company. Before I turn it back to Jeff, I just want to give you a quick recap on the first quarter. We got off to a good start. We earned $0.31 before the charges associated with GE Capital. That was better than consensus. We grew organically 3% in the quarter, despite all the volatility you see in the world, we delivered 120 basis points of margin improvement versus last year. With that, I'll turn it back to Jeff.
Great, Jeff. Thanks. That's where we are financially. I thought I'd just give you a brief update on some of the technologies and innovations we're driving as a company. I always think about GE in three ways. A purposeful company. We compete in some of the big infrastructure markets around the world to really make the world a more productive place. A valuable company, all the things Jeff talked about in terms of the ways we create shareholder value. We return capital back to you and grow our company. A competitive company. We're out there every day competing in every country around the world, we do that with technology, with driving new innovations, the diversity of our portfolio. When you think about the company you own, I think about it as purposeful, valuable, and competitive as the three keywords for the company.
What Jeff mentioned, we made some portfolio changes. We made some investments last year. We announced a big acquisition, a global franchise called Alstom, which will help both our power business and our grid business dramatically grow our installed base and help us grow around the world. We announced the sale of our appliance business to Electrolux. This is a 100-year GE franchise, but we think the combination of Electrolux and GE will be better in the future, better for our employees, better for our customers. These are the kind of moves we make around the portfolio to strengthen it and help us grow in the future. You heard Jeff talk a little bit about what we call the GE Store. We're a multi-business company, what we try to do across the company is share intellect and ideas from one division to another.
We do that in technology, we do that in globalization, we do that in services. We have technology from healthcare that we use in the aviation business. We have service shops and energy that the aviation business also uses. We're constantly trying to make the company better by sharing ideas in what we call the GE Store. It's the reason why GE really makes sense as a combined entity. Technology is always core to your company. The H turbine is the most efficient gas turbine in the world that we've launched this year. The LEAP engine will go on Boeing 737s and Airbus A320s. These two products at the top, in their life, these will be $100 billion products over their lifetime. It's quite astounding some of the things the company can do. The Tier 4 locomotive is the fastest-selling, best locomotive on the rails today.
The PET/MR is a great GE product in healthcare that allows us to spot disease earlier, treat it more effectively. Technology remains key to your company. We are quite a global company. We compete in 175 countries around the world. Alstom helps us grow our global franchise. We're $60 billion in the growth markets, emerging markets around the world. The whole company was $20 billion in revenue the year I joined in 1982. Today, globally, we're multitudes of that. We're a big exporter, we export $21 billion every year from the U.S. globally. We're a net exporter in almost every country around the world. We're out there fighting for business and winning business each and every day, globalization is key. The installed base is very valuable, what we call services.
This is almost $50 billion of revenue, high margin, these are the ways that we upgrade jet engines and gas turbines and scanners to make them more valuable for our customers. We're working very hard to create a more valuable installed base and grow our service business. This has immense value to the people in this room in terms of the overall valuation of the company and where we're going. One of the new things that we're doing is GE's investing in analytics and software. All of us grew up industrially. For more than 100 years, we've been a company that's based on physics and mechanical engineering and electrical engineering.
In the next decades, it's going to be more important for us to be around software and analytics, some of the things you see or read about in the newspaper, to drive better outcomes for our customers. The work we're doing around software and analytics is about $6 billion each year, and some of the key customers that you might see every day, Norfolk Southern or EON doing wind turbines in the United States. This is really critical to the company in terms of long-term strategy and where we're going. It's always important to be efficient. Basically, our cost base is about $100 billion. We also have $60 billion of investment. When we talk about margins and returns, this is a way we can make your company more valuable.
We're really working hard to lower our product costs, to run our business more efficiently, and that shows up in margins. We've cut our structural costs down to about 12%. We've taken multiple billion dollars of cost out. What's called gross margins is really the value of taking cost out of our products. We continue to grow our margins with a target of getting 17% margins over time, and our returns are also heading towards 17%. These are the things that the mass of our investors appreciate, and they want us to run the company efficiently and run it well, and you see that in the work we're doing here. Just a last couple of thoughts really about the company, the culture of the company, to drive what we call lean management, digitization, focus on customers, making speed a bigger part of what we're doing.
I think as we've done this, we've really achieved a lower cost company. We've cut out a lot of layers and steps and processes. A smarter and faster company to improve our speed to market on products. That H turbine I showed you, we got that to market in two and a half years. Its predecessor took us seven years to get it to market. That's one of the ways we can help be more competitive. Driving market share, winning in the marketplace. Our market shares, our backlogs have never been higher than they are today. Again, driven by beliefs. Customers determine our success. Stay lean to go fast. Deliver results in an uncertain world. These are all things that are important. I always think it's important for the leadership of the team to be aligned with investors.
When you talk about the way I'm compensated, the people in this room are compensated, the way our leaders are compensated, it's directly based on the metrics Jeff showed you earlier. We basically take the things that are important to our investors. We put those into our compensation plan so that we're completely aligned on cash flow, operating profit, the things that ought to be consistent with a more valuable company. We're all kind of in this together. We all have skin in the game in terms of the compensation and the way we think about running the company in the future. I always know it's important to a lot of the groups in here about pension and healthcare, and this just shows over the years, the company basically has about a $6 billion headwind as it pertains to pension expense, healthcare costs, things like that.
That's grown dramatically since the year 2000. We always want our pension plan to be strong and supported, and it's that way today, and it will always be that way. We've constantly evolved our strategies around healthcare and provided more alternatives this year in the post-65 healthcare to take advantage with some of the things that are going on in the government around healthcare exchanges and try to leverage a much bigger purchasing pool. We're going to continue to contribute and access to one exchange, these are the kind of changes that every company in the world is making, and we will continue to try to drive the company and make it more competitive. There's a lot of constituencies as it pertains to the company, and we need to make sure that we're running the company for the long term.
We're always going to stay contemporary in the things we do. Lastly, in terms of just what Jeff shows, how do you get a higher value company? It's more industrial. It's returning cash to investors. It's growing our industrial EPS ahead of our peers, which we plan to do. It's leading in the big growth themes. It's expanding margins and returns. It's an accountable team. In the past five years, we've basically tracked the S&P 500. Last year, we trailed. Year to date this year, we're ahead. We think that with the moves we've made around the portfolio, the backlogs, the strategy, the activities we've got going in the company, we think the profile for the company going forward is quite strong. That's just a little update on the company. Let's go to the rest of the agenda.
Let's move on to discussion and voting matters set forth in the proxy statement. The independent inspectors of election for this year's meeting are the representatives of IVS Associates. The inspectors have taken the oaths of office required by law and have been at work since the proxies started coming in. If you've already voted by proxy, there's no need to vote by ballot today. Unless you would like to change your vote, you will find a ballot on your seat. We'll take up the election of directors and management proposals first. After the election of directors and management proposals are introduced, there'll be an opportunity for discussion. Then after the shareowner proposals are introduced, there will be a chance to discuss those.
There will be time later in the meeting for discussion on other business matters, first, we want to address the items presented in the proxy statement. The first item is election of directors. I place before the meeting the service directors for the coming year, the 16 individuals whose names and biographies appear on pages two through seven of the proxy statement. Each of these nominees has received the overwhelming majority of the 8 billion shares voted by proxy. Then lastly is the ratification of KPMG as independent auditors for 2015. We have with us today Bill Amer and Larry Bradley, the KPMG partner responsible for the GE audit, and they're available after the meeting to respond to appropriate questions.
Your board of directors recommends a vote for the ratification of KPMG as independent auditors. Those are the management proposals. Is there any discussion? Bill, let's start with you. Good morning.
Good morning, fellow shareowners. My name is Bill Freeda, I'm here to tell you that I am voting against Jeff Immelt, Chairman, Lead Director, James I. Cash, Marijn E. Dekkers, Andrea Jung, Robert W. Lane, and Douglas A. Warner III. I would like to urge all of you to do the same. It has always been my understanding that a CEO's compensation was based on performance. Let's examine Mr. Immelt's performance during 2014. On January 2nd, 2014, our stock, it stood at $25.42, a decline of almost 10%. Let's be fair, we should take into account the generous $0.01 increase in the dividend. In all, Mr. Immelt's salary and cash bonus increased 8%, and his total 2014 compensation nearly doubled to $37.5 million.
Much of his increase came from a big jump in his supplementary pension from $52 million to more than $70 million. It does make you wonder what the board would have granted Mr. Immelt had he been successful in 2014. I know the board says Mr. Immelt has met all the company's goals. Is it possible? I very much doubt it. My question to the board of directors is, with all due respect, have you all lost your minds? GE executives bandy terms around like cash flow from operating activities, operating margin, organic growth, in an attempt to justify their inflated compensation packages, when in fact, the only term that really matters to shareowners is ROI, return on investment. There can be no doubt that when it comes to ROI, Mr. Immelt has been a colossal failure during his tenure as CEO.
The board of directors bestows great praise and greater riches on him. What makes Mr. Immelt's more than 30% increase in his supplementary pension even more egregious is that it was granted against the background of GE's all but eliminating the company's post-65 retirement benefits for tens of thousands of long-tenured GE retirees on January 1st of this year. I ask the members of the board, how is it possible that a group of intelligent and accomplished men and women like you can be so totally tone-deaf and disrespectful to the men and women who built this company? Some may differ, it is my belief that the board of directors was not given all the facts before a vote was taken on this issue. Did all or any of you do your due diligence? Let us revisit this issue of post-65 retirement benefits.
Did you know that beginning January 1st, 2005, newly hired GE employees would no longer be eligible for these plans, therefore guaranteeing a slow but steady decline and eventual elimination of these benefits? Did you know that the program has four components, two of which are paid entirely by the participants in the plan? Did you know that the cost of GE retiree healthcare, including prescription drugs, has been declining in recent years? Did you know that by forcing us to move from the GE plans to individual Medigap plans, retirees may be declined coverage due to preexisting conditions if they try to switch to another Medigap plan in the future? If the answer to any of these questions is no, you should be asking Mr. Immelt and his surrogates why. Based on these factors, what was the urgency for Mr. Immelt to terminate these long-standing and long-promised plans?
I can only come to one conclusion. Mr. Immelt does not feel retirees are dying fast enough. As I stand here today a day before my 75th birthday, I can assure you, Mr. Immelt, that as you get older, you may look back on your career to see what impact you have made in people's lives. During that reflection, I hope you will finally realize the damage you have caused tens of thousands of GE employees, retirees, and their families, all members of the GE family, by making them scapegoats for your inability to increase the ROI to GE's shareowners. In closing, I would ask all the GE retirees who are here today to stand. Join me in turning their backs on Jeff Immelt, because that is exactly what he has done to us.
Great, Bill. Thank you. Now we'll move on to shareholder proposals. To be sure that all the proponents have an opportunity to present their proposals today, we ask that the presenters combine their comments during this portion of the meeting to the subject matter of the proposal being presented, and we ask that other speakers wait until all shareholder proposals are presented before providing their comments. We'll have an opportunity for discussion of other matters after we finish the balloting and report of inspectors of election on the voting results. The first proposal is on cumulative voting, and I would like to ask Mr. Harang ozo to speak with us today. Hi, Martin. Good morning.
Good morning. My name is Martin Harangozo . I am grateful and excited to be a shareholder. I love this company, people, and products. I care enough to raise my hand, to stand, and to speak. This year marks my 25th year as a shareholder. I hope to be a shareholder for another 50 years. As a shareholder, I am just a baby, a resilient baby. This proposal is my first one that was not challenged many times by your corporate counsel and outside counsel, Gibson Dunn. As an engineer, I prevailed at each of your legal challenges, confirming something Warren Buffett had said, that is, smart people can do anything. Mr. Immelt, I believe you and I should sit on the same side of the table.
Cumulative voting is recommended by Warren Buffett's investment mentor, the late Benjamin Graham, in the book, "Security Analysis," a book he co-authored by Columbia colleague David Dodd. Nazi concentration camp survivor, Evelyn Davis, placed this proposal on the GE proxy many times in previous years. I am honored and humbled to stand on the shoulders of great minds and great people in presenting this cumulative voting proposal. Cumulative voting gives shareholders a company with more distinction capability in director elections. Directors provide oversight to the company on behalf of the shareholders. Oversight matters of interest to me are transparency and sustainability. I find the best transparency is a generous dividend to show that the earnings are indeed tangible. The best show of sustainability is a removal of debt.
Academically on dividends, there is an opportunity cost when you can borrow money at, for example, 1%, loan it at 11% to enjoy a double-digit spread. Real-life examples, however, can steer us to financial success. When Apple announced that it was debt-free, the stock was about an adjusted $1.6. Today, it is 75 times that. I like 75x growth better than breaking promises to retirees. Trusted work by Benjamin Graham in the book, "The Intelligent Investor," show that generous dividends stabilize the company, whereas share buybacks drive volatility. A generous dividend focuses the company, loads the company, and exercises the company to reduce the risk of financial obesity. Dow companies with a fraction of the debt to earnings that we have, such as Apple, Johnson & Johnson, Walmart, McDonald's, did not have price drops of 90%. They did not cut the dividend.
Their performance is nearly a straight line onward and upward. These examples show that low debt and generous dividends go hand-in-hand. The sustainability of low debt drives the transparency of uninterrupted dividends. Forbes 2000 showed former CEO, Mr. Welch, to be among the richest people at nearly $700 million. Soon after, shareholders lose over $500 billion in valuation. For every dollar to make Welch the richest, shareholders lose nearly 1,000. I believe you can agree with me that if CEO performance was perfectly correlated to the dividend, both during employment as well as from retirement to heaven, we hope, the company would have been managed better for the shareholders instead of at the expense of the shareholders, still biased nearly 1,000 to one. Debt and shareholder buybacks drive volatility in both price and dividends, making CEOs very rich, but leaving shareholders very poor.
The growing of dividends and the removal of debt are the hallmarks of Dow companies performing much better than us. While transparency and sustainability, as demonstrated by dividends and low debt, are oversight matters of interest to me, I know there are other matters of interest to other shareholders. I urge all shareholders to vote for cumulative voting shareholder proposal number one.
Thank you, Martin.
You're welcome.
Proposals number 2 and number 5. Number 2 is on written consent, number 5 is on limit equity investing, are going to be offered this morning by Olivia Gray. Is Olivia here? Hi, good morning.
Good morning. Shareowner Proposal 2, right to act by written consent, sponsored by William Steiner of Piermont, New York. Resolved, shareholders request that our board of directors undertake such steps as may be necessary to permit written consent by shareholders entitled to cast the minimum number of votes that would be necessary to authorize the action at a meeting at which all shareholders entitled to vote thereon were present and voting. This written consent is to be consistent with the giving shareholders the fullest power to act by written consent in accordance with applicable law. This includes shareholder ability to initiate any topic for written consent consistent with the applicable law. This proposal topic won majority shareholder support at 13 major companies in a single year. This included 67% support at both Allstate and Sprint. Please vote to protect shareholder value, right to act by written consent, proposal number 2.
Shareowner Proposal number 5, limits accelerated executive pay, sponsored by Kenneth Steiner of Great Neck, New York. Resolved, shareholders ask our board of directors to adopt a policy in the event of a change in control. There shall be no acceleration of vesting of any equity award granted to any senior executive, provided, however, that our board's executive pay committee may be provided in an applicable grant or purchase agreement that any unvested award will vest on a partial pro rata basis up to the time of the senior's executive termination, with such qualifications for an award as the committee may determine. For purposes of this policy, equity award means an award granted under an equity incentive plan as defined in item number 402 of the SEC's Regulation S-K, which addresses executive pay.
This resolution shall be implemented so as not affect any contractual rights in existence on the date this proposal is adopted. The vesting of this equity pay over a period of time is intended to promote long-term improvements in performance. The link between executive pay and long-term performance can be broken if such pay is made on an accelerated schedule. Accelerated equity vesting allows executives to realize pay opportunities without necessarily having earned them through strong performance. Please vote to protect shareholder value, limit accelerated executive pay, proposal number five.
Great. Thank you, Ms. Gray.
Thank you.
Proposal number three, I think, would be offered today by Mr. Tim Roberts. Is Tim here? Good morning.
Good morning. Mr. Gilson requested me to present his proposal. The objective of this presentation is to give shareholders a company more incentivized towards price stability and growth. From 2001, the market is up over 50%, yet we are down nearly 50% ending 2014. We have learned that among the largest Six Sigma initiatives and the most rigorous succession plans do not prevent protected dividends to be nearly eliminated, share price to fall to one-tenth, or promised benefits to retirees cut. Clearly, there is no man or method that can replace sound financial practices. Dow companies such as Walmart, Johnson & Johnson, and McDonald's did not interrupt dividend increases, nor did their earnings drop, nor did their price drop. Their performance is nearly a straight line onward and upward.
What does a retailer, a Band-Aid maker, and a burger maker know and do so differently as to be growing when we are sinking? Value Line Dow 30 free website shows the total debt of these companies. If you look at the total debt to earnings, we see that Johnson & Johnson has a debt to earnings of less than one. In other words, they earn more than a year than they have of debt. McDonald's has $3.22 of debt for each dollar of earnings. Walmart has $3.34 of debt for each dollar of earnings. Dow valuation champion, Apple, also has less than a dollar of debt for each dollar of earnings. Each of these companies has an A plus plus financial rating, according to Value Line. General Electric has more than $19 of debt for each dollar of earnings.
Our financial grade is grade 3 below the companies mentioned with good performance. Why, as the oldest Dow company, are we at GE among the financially weakest? Why do we not strive to become the financially strongest Dow company and set yet new standards for financial strength? Japanese company, Kongō Gumi, mentioned in a GE 2013 shareholder proposal, showed that companies over 1,000 years old can easily slip into bankruptcy when they take on high levels of debt. I believe removing the company's debt will be GE's smartest move, second only to Edison's light bulb. First, it will nearly ensure that we stay alive. Secondly, it will remove the recklessness that make our CEOs very rich, leaving the risk and financial disaster to shareholders. Former CEO Jack Welch, an engineer, claimed the real money is in capital. Mr. Immelt, a business major, wants to grow manufacturing.
The grass seems greener on the other side. I see ancient business history and current business examples hitting us over the head and telling us that the devil is in our debt. Although there may be a method to the madness, the volatility of performance driven by debt and share buybacks makes the shareholder poor, but the CEO very, very rich. Jeff Immelt, for example, sold his shares at over $57 near the all-time high and repurchased below $9 during the price collapse. This money gained more for him than if the GE stock price today were at $100, but grown in a straight line. As the CEO, he hears the canary in the mine and bails out and reloads while the shareholders are left holding the bag.
It is great for the CEO to get rich from the GE price swings when he is pushing the swing in conjunction with getting $40 million for dropping the price 10%. Retirees who do not get nearly $40 million when the GE stock price drops 10% are more inclined to pursue the steady growth initiatives mentioned above. I urge all shareholders to vote for appointing a retiree as a director shareholder, as in proposal number three, and correspond with management starting each sentence with four words and ending each sentence with four words. The beginning and ending four words are, "Show me the debt," and, "Take the debt to zero.
Great. Thank you.
Thank you.
I understand that on proposal number four, the Holy Land Principles were to be offered by Father Sean McManus and Barbara Flaherty. I don't believe they're here this morning. Oh, there we go. Please. Yes, sir.
Good morning, Mr. Chairman, and everybody present. My name is Father Sean McManus from Washington, D.C., and I rise to move resolution number four on the Holy Land Principles. The Holy Land Principles are pro-Jewish, pro-Palestinian, and pro-company. The Principles do not call for quotas, reverse discrimination, divestment, disinvestment, or boycotts. The Principles do not take any position on solutions to the Palestinian-Israeli issue. The Principles do not try to tell the Palestinians or the Israelis what to do. The Holy Land Principles only call for fair employment by American companies in Palestine, Israel. That, and only that. Irrespective of what Americans think about the Palestinian-Israeli issue, one thing is certain. Americans expect American companies in the Holy Land to practice fair employment.
Our resolution calls on GE to set the standard by signing and implementing the Holy Land Principles, which are based on the very effective MacBride Principles for Northern Ireland. Initially, American companies resisted the MacBride Principles, but now 116 American companies, including GE, have signed the MacBride Principles. Now, why would an American company refuse to sign the Holy Land Principles? GE tried to get the SEC to exclude this resolution, but the SEC ruled in favor of the Holy Land Principles. Therefore, you will all know that the Holy Land Principles are intrinsically valid, inherently fair and reasonable, and in the best American tradition. This is a historic moment, in that this is the first time ever an American company is voting on the Holy Land Principles. Please, I ask you, vote for the Holy Land Principles resolution.
It is the American way, and God bless America, and thank you.
Thank you, sir. Thank you, Father. Now we have time for some other questions on the five proposals that were offered. I would welcome people if they have questions to ask them now. Kevin, good morning.
Good morning again. My name is Kevin Mahar, M-A-H-A-R. I'm a retiree at GE. There was another issue that is in your proxy, it's called the director nominees for inclusion in next year's proxy statement, proxy access. We recently amended our bylaws to permit a group of share owners, up to 20, who have owned a significant amount of GE stock, at least 3%, for a significant period of time, at least three years, the ability to submit director nominees up to 20% of the board for inclusion in our proxy statement. That's already been adopted. You should know, as share owners, that was tried to be excluded by General Electric Company, you'd have to look and see the amount of paper that was sent to me by the law firm of Gibson & Dunn.
I didn't know if Father Sean had probably the same kind of ordeal that I had. Let me tell you, I thought about that a lot. I don't know what the amount of money it cost us as share owners to have that try to be excluded and then have the company turn around and include it. Okay? They changed the bylaws. The amount of money that was spent, our money from the share owners that was spent on that law firm must have been very substantial, because I couldn't get over the amount of paper that they did. I thought about that a little bit.
Of course, thinking of what they did, paid for Gibson & Dunn for this to be excluded and for Father Sean's to be excluded, what should have been done with that money is the retirees that have been retired for 10 or more years, if they had 2% increase in the amount of time that they are retired, it would be a great increase to them for those that are getting, it might even include your own father, might have been for more than 10 years. We really need to do that because, the retirees are really getting hurt out there this year and going forward. That's what I'd propose.
Great
I propose that you do, have an increase of 2% for every year that you've been retired after a period of time. Thank you.
Great, Kevin. Thanks. I'm glad your hip's doing better. Let's move on to agenda item number 4, balloting. Remember, we'll provide an opportunity for discussion on other business matters in a few minutes, but balloting on the items in the proxy statement comes first. You will find a ballot on your seat. If you have a ballot ready to turn in, please hold it up and I'll ask the ushers to collect it. Ballots collected this meeting will be reflected in the final vote results. Let's move on. I believe the inspectors of election are ready to announce the outcome of the voting. Let's go to the inspector's report. Mr. Michael Barbera of IVS Associates, Inc. will be presenting the report of the inspectors. Mr. Barbera, do you have a report for us?
Yes, Mr. Chairman. The inspectors of election have completed an initial count of the votes cast at this meeting in person or by proxy. Proxies representing approximately 7 billion 720 million shares, or 76.7% of the total shares eligible to vote were received. Other shares have been voted at this meeting by ballot or by proxy. On the basis of our initial count, the inspectors of election announced the following results. On the election of directors, each director received at least 5.1 billion favorable votes, and all nominees have been elected. The management proposal on the advisory approval of our named executives compensation, for 92.1% of shares voted, against 7.9%. On the ratification of KPMG as independent auditor for 2015, for 97.6%, against 2.4%.
Regarding the shareholder proposals, number 1, cumulative voting, for 10.8%, against 89.2%. Written consent, for 12.1%, against 87.9%. One director from ranks of retirees, for 3.2% of shares voted, against 96.8%. The Holy Land Principles, for 3.1% of shares voted, against 96.9%. Limit equity vesting upon change in control, for 40.7% of shares voted, against 59.3%. Mr. Chairman, this initial tally is subject to verification, and the final tabulation may reflect small changes in the vote I have announced. The final tabulation will be set forth in the formal report of the inspectors of election to the Secretary of the company, which will be made after the count has been verified. This concludes our report.
Thanks. That's the formal business. We now turn to agenda item number 6, which opens up again a chance to ask questions. We've heard comments on the proposals raised today, and we have a chance for other shareholders who have not spoken to get a chance to discuss matters that may be on their minds. If you wish to speak, please come to one of the microphones and, please remember to give us your name when you're recognized. Microphone number 1. Yes, sir.
Okay. Thank you, Mr. Chairman. My name is Julian Martinez, and I represent SER Jobs for Progress National Inc. SER is a 501 [c] [3] not-for-profit corporation serving the workforce needs of Hispanic Americans. We were organized in 1964 by the League of United Latin American Citizens and the American GI Forum. I would like to speak briefly about GE and the Hispanic community and the incredible growth of the Hispanic population in our country. I would like to thank you for participating in the Hispanic Association on Corporate Responsibility annual survey. It's continued to improve its efforts in working with the Latino community. GE's participation in the Hispanic Forum Scholarship Awards and HACR Young Hispanic Corporate Achievers Program is a testament to GE's commitment. What is lacking, however, is a Latino member on your board of directors and a Latino as part of your senior management team.
As you may know, the Hispanic population has been increasing dramatically in the U.S. One out of four children are now Latino, and the number of Latino-owned businesses has grown 44% in a five-year period as compared to 15% for non-Latino firms.
The combined Latino population of the U.S. is greater than the total population of Canada and any Latin American country except Mexico and Brazil. It would be the world's 14th largest economy. GE must harness the power of the Hispanic consumer and employee as a means of sustaining their competitive edge. The continued under-representation of Hispanics in key positions throughout corporate America means companies are not leveraging this talent to their fullest potential. SER International would welcome an opportunity to partner with General Electric to increase the pipeline of Hispanics into the upper ranks of corporate America and to further develop the Hispanic entrepreneur and middle class. Thank you for allowing me to self-finish.
Thank you. Microphone number 2. Yes, sir.
Good morning. My name is Reverend John Mitchell. I'm representing Pastor Keith Savage at First Baptist Church, Manassas, with VOICE.
Good morning. I'm Venus Miller, representing Reverend Clyde W. Ellis III from Woodbridge, Virginia, I am also a representative of VOICE.
Mr. Immelt, I am Mike Wilson, a Faith Leader for VOICE, Virginians Organized for Interfaith Community Engagement, an Industrial Areas Foundation affiliate. On October 17th, 2012, you met with Reverend Ellis, Reverend Savage, and me in your Fairfield office to discuss the foreclosure disaster in Prince William County, Virginia. During that meeting, you pledged financial support to restore our neighborhoods. Two and a half years later, we are here to commend GE for following through on their initial $1 million grant, we look forward to working with GE in the future. Mr. Immelt, during the next year, as we rehab, we're asking you to come visit our neighborhoods, and will you do that?
Thank you for the invitation, let me see what we can do. Thanks. Microphone number 1. Yes, sir.
Hi, good morning. I'm Justin Danhoff of the National Center for Public Policy Research, a free market think tank and company shareholder. I have a comment and then a quick question. I want to first thank GE and commend the company for taking an important step in protecting its employees from potential workplace discrimination. When we asked GE to consider protecting its employees' right to engage in personal, political, and civic activities outside of the workplace without retribution, the company did not hesitate to amend its corporate policies to do just that. Some major American corporations have resisted adopting such protections. GE employees should feel proud to work at a company whose leadership realizes the importance of employee freedoms, so thank you for doing that. My question concerns, however, the company's dealings with the Clinton Foundation.
Numerous sources have recently reported, including The Wall Street Journal and The New Yorker, that while she was Secretary of State, Hillary Clinton lobbied foreign governments on behalf of companies, including General Electric, at a time when those companies were making donations to the Clinton Foundation. In late 2012, for example, Clinton urged the Algerian government to award a power plant contract to GE. GE partnered with the Clinton Foundation on a health initiative. In 2013, Algeria awarded the power plant contract to GE. By donating to the Clinton Foundation while receiving a huge favor from the Secretary of State, did we not expose our company to the risk of being charged with honest services fraud? I'm not accusing the company of any wrongdoing, don't get me wrong.
You have to admit the optics suggest a quid pro quo could have occurred, and a public official pushing a foreign government to buy a company's products while that company makes a generous donation to the public official's family-run foundation appears to fit the very limited definitions of honest services fraud. Since Mrs. Clinton had control of her business emails during this time and has said that she deleted many of them, GE is presumably the only entity with evidence that everything was above board. To prevent the company from being the focus of any media or public investigation, I'm asking, would you consider making public all the company's written communications with the State Department during the relevant period?
Again, it's great to see you this morning. I think for a global company, it's very normal business where the State Department or other officials actually help us around the world, and we do that today, we did that in the past, I hope we do that always, that this is.
They don't always have a family foundation
a way to create great American jobs, and so that's what we did, and that's what we do today.
Okay.
Thank you.
Would you provide the documentation?
I think that's not something we would do.
Okay.
I appreciate you being here, and I appreciate your thoughts.
Thanks.
Thank you this morning. Dennis, good morning. How are you?
Fine, Jeff. Good morning to you, too. I appreciated your introductory comments regarding pension and healthcare issues. In the spirit of Kurosawa's Rashomon, I see the world quite differently.
You know, I'm glad to see your vocabulary and reading list has remained robust, Dennis, in your retirement.
In retirement, you go to movies. At the last two annual meetings, I spoke against GE's unconscionable $832 million cut in salaried retiree health and life insurance coverage announced in 2012. I said it was a bad design, badly implemented. What did we get after my comments were branded by the company's leaders as thoughtful at last year's meeting? Even more draconian cuts to healthcare plans announced last September to the tune of $586 million reduction in company liabilities and more costs shifted to fixed income retirees. La Rochefoucauld is right. "Hypocrisy is the tribute vice pays to virtue." My response, as I said it would be, was a lawsuit in federal court. So far, the district court has initially indicated that there is merit in our arguments.
We have succeeded in introducing GE and its high-priced outside legal team to the concepts of fairness, equity, and meaning what you say. GE, for its part, has demonstrated a willingness to spend millions of the share owners' money to advance its discredited theories and richly reward departing executives like retired senior VP John Lynch and the current architects of this devastation, like health benefits director Virginia Pustay. The fight will continue in multiple fora. The company's image will likely be further tarnished, and its pious platitudes about balancing interests will receive the derision they richly deserve. There is no balancing of interests. Terminating these long-promised post-65 health plans at a cost to individual retirees of $25,000-$100,000 to replace this coverage during their retirement years simply enriches the company. GE's few words of public commentary are unadulterated sanctimony.
The board of directors still has the opportunity to demand a reappraisal of these savage cuts. Please take it. Move away from greed and legalese and toward fair and decent treatment of men and women who have devoted long years of productive service to make GE great. Fulfill the commitments made to GE retirees in the same manner you expect to pay the extraordinary post-retirement benefits described in the GE proxy statement to the top five named GE executives and to thousands of other GE officers and execs when they retire. Full disclosure, I'm one of them. The current GE leadership also has the chance in the next couple of months to walk the talk of good intentions at the bargaining table. The IUE-CWA, the UE, the IAM, the IBEW, UAW, and other CEC unions know your predatory and pernicious intentions.
They know the arguments against these takeaways, they have the skill, energy, and commitment to express their opinions and opposition. These unions have long had my respect and admiration, even when I strongly oppose some of their initiatives and proposals at the bargaining table. On this critical matter, they will have my full support should they seek it. I am not being disloyal to the company that has been very good to me, but loyal to the core values this company taught me, the spirit and letter of integrity, compassion, and candor. Here is a chance for the CEC and the board to do the right thing. Carpe diem. Thank you so much.
Thanks, Dennis. Good morning, Ron.
Morning, Jeff. Ron Flowers, President of the Retirees Association of General Electric in Erie, Pennsylvania. I sit monthly in front of about between 80 and 120 retirees, we don't go over how many billion dollars are here and how many billion dollars are there. We sit and we talk about how come it went from $35 up to $65 for this particular drug. How come this costs more this month than it did last month? We're not talking about billions of dollars. We're talking about people sitting there making between $600, $800, and $1,500 a month in pensions. This is big money to these people. I went through six sets of negotiations with General Electric at the table in New York. Before each set of negotiations, the National Union requests certain information.
When we get this information, we go over it to see how profitable the company is and how our demands work in with whether GE can afford it. Well, my National Union got the information this time for the negotiations, GE tells them their healthcare costs are flat or going down. Flat or going down. On the other hand, the GE executives tell our union leadership, "We want to talk about the over 65 health insurance for retirees." Now, why would they want to talk about it? They want to talk about it because they want to cut it. GE doesn't do anything at the table for the sake of conversation. Why would they want to cut it if it's flat or going down by the information that GE gave us? They've been doing it.
GE says and proud of the fact in 2011, 2012, they moved to a defined contribution retirement for new hires. That means they took the pension plan away from new hires. 2012, announcing the closing of retiree health plans. 2014, introduced private exchanges for salary Medicare. Some of my members are exempt. I went through this. I spent two, three, four hours on the telephone with this one exchange trying to get an insurance policy for these people. The one person I was talking with for about three hours is 82 years old. The only thing she knows about insurance is she hands them the card and it says GE Insurance.
She has to get on the telephone and talk about 22 different plans that General Electric has. Is it really necessary for the bottom line to take this insurance away from the people that built your company, the over 65 people? General Electric says, "Well, we give them money. We give them $1,000." Well, that's for the people that are 65 now. What about the people, a really good friend of mine that was 65 two months late? Okay? Cost him $1,700 a month for insurance to get the same insurance because his wife had cancer. Is it really necessary for General Electric to do this to their retirees, to the people that built their company, the people that I sat in negotiations and heard the company say, "You will get this for the rest of your life." Is it really necessary?
Does the bottom line really require that? I hope, I really hope that with all of the stuff that General Electric is doing, and I have no problem, General Electric is a fine company. Do they have to do this to the retirees? Have they lost all of their heart? Thank you.
Thank you very much, Ron. Well, again, I'd like to thank the people of Oklahoma City for being such a great host for this year's annual meeting. I'd like to say to the retirees, thanks for coming. We listen to you. We honor your service. Thanks for being here today. Again, I would like to thank all of our investors and shareholders who are here today for being here. Thank you very much. This meeting is adjourned.