GE's Compensation for the CEO
I happen to end up on GE's governance web page during my routine stroll down the Internet avenue and was very pleasantly surprised to see the following. Very encouraging!!
Source: http://www.ge.com/en/citizenship/governance/board/committees/devcomp/sept03.htm
Chairman and CEO Jeff Immelt was granted Performance Share Units (PSUs) in lieu of stock options and restricted stock units. These Performance Share Units are intended to recognize the unique position of the GE CEO. The board believes that the CEO of GE needs no retention compensation, and that his or her equity compensation should be focused entirely on performance and alignment with investors.
PSUs may vest at the end of five years (2007); half of the PSUs will convert into shares of GE stock only if GE's cash flow from operating activities has grown an average of 10% or more per year over the period. The remaining PSUs will convert only if GE's total shareowner return meets or exceeds that of the S&P 500 over the period. If one or both performance criteria are not met, the associated PSUs will be cancelled. During the performance period, Mr. Immelt will receive quarterly cash payments on each PSU equal to GE's quarterly per-share dividend.
Linking 50% of Mr. Immelt's equity compensation directly to cash generation performance of the Company underscores GE's commitment to strong operating discipline, our triple-A ratings, and the GE dividend. The remaining 50% of the equity compensation is based solely on successfully delivering to GE's shareholders total returns equal to or better than the broader market.
The 2003 grant of 250,000 Performance Share Units represents a present value of approximately $7.5 million if both performance criteria are met. The full value of the grant is at risk based on GE and GE stock performance. By comparison, in 2002 Mr. Immelt's annual equity grant was 1 million stock options, vesting in equal parts over 5 years, with an estimated present value of $8.4 million (see 2002 proxy statement).
With the grant, more than 60% of Mr. Immelt's compensation is fully at risk and linked to performance measures that are directly aligned with long-term investor interests.
Source: http://www.ge.com/en/citizenship/governance/board/committees/devcomp/sept03.htm
Chairman and CEO Jeff Immelt was granted Performance Share Units (PSUs) in lieu of stock options and restricted stock units. These Performance Share Units are intended to recognize the unique position of the GE CEO. The board believes that the CEO of GE needs no retention compensation, and that his or her equity compensation should be focused entirely on performance and alignment with investors.
PSUs may vest at the end of five years (2007); half of the PSUs will convert into shares of GE stock only if GE's cash flow from operating activities has grown an average of 10% or more per year over the period. The remaining PSUs will convert only if GE's total shareowner return meets or exceeds that of the S&P 500 over the period. If one or both performance criteria are not met, the associated PSUs will be cancelled. During the performance period, Mr. Immelt will receive quarterly cash payments on each PSU equal to GE's quarterly per-share dividend.
Linking 50% of Mr. Immelt's equity compensation directly to cash generation performance of the Company underscores GE's commitment to strong operating discipline, our triple-A ratings, and the GE dividend. The remaining 50% of the equity compensation is based solely on successfully delivering to GE's shareholders total returns equal to or better than the broader market.
The 2003 grant of 250,000 Performance Share Units represents a present value of approximately $7.5 million if both performance criteria are met. The full value of the grant is at risk based on GE and GE stock performance. By comparison, in 2002 Mr. Immelt's annual equity grant was 1 million stock options, vesting in equal parts over 5 years, with an estimated present value of $8.4 million (see 2002 proxy statement).
With the grant, more than 60% of Mr. Immelt's compensation is fully at risk and linked to performance measures that are directly aligned with long-term investor interests.
posted by OneMBA Poster at 9:26 PM
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