Nearly 100 protesters affiliated with the 99 Percent populist movement disrupted General Electric Co's annual shareholders' meeting on Wednesday in an attack on the largest U.S. conglomerate's low tax rate.
The demonstrators, who began chanting Pay Your Fair Share when the meeting began, were quickly ushered out of the meeting -- held in the Detroit building that houses General Motors Co's headquarters -- but could still be heard chanting protests as the meeting got underway.
After their exit, Chief Financial Officer Keith Sherin stepped up to defend GE's tax practices, and noted that the company's low tax rates in 2008 and 2009 were the result of heavy losses at GE Capital.
Over the 2008 through 2010 time period we lost over $30 billion in credit losses at GE Capital and that reduced our pre-tax income and also our rate, Sherin said. Our U.S. tax expense last year was $2.6 billion. We are a large taxpayer, we pay our taxes and we very much support tax reform.
As they were ushered outside, protesters rejoined a large crowd of hundreds of other demonstrators with signs that read Tax Dodgers at Work and This is What Democracy Looks Like. Police herded them away from the riverfront building.
The protesters were part of the 99 Percent movement, an offshoot of last year's Occupy Wall Street protests. Both are loosely organized around the idea that the U.S. economy no longer serves the needs of most Americans. The 99 Percent moniker contrasts the average citizen to the nation's wealthiest.
None of the demonstrators were arrested, unlike the scene at Wells Fargo & Co's shareholder meeting in San Francisco a day earlier, where about a dozen were arrested.
Demonstrators, many of whom had traveled from other states, said they wanted to draw attention to GE's low tax rate. Taxes are a particularly thorny issue in Detroit, which is facing a severe budget crisis that is leading to sharp cuts in municipal services.
We're hoping that huge corporations realize they have to pay their fair share. All of our services need to be paid for, and you have places like GE and Wells Fargo that don't, said Greg Lyons, 40, of Toledo, Ohio. Citizens pay taxes and if corporations want to be citizens, they better start paying up.
Much of the ire resulted from a 2011 report by left-leaning think tank Citizens for Tax Justice that claimed GE had an effective negative tax rate from 2008 through 2010, which the company has repeatedly denied.
GE disclosed in filings with the U.S. Securities and Exchange Commission that its overall tax rate -- on both foreign and U.S. earnings -- was 7 percent in 2010 and negative 12 percent in 2009. It has not provided details about its U.S.-specific tax rates for prior years.
Chief Executive Jeff Immelt reiterated to reporters the Fairfield, Connecticut-based company's position that it supports tax reform, including a phasing out of corporate tax deductions, a lowering of the 35 percent statutory rate and Washington agreeing not to tax profits made overseas -- a key concern for a company that generates about half its revenue outside U.S. borders.
We are in favor of tax reform, Immelt said. Our tax rate in 2011 was 29 percent, just as we said it was going to be.
The last time top GE brass faced a significantly hostile crowd at the company's annual meeting was in 2009, when the company was reeling in the wake of the financial crisis and shareholders had just seen GE shares plunge to an 18-year low below $6. The stock traded on Wednesday at $19.52.
MORE COMPANIES IN ACTIVISTS' SIGHTS
The 99 Percent movement has said it plans to make shareholder meetings -- a rare public forum in U.S. business where anyone who owns a share of a company may attend -- a focal point this year. Organizers have said they also plan to target upcoming parleys for The Hershey Co, Bank of America Corp and Wal-Mart Stores Inc.
We understand the amount of economic pain and anxiety people continue to feel in today's climate, GE Spokesman Andrew Williams said after the meeting. We agree that there needs to be more fairness in our economy and we are focused on doing our part by investing in putting people back to work here in Michigan and around the country.
Populist voices are not the only ones turning up the heat on corporate America this spring. Shareholders of Citigroup Inc stunned the bank's management last week when they rejected CEO Vikram Pandit's $14.8 million pay package at the company's annual meeting in Dallas.
A similar motion at GE's meeting passed with the support of 92.5 percent of shareholders. Shareholders came very close to passing, with 47.5 percent of the vote, a measure that would allow them to initiate changes in the company's management with the support of 51 percent of shareholders.
Members of the 99 Percent movement said they wanted to be sure their voices were heard.
I'm here because of the corporations in Washington and all of the lobbyists that have created corruption, said Tim Novak, 42, of Wayne, Michigan. If it wasn't for the money, the politicians would work for the people and not the corporations and big banks.
(Additional reporting by Katrease Stafford. Editing by Bernadette Baum and Dan Grebler)