This article, originally published at 7:!6 p.m. on Wednesday, April 27, 2016, has been updated with voting information from the annual shareholder's meeting, additional comment from retirees and the status of two federal lawsuits.
Last fall, General Electric (GE) - Get Report established a 15-year term limit for members of its board of directors. It's a similar system to the one that retiree Dennis Rocheleau, once the chief labor negotiator, proposed two years earlier that the manufacturer staunchly opposed.
The turnabout shows GE can recognize its missteps over time and recover, Rocheleau told CEO Jeffrey Immelt during Wednesday's annual investor meeting. But time is a luxury that the people hurt by what Rocheleau considers the company's latest mistake don't have.
"We cannot afford to wait for a similar recognition of error on the company's part regarding retiree health care," he said, referring to GE's decision to scrap its popular traditional benefits plan and send retirees instead to a private exchange with a $1,000-a-year subsidy. "Not just a lot of money but lives are at stake."
Rocheleau, who has contested the Fairfield, Conn.-based company's decision in a federal lawsuit, was among a chorus of retirees who criticized both Immelt and the board for the decision during the investor meeting in Jacksonville, Fla. Many still hold shares in their former employer and some said they voted against the company's board nominees, whose 71% majority was less than the 90% for other proposals.
For the company, the benefits of the move are obvious: It reduced GE's total retiree benefit obligation by $4.7 billion in the past three years, including $3.3 billion in 2015 alone. That's a significant savings in era when health-care costs are surging and the returns on investments that helped fund such benefits have been curbed by slower economic growth and low interest rates.
GE isn't the only company to alter its retiree health-care plans, nor was it the first. IBM, Wal-Mart and Dupont have done so as well. In fact, a Massachusetts Institute of Technology professor said last year that U.S. corporations stood to save a combined $3.25 trillion by giving subsidies to workers and retirees and sending them to exchanges.
"Our program provides post-65 retirees with access to a quality private exchange, additional cost-saving options and with more choice in coverage," said David Lurie, a GE spokesman. "The change is consistent with trends among other large companies."
For former employees, many of whom spent their careers at GE in the expectation of high-quality health care in their later years, it's a bitter adjustment.
"Yes, we can continue to litigate, but at what cost to the company's reputation and the retirees' well-being?" Rocheleau asked. "This is about higher principles than profit. It is about honorable conduct. It is about fair treatment for loyal and credulous retirees."
Many former GE employees have struggled to figure out which of the exchange's options will meet their needs affordably as well as how to pay for expensive prescription drugs that their insurance no longer covers, said Ron Flowers, president of the Retirees Association of General Electric in Erie, Pa.
"This is obscene," Flowers told GE's board on Wednesday. "When you're a retiree, you have nowhere to get any more money. You have to do with what you've got. So when you're prescribed a drug, what are you supposed to do -- tell the doctor, 'Even though it's going to save my life, I can't take it because I can't afford it?'"
Flowers, who spoke at last year's investor meeting Oklahoma City, said he told the board then that the coming year would indicate whether GE had a heart.
"We now know it's nonexistent, and GE couldn't care less about the people who built the foundation that they stand on," he said.
GE's changes have generated at least two lawsuits so far as retirees' health-care bills add up. In addition to the 2014 claim filed by Rocheleau and retired benefits counselor Evelyn Kaufman, there's a separate federal suit by unions including the Teamsters and United Auto Workers.
GE has contested both, arguing that it never promised to continue offering previous healthcare plans indefinitely. In a motion seeking to have the union's suit dismissed, the company noted that not only will the changes make retiree health care "more financially manageable for GE," they will also save many retirees money.
A healthcare consultant that GE retained before making the changes concluded that roughly 75% of eligible retirees would have a chance to save money under the new arrangement, the company said in the motion, filed Feb. 10 in U.S. District Court in Northern Ohio.
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U.S. District Judge Benita Pearson has yet to rule on the motion. In the suit by Rocheleau and Kaufman, filed in federal court in Wisconsin, Judge Lyn Adelman tossed out a claim that GE was obligated to keep providing the traditional benefits because of a statement in the 2012 plan description that it expected to do so indefinitely.
He let stand, however, a claim that GE violated a fiduciary duty to act in participants' best interests by making the statement when it already intended to change the health-care plans.
While GE reserved the right to discontinue the plans whenever it chose, the company cited examples of when such an "extreme measure" would be taken that made the move seem unlikely, said Bill Freeda, a retiree affiliated with the media sector of the Communications Workers of America union.
"That provision was never meant to cut the legs out from under long-term loyal employees and retirees who had earned coverage," he told executives at Wednesday's meeting. "That, however, is the legal position GE is taking in the two lawsuits it is currently facing."
While no one at the annual meeting could resolve the question of legality, Freeda said, "let us not confuse legal and illegal with right or wrong. Make no mistake about it, this action that GE has taken is wrong. We can point to times in this country's history when actions may have been legal but were still wrong."