DEF 14A of General Electric Co
Filed Feb 18, 2009 · FY20080001193125-09-031738
Election of Directors
Election of Directors At the 2009 Annual Meeting, 15 directors are to be elected to hold office until the 2010 Annual Meeting and until their successors have been elected and qualified. The 15 nominees for election at the 2009 Annual Meeting are listed on pages 6 to 9, with brief biographies. They are all now GE directors. The Board of Directors has determined that the following 12 nominees satisfy the New York Stock Exchange’s definition of independent director: James I. Cash, Jr., Ann M. Fudge, Susan Hockfield, Andrea Jung, A.G. Lafley, Robert W. Lane, Ralph S. Larsen, Rochelle B. Lazarus, James J. Mulva, Sam Nunn, Robert J. Swieringa and Douglas A. Warner III. We do not know of any reason why any nominee would be unable to serve as a director. If any nominee is unable to serve, the shares represented by all valid proxies will be voted for the election of such other person as the Board may nominate.
Election of Directors
| | James I. Cash, Jr., 61, Emeritus James E. Robison Professor of Business Administration, Harvard Graduate School of Business, Boston, Massachusetts. Director since 1997. |
Election of Directors
A graduate of Texas Christian University with MS and PhD degrees from Purdue University, Dr. Cash joined the faculty of Harvard Business School in 1976, where he served as chairman of the MBA program from 1992 to 1995, and served as chairman of HBS Publishing from 1998 until 2003. Dr. Cash retired from the Harvard Business School faculty in 2003. Dr. Cash is a director of The Chubb Corporation, Microsoft Corporation, Wal-Mart Stores, Inc. and Phase Forward, Inc. He also serves as a trustee of the Bert King Foundation and on the board of the National Association of Basketball Coaches (NABC) Foundation.
Election of Directors
| | Sir William M. Castell, 61, Former Vice Chairman, General Electric Company. Director since 2004. |
Election of Directors
A graduate of the City of London College, Sir William joined Amersham plc in 1989 as chief executive. After GE acquired Amersham plc in April 2004, Sir William was appointed a vice chairman of GE and became the CEO of GE Healthcare, the combination of the Amersham and the GE Medical businesses and, in July 2005, became the chairman of GE Healthcare. In April 2006, Sir William retired as a vice chairman of GE. Sir William was knighted in 2000 for services to the life sciences industry. He served in the United Kingdom from 1993 to 2003 as chairman of The Prince’s Trust, a charity set up by the Prince of Wales in 1976. Sir William is currently chairman of the Wellcome Trust, a non-executive director of British Petroleum plc and serves as a member of the Prime Minister’s Business Council for Britain. Sir William is an honorary fellow of Green College Oxford, the Academy of Medical Sciences and of King’s College London. He has received honorary degrees from the University of Cardiff, University of Oxford and Imperial College London.
Election of Directors
| | Ann M. Fudge, 57, Former Chairman and Chief Executive Officer, Young & Rubicam Brands, global marketing communications network, New York, New York. Director since 1999. |
Election of Directors
Ms. Fudge received a BA degree from Simmons College and an MBA from Harvard University. Ms. Fudge served as the chairman and chief executive officer of Young & Rubicam from 2003 to the end of 2006. Prior to joining Young & Rubicam, Ms. Fudge worked at General Mills and at General Foods, where she served in a number of positions including president of Kraft General Foods’ Maxwell House Coffee Company and president of Kraft’s Beverages, Desserts and Post Divisions. Ms. Fudge is a director of Novartis AG, the Gates Foundation and the Rockefeller Foundation and is on the board of overseers of Harvard University.
Election of Directors
| | Susan Hockfield, 57, President of the Massachusetts Institute of Technology, Cambridge, Massachusetts. Director since 2006. |
Election of Directors
President of MIT since December 2004, Dr. Hockfield received an undergraduate degree from the University of Rochester, and a PhD from the Georgetown University School of Medicine, concentrating in neuroscience. Following a postdoctoral fellowship at the University of California at San Francisco, she joined the scientific staff at the Cold Spring Harbor Laboratory in 1980. In 1985, Dr. Hockfield joined the faculty of Yale University, where she went on to serve as dean of the Graduate School of Arts and Sciences from 1988 to 2002 and as provost. Dr. Hockfield is an elected member of the American Academy of Arts and Sciences and a fellow of the American Association for the Advancement of Science. She has received honorary degrees from Tsinghua University, Brown University and the Watson School of Biological Sciences at the Cold Spring Harbor Laboratory. Dr. Hockfield is also a director of the World Economic Forum Foundation, an overseer of the Boston Symphony Orchestra, and a trustee of the Carnegie Corporation of New York and of the Woods Hole Oceanographic Institution.
Election of Directors
| | Jeffrey R. Immelt, 53, Chairman of the Board and Chief Executive Officer, General Electric Company. Director since 2000. |
Election of Directors
Mr. Immelt joined GE in corporate marketing in 1982 after receiving a degree in applied mathematics from Dartmouth College and an MBA from Harvard University. He then held a series of leadership positions with GE Plastics in sales, marketing and global product development. He became a vice president of GE in 1989, responsible for consumer services for GE Appliances. He subsequently became vice president of worldwide marketing product management for GE Appliances in 1991, vice president and general manager of GE Plastics Americas commercial division in 1992, and vice president and general manager of GE Plastics Americas in 1993. He became senior vice president of GE and president and chief executive officer of GE Medical Systems in 1996. Mr. Immelt became GE’s president and chairman-elect in 2000, and chairman and chief executive officer in 2001. He is a director of the Federal Reserve Bank of New York, a trustee of Dartmouth College, and was recently named a member of President Obama’s Economic Recovery Advisory Board.
Election of Directors
| | Andrea Jung, 50, Chairman of the Board and Chief Executive Officer, Avon Products, Inc., beauty products, New York, New York. Director since 1998. |
Election of Directors
Ms. Jung, a graduate of Princeton University, joined Avon Products, Inc. in 1994 as president, product marketing for Avon U.S. She was elected president, global marketing, in 1996, an executive vice president in 1997, president and a director of the company in 1998, chief operating officer from 1998 to 1999, chief executive officer in 1999 and chairman of the board in 2001. Previously, she was executive vice president, Neiman Marcus and a senior vice president for I. Magnin. Ms. Jung is also a director of Apple Inc., Catalyst and chairman of the World Federation of Direct Selling Associations.
Election of Directors
| | Alan G. (A.G.) Lafley, 61, Chairman of the Board and Chief Executive Officer, Procter & Gamble Company, personal and household products, Cincinnati, Ohio. Director since 2002. |
Election of Directors
Mr. Lafley received a BA degree from Hamilton College and an MBA from Harvard University, following which time he joined Procter & Gamble. He was named a group vice president in 1992, an executive vice president in 1995 and, in 1999, president of global beauty care and North America. He was elected chief executive officer in 2000 and chairman of the board in 2002. He serves on the board of directors of Dell Inc., the board of trustees of Hamilton College, and is a member of the Lauder Institute Board of Governors (Wharton School of Arts & Sciences), the Business Roundtable and The Business Council.
Election of Directors
| | Robert W. Lane, 59, Chairman of the Board and Chief Executive Officer, Deere & Company, agricultural, construction and forestry equipment, Moline, Illinois. Director since 2005. |
Election of Directors
A graduate of Wheaton College, Mr. Lane also holds an MBA from the University of Chicago. Mr. Lane joined Deere & Company in 1982 following a career in global banking, and has served Deere in leadership positions in its global construction equipment and agricultural divisions as well as at Deere Credit, Inc. He also has served as Deere’s chief financial officer and president, and was elected chairman and chief executive officer in August 2000. Mr. Lane is a director of Verizon Communications Inc.
Election of Directors
| | Ralph S. Larsen, 70, Former Chairman of the Board and Chief Executive Officer, Johnson & Johnson, pharmaceutical, medical and consumer products, New Brunswick, New Jersey. Director since 2002. |
Election of Directors
After graduating with a BBA degree from Hofstra University, Mr. Larsen joined Johnson & Johnson in 1962. In 1981, he left Johnson & Johnson to serve as president of Becton Dickinson’s consumer products division and returned to Johnson & Johnson in 1983 as president of its Chicopee subsidiary. In 1986, Mr. Larsen was named a company group chairman and later that year became vice chairman of the executive committee and chairman of the consumer sector. He was elected a director in 1987 and served as chairman of the board and chief executive officer from 1989 to 2002. Mr. Larsen is also a trustee of the Robert Wood Johnson Foundation.
Election of Directors
| | Rochelle B. Lazarus, 61, Chairman and former Chief Executive Officer, Ogilvy & Mather Worldwide, global marketing communications company, New York, New York. Director since 2000. |
Election of Directors
A graduate of Smith College, Ms. Lazarus also holds an MBA from Columbia University. She joined Ogilvy & Mather Worldwide in 1971, becoming president of its U.S. direct marketing business in 1989. She then became president of Ogilvy & Mather New York and president of Ogilvy & Mather North America before becoming president and chief operating officer of the worldwide agency in 1995, chief executive officer in 1996, which she held to 2008, and chairman in 1997. Ms. Lazarus also serves as a director of Merck & Co., New York Presbyterian Hospital, the American Museum of Natural History and the World Wildlife Fund, and is a member of the board of overseers of Columbia Business School.
Election of Directors
| | James J. Mulva, 62, Chairman, President and Chief Executive Officer, ConocoPhillips, international, integrated energy company, Houston, Texas. Director since 2008. |
Election of Directors
Mr. Mulva received a BBA degree and an MBA in finance from the University of Texas. After serving as an officer in the U.S. Navy, he joined Phillips Petroleum Company in 1973 and became its chief financial officer in 1990, when he also became part of the company’s management committee. He was appointed senior vice president in 1993, executive vice president in January 1994, president and chief operating officer in May 1994 and served as chairman and chief executive officer from 1999 to 2002. He has been president and chief executive officer of ConocoPhillips since 2002 and also became chairman in 2004. Mr. Mulva served as chairman of the American Petroleum Institute in 2005 and 2006 and is a member of the board of visitors for the M.D. Anderson Cancer Center and The Business Council.
Election of Directors
| | Sam Nunn, 70, Co-Chairman and Chief Executive Officer, Nuclear Threat Initiative, Washington, D.C. Director since 1997. |
Election of Directors
After attending the Georgia Institute of Technology and serving in the U.S. Coast Guard, Mr. Nunn received an AB degree from Emory University in 1960 and an LLB degree from Emory Law School. He practiced law and served in the Georgia House of Representatives before being elected to the United States Senate in 1972, where he served as the chairman and ranking member on both the Senate Armed Services Committee and the Senate’s Permanent Subcommittee on Investigations before retiring in 1997. He was a partner at King & Spalding from 1997 through 2003. He is the co-chairman and CEO of the Nuclear Threat Initiative and the chairman of the board of the Center for Strategic and International Studies. Mr. Nunn is a distinguished professor at the Sam Nunn School of International Affairs at Georgia Tech. He is also a director of Chevron Corporation, The Coca-Cola Company and Dell Inc.
Election of Directors
| | Roger S. Penske, 72, Chairman of the Board, Penske Corporation, Penske Truck Leasing Corporation, and Penske Automotive Group, Inc., diversified transportation company, Detroit, Michigan. Director since 1994. |
Election of Directors
After attending Lehigh University, Mr. Penske founded Penske Corporation in 1969. He became chairman of the board of Penske Truck Leasing Corporation in 1982 and chairman of the board of United Auto Group, Inc. (currently Penske Automotive Group, Inc.) in 1999. Mr. Penske is also a director of Universal Technical Institute, Inc. and Internet Brands, Inc. He is a director of Detroit Renaissance, Inc., chairman of Downtown Detroit Partnership and a trustee of the Detroit Medical Center.
Election of Directors
| | Robert J. Swieringa, 66, Professor of Accounting and former Anne and Elmer Lindseth Dean, S.C. Johnson Graduate School of Management, Cornell University, Ithaca, New York. Director since 2002. |
Election of Directors
Dr. Swieringa received a BA degree from Augustana College, an MBA in accounting and economics from the University of Denver and a PhD in accounting and complex organizations from the University of Illinois. He taught accounting at Stanford’s Graduate School of Business and at the Johnson Graduate School of Management at Cornell University before serving as a member of the Financial Accounting Standards Board from 1986 to 1996. He was then a professor in the practice of accounting at Yale’s School of Management from 1996 to 1997 and was the ninth dean of the S.C. Johnson Graduate School of Management from 1997 to 2007. Dr. Swieringa is currently a member of the American Accounting Association (AAA) and the board of managers of the Partners Group Private Equity Fund, and is a past president of the Financial Accounting and Reporting Section of the AAA.
Election of Directors
| | Douglas A. Warner III, 62, Former Chairman of the Board, J.P. Morgan Chase & Co., The Chase Manhattan Bank, and Morgan Guaranty Trust Company, investment banking, New York, New York. Director since 1992. |
Election of Directors
Following graduation from Yale University in 1968, Mr. Warner joined Morgan Guaranty Trust Company of New York, a wholly owned subsidiary of J.P. Morgan Chase & Co. (formerly J.P. Morgan & Co. Incorporated). He was elected president and a director of the bank and its parent in 1990, serving as chairman and chief executive officer from 1995 to 2000, when he became chairman of the board of J.P. Morgan Chase & Co., The Chase Manhattan Bank and Morgan Guaranty Trust Company until his retirement in 2001. Mr. Warner is also a director of Motorola, Inc., a member of the board of counselors of The Bechtel Group, Inc., chairman of the board of managers and the board of overseers of Memorial Sloan-Kettering Cancer Center, chairman of the Yale Investment Committee and a trustee of Yale University.
Compensation Actions for 2008
| • | Mr. Immelt proposed, and the MDCC agreed, that he would receive no bonus for 2008 and that he would decline the entire $11.7 million earned under his long-term performance award. The MDCC accepted Mr. Immelt’s proposal as appropriate recognizing that, although the company delivered a strong operational performance in 2008, this performance was not reflected in GE’s stock price. The aggregate effect of these actions reduced the amount of cash compensation paid to Mr. Immelt 64% versus 2007. |
Compensation Actions for 2008
| • | In light of the performance of our financial services businesses, Messrs. Sherin and Neal received bonuses for 2008 that were 15% and 25% lower than their 2007 bonuses, respectively. In addition, with the agreement of the MDCC, each declined half of the amount earned under his long-term performance award, which, if paid out according to formula, would have entitled each of them to an additional $2.6 million and $2.9 million, respectively. Mr. Rice, who led Technology Infrastructure to a solid performance in 2008, received a 10% lower bonus than awarded in 2007. |
Determining Compensation for Our Chief Executive Officer for 2008
Determining Compensation for Our Chief Executive Officer for 2008 The following table reflects the MDCC’s view of 2008 compensation actions for Mr. Immelt and includes the actions described above. The MDCC considered salary, bonus, the potential value of performance share units (PSUs) granted in 2008 and the 2006 through 2008 long-term performance award.
2008 Summary Compensation Table
2008 Summary Compensation Table
2008 Summary Compensation Table
| Name and Principal Position | Year | Salary(1) | Bonus | Stock Awards(2) | Option Awards(4) | Non-Equity Incentive Plan Compensation | Change in Pension Value and Nonqualified Deferred Compensation Earnings(5) | All Other Compensation(6) | Total | | Jeffrey R. Immelt, | 2008 | $3,300,000 | $0 | $6,860,318(3) | — | $0 | $3,563,466 | $372,819 | $14,096,603 | | Chairman of the Board and CEO | 2007 2006 | 3,300,000 3,300,000 | 5,800,000 5,000,000 | 9,802,359 7,404,209(3) (3) | $214,664 574,322 | 0 0 | 78,290 1,036,908 | 396,267 548,013 | 19,591,580 17,863,452 | | Keith S. Sherin, | 2008 | $1,500,000 | $2,550,000 | $2,987,493 | $1,597,537 | $2,555,300 | $2,503,541 | $288,718 | $13,982,589 | | Vice Chairman and CFO | 2007 2006 | 1,354,167 1,225,000 | 3,000,000 2,550,000 | 3,076,095 2,808,919 | 1,714,833 2,225,749 | 0 0 | 1,281,453 1,564,398 | 275,400 308,222 | 10,701,948 10,682,288 | | Michael A. Neal, | 2008 | $1,650,000 | $2,900,000 | $3,512,898 | $1,475,945 | $2,933,900 | $3,484,939 | $344,044 | $16,301,726 | | Vice Chairman | 2007 2006 | 1,550,000 1,400,000 | 3,880,000 3,300,000 | 4,212,201 3,906,929 | 1,457,839 1,759,672 | 0 0 | 2,979,130 3,032,927 | 343,674 294,872 | 14,422,844 13,694,400 | | John G. Rice, | 2008 | $1,650,000 | $2,700,000 | $3,659,090 | $1,597,537 | $5,615,400 | $3,328,715 | $261,073 | $18,811,815 | | Vice Chairman | 2007 2006 | 1,550,000 1,400,000 | 3,000,000 2,550,000 | 4,406,900 4,122,437 | 1,714,833 2,225,749 | 0 0 | 1,852,735 2,183,677 | 393,825 335,866 | 12,918,293 12,817,729 | | Brackett B. Denniston, Senior Vice President, General Counsel and Secretary | 2008 | $1,200,000 | $1,850,000 | $2,284,110 | $1,239,568 | $4,000,200 | $1,432,870 | $250,857 | $12,257,605 | | David R. Nissen, Former President & CEO, GE Money | 2008 | $1,350,000 | $1,310,000 | $6,777,594 | $2,731,013 | $4,169,500 | $5,911,944 | $190,426 | $22,440,477 | | Robert C. Wright, | 2008 | $916,667 | $2,783,000 | — | — | $10,148,300 | $1,208,099 | $2,080,058 | $17,136,124 | | Former Vice Chairman | 2007 2006 | 2,750,000 2,500,000 | 7,590,000 6,900,000 | $1,943,665 2,516,712 | $1,303,005 2,473,683 | 0 0 | 1,072,075 2,422,714 | 1,314,005 1,010,780 | 15,972,750 17,823,889 |
2008 Summary Compensation Table
(1) Each of the named executives contributed a portion of his salary to the company’s 401(k) savings plan. (2) This column represents the dollar amounts recognized for the years shown for the fair value of PSUs and RSUs granted in those years, as well as prior years, in accordance with SFAS 123R. These amounts reflect the company’s accounting expense and do not correspond to the actual value that will be realized by the named executives. Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. For RSUs, fair value is calculated using the closing price of GE stock on the date of grant. For Mr. Nissen, the expense includes the effect of the accelerated vesting of his unvested RSUs upon retirement. Mr. Wright did not receive any RSU awards in 2008 and his prior awards were fully expensed by December 31, 2007. For information on the valuation assumptions, refer to the note on Other Stock-Related Information for the GE financial statements in the Annual Report on Form 10-K for the respective year-end. Refer to note 3 below for a discussion of the calculation of the fair value of PSUs. See the 2008 Grants of Plan-Based Awards table for information on grants awarded in 2008. (3) This amount represents the company’s accounting expense for PSUs pursuant to SFAS 123R and SEC rules. It reflects the expense for all previously granted PSUs, not only those granted in the years shown. Mr. Immelt received 150,000 PSUs in 2008 with a SFAS 123R value of $2,044,650. As set forth on page 13, this amount reflects the MDCC’s view of Mr. Immelt’s equity compensation for 2008. The actual value of PSUs received is different from the accounting expense because it depends on performance: 50% of the PSUs converts into GE stock only if GE’s cash flow from operating activities, adjusted to exclude the effect of unusual events, has grown an average of 10% or more per year over the performance period, and 50% converts into GE stock only if GE’s total shareowner return meets or exceeds that of the S&P 500 over the performance period. Accordingly, Mr. Immelt may receive 0%, 50% or 100% of each PSU grant. For example, as described in the Compensation Discussion and Analysis on page 16, Mr. Immelt only earned 50%, or 125,000 shares valued at $1,387,500 based upon the $11.10 stock price on the vesting date, of the PSUs granted to him in September 2004. Mr. Immelt did not earn the other 50% because the total shareowner return condition was not met. Although the PSUs not earned by Mr. Immelt were cancelled, the related accounting expense of $3,007,000 has been disclosed as compensation to Mr. Immelt over the performance period. (4) This column represents the dollar amounts recognized for the years shown for the fair value of stock options granted in those years, as well as prior years, in accordance with SFAS 123R. These amounts reflect the company’s accounting expense and do not correspond to the actual value that will be realized by the named executives. Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. For Mr. Nissen, the expense includes the effect of the accelerated vesting of his unvested stock options upon retirement. Mr. Wright did not receive any stock option awards in 2008 and his prior awards were fully expensed by December 31, 2007. For information on the valuation assumptions, refer to the note on Other Stock-Related Information for the GE financial statements in the Annual Report on Form 10-K for the respective year-end. See the 2008 Grants of Plan-Based Awards table on page 25 for information on stock options awarded in 2008. (5) This column represents the sum of the change in pension value and nonqualified deferred compensation earnings for each of the named executives. The change in pension value in 2008 was $3,475,806, $2,437,513, $3,411,207, $3,225,578, $1,426,243, $5,788,114 and $553,072 for Messrs. Immelt, Sherin, Neal, Rice, Denniston, Nissen and Wright, respectively. The increase in Mr. Immelt’s pension value was primarily due to actuarial present value calculations and not any change in his compensation. In 2008, the above-market earnings on the executive deferred salary plans in which the named executives participated were $87,660, $66,028, $73,732, $103,137, $6,627, $123,830 and $655,027 for Messrs. Immelt, Sherin, Neal, Rice, Denniston, Nissen and Wright, respectively. Pursuant to an early retirement agreement and subject to non-compete and non-solicitation obligations, Mr. Nissen became vested in his accrued pension benefits and entitled to payment of pension benefits to begin as of January 1, 2009. The change in pension value for Mr. Nissen in the above table reflects these provisions of his agreement. See the 2008 Pension Benefits table on page 33 for additional information, including the present value assumptions used in this calculation. Above-market earnings represent the difference between market interest rates determined pursuant to SEC rules and the 8.5% to 14% interest contingently credited by the company on salary deferred by the named executives under various executive deferred salary plans in effect between 1987 and 2008. See 2008 Nonqualified Deferred Compensation beginning on page 33 for additional information. (6) See the 2008 All Other Compensation table below for additional information.
2008 Grants of Plan-Based Awards
2008 Grants of Plan-Based Awards The following table provides information about equity awards granted to the named executives, other than Messrs. Nissen and Wright, in 2008: (1) the grant date, (2) estimated future payouts under equity incentive plan awards, which consist of the PSUs awarded to Mr. Immelt, (3) the number of shares underlying all other stock awards, which consist of RSUs awarded to certain of the named executives, (4) all other awards, which consist of the number of shares underlying stock options awarded to certain of the named executives, (5) the exercise price of the stock option awards, which reflects the closing price of GE stock on the date of grant, and (6) the grant date fair value of each equity award computed under SFAS 123R.
2008 Grants of Plan-Based Awards
| Name of Executive | Grant Date | Estimated Future Payouts Under Equity Incentive Plan Awards(1) | All Other Stock Awards: Number of Shares of Stock or Units(2) | All Other Awards: Number of Securities Underlying Options(3) | Exercise or Base Price of Option Awards | Full Grant Date Fair Value(4) | | | | Maximum | | | | | | Immelt | 12/11/2008 | 150,000 | | | | $2,044,650 | | Sherin | 6/5/2008 | | 100,000 | | | $3,106,000 | | | 9/9/2008 | | 100,000 | | | 2,812,000 | | | 9/9/2008 | | | 300,000 | $28.12 | 1,560,000 | | Neal | 9/9/2008 | | 100,000 | | | $2,812,000 | | | 9/9/2008 | | | 300,000 | $28.12 | 1,560,000 | | Rice | 9/9/2008 | | 100,000 | | | $2,812,000 | | | 9/9/2008 | | | 300,000 | $28.12 | 1,560,000 | | Denniston | 9/9/2008 | | 58,334 | | | $1,640,352 | | | 9/9/2008 | | | 175,000 | $28.12 | 910,000 |
2008 Grants of Plan-Based Awards
(1) This column shows the number of PSUs granted in 2008 to Mr. Immelt, which is the maximum number of PSUs that will convert into shares of GE stock at the end of the five-year performance period, if GE achieves the specified performance conditions. The terms of the PSUs are described in note 3 of the 2008 Summary Compensation Table on page 23. (2) This column shows the number of RSUs granted, which will vest and convert into shares of GE stock ratably in five equal annual installments beginning one year from the date of grant and each year thereafter. During the restricted period, each RSU entitles the individual to receive quarterly payments from the company equal to the quarterly dividends on one share of GE stock. (3) This column shows the number of stock options granted, which will vest and become exercisable ratably in five equal annual installments beginning one year from the date of grant and each year thereafter. (4) This column shows the full grant date fair value of PSUs under SFAS 123R granted to Mr. Immelt, and the full grant date fair value of RSUs and stock options under SFAS 123R granted to the other named executives in the table, in 2008. Generally, the full grant date fair value is the amount that the company will expense in its financial statements over the award’s vesting schedule. See note 3 of the 2008 Summary Compensation Table for a discussion of the fair value calculation related to the PSUs. For RSUs, fair value is calculated using the closing price of GE stock on the grant date of $31.06 and $28.12 as of June 5, 2008 and September 9, 2008, respectively. For stock options, fair value is calculated using the Black Scholes value on the grant date of $5.20 as of September 9, 2008. For additional information on the valuation assumptions, refer to note 24 of the GE financial statements in the Annual Report on Form 10-K for the year ended December 31, 2008, as filed with the SEC.
2008 Outstanding Equity Awards at Fiscal Year-End
2008 Outstanding Equity Awards at Fiscal Year-End The following table provides information on the current holdings of stock option and stock awards by the named executives. This table includes unexercised and unvested option awards, unvested RSUs or PSUs with vesting conditions that were not satisfied as of December 31, 2008. Each equity grant is shown separately for each named executive. The vesting schedule for each outstanding award is shown following this table, based on the option or stock award grant date. The option exercise prices shown below indicate rounding with respect to prices prior to 2000, which extended to four decimal points. For additional information about the stock option and stock awards, see the description of equity incentive compensation in the Compensation Discussion and Analysis beginning on page 20.
2008 Outstanding Equity Awards at Fiscal Year-End
| Option Awards | | | | | | Stock Awards | | | | | | Name of Executive | Option Grant Date | Number of Securities Underlying Unexercised Options Exercisable | Number of Securities Underlying Unexercised Options Unexercisable | Option Exercise Price | Option Expiration Date | Stock Award Grant Date | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(1) | | Immelt | | | | | | 7/3/1989 | 60,000 | $972,000 | | | | | | | | | | 12/20/1991 | 72,000 | 1,166,400 | | | | | | | | | | 6/23/1995 | 75,000 | 1,215,000 | | | | | | | | | | 6/26/1998(a) | 112,500 | 1,822,500 | | | | | 9/10/1999 | 375,000 | | $39.73 | 9/10/2009 | | | | | | | | 9/22/2000 | 350,000 | | 57.31 | 9/22/2010 | | | | | | | | 11/24/2000 | 200,000 | | 49.38 | 11/24/2010 | | | | | | | | | | | | | 11/24/2000 | 150,000 | 2,430,000 | | | | | 7/26/2001 | 800,000 | | 43.75 | 7/26/2011 | | | | | | | | 9/26/2001 | 400,000 | | 35.48 | 9/26/2011 | | | | | | | | 9/13/2002 | 1,000,000 | | 27.05 | 9/13/2012 | | | | | | | | | | | | | 9/17/2004(a) | | | 250,000(2) | $4,050,000 | | | | | | | | 9/16/2005(a) | | | 250,000 | 4,050,000 | | | | | | | | 9/8/2006(a) | | | 250,000 | 4,050,000 | | | | | | | | 11/2/2007 | | | 150,000 | 2,430,000 | | | | | | | | 12/11/2008 | | | 150,000 | 2,430,000 |
2008 Outstanding Equity Awards at Fiscal Year-End
| Option Awards | | | | | | Stock Awards | | | | | | Name of Executive | Option Grant Date | Number of Securities Underlying Unexercised Options Exercisable | Number of Securities Underlying Unexercised Options Unexercisable | Option Exercise Price | Option Expiration Date | Stock Award Grant Date | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(1) | | Sherin | | | | | | 12/20/1996 | 30,000 | $486,000 | | | | | | | | | | 6/26/1998(a) | 45,000 | 729,000 | | | | | | | | | | 7/29/1999(a) | 30,000 | 486,000 | | | | | 9/10/1999 | 150,000 | | $39.73 | 9/10/2009 | | | | | | | | | | | | | 6/2/2000 | 30,000 | 486,000 | | | | | 9/22/2000 | 150,000 | | 57.31 | 9/22/2010 | | | | | | | | 7/26/2001 | 225,000 | | 43.75 | 7/26/2011 | | | | | | | | | | | | | 9/10/2001 | 25,000 | 405,000 | | | | | 9/26/2001 | 112,500 | | 35.48 | 9/26/2011 | | | | | | | | 9/13/2002 | 350,000 | | 27.05 | 9/13/2012 | | | | | | | | 9/12/2003 | 240,000 | | 31.53 | 9/12/2013 | | | | | | | | | | | | | 9/12/2003(a) | 62,500 | 1,012,500 | | | | | 9/17/2004 | 216,000 | 54,000 | 34.22 | 9/17/2014 | | | | | | | | | | | | | 9/17/2004(b) | 30,000 | 486,000 | | | | | 9/16/2005 | 180,000 | 120,000 | 34.47 | 9/16/2015 | | | | | | | | | | | | | 9/16/2005(b) | 33,334 | 540,011 | | | | | 9/8/2006 | 100,000 | 150,000 | 34.01 | 9/8/2016 | | | | | | | | | | | | | 9/8/2006(b) | 83,334 | 1,350,011 | | | | | 9/7/2007 | 55,000 | 220,000 | 38.75 | 9/7/2017 | | | | | | | | | | | | | 9/7/2007 | 73,334 | 1,188,011 | | | | | | | | | | 6/5/2008 | 100,000 | 1,620,000 | | | | | 9/9/2008 | | 300,000 | 28.12 | 9/9/2018 | | | | | | | | | | | | | 9/9/2008 | 100,000 | 1,620,000 | | | | Neal | | | | | | 6/24/1994 | 60,000 | $972,000 | | | | | | | | | | 6/23/1995 | 75,000 | 1,215,000 | | | | | | | | | | 6/26/1998(a) | 45,000 | 729,000 | | | | | | | | | | 7/29/1999(a) | 30,000 | 486,000 | | | | | 9/10/1999 | 135,000 | | $39.73 | 9/10/2009 | | | | | | | | | | | | | 6/22/2000 | 30,000 | 486,000 | | | | | | | | | | 7/27/2000(a) | 7,500 | 121,500 | | | | | 9/22/2000 | 125,000 | | 57.31 | 9/22/2010 | | | | | | | | 7/26/2001 | 160,000 | | 43.75 | 7/26/2011 | | | | | | | | 9/26/2001 | 80,000 | | 35.48 | 9/26/2011 | | | | | | | | 9/13/2002 | 250,000 | | 27.05 | 9/13/2012 | | | | | | | | 9/12/2003 | 180,000 | | 31.53 | 9/12/2013 | | | | | | | | | | | | | 9/12/2003(a) | 37,500 | 607,500 | | | | | 9/17/2004 | 168,000 | 42,000 | 34.22 | 9/17/2014 | | | | | | | | | | | | | 9/17/2004(b) | 23,334 | 378,011 | | | | | | | | | | 7/1/2005 | 150,000 | 2,430,000 | | | | | 9/16/2005 | 144,000 | 96,000 | 34.47 | 9/16/2015 | | | | | | | | | | | | | 9/16/2005(b) | 26,667 | 432,005 | | | | | 9/8/2006 | 100,000 | 150,000 | 34.01 | 9/8/2016 | | | | | | | | | | | | | 9/8/2006(b) | 83,334 | 1,350,011 | | | | | 9/7/2007 | 55,000 | 220,000 | 38.75 | 9/7/2017 | | | | | | | | | | | | | 9/7/2007 | 73,334 | 1,188,011 | | | | | 9/9/2008 | | 300,000 | 28.12 | 9/9/2018 | | | | | | | | | | | | | 9/9/2008 | 100,000 | 1,620,000 | | |
2008 Outstanding Equity Awards at Fiscal Year-End
| Option Awards | | | | | | Stock Awards | | | | | | Name of Executive | Option Grant Date | Number of Securities Underlying Unexercised Options Exercisable | Number of Securities Underlying Unexercised Options Unexercisable | Option Exercise Price | Option Expiration Date | Stock Award Grant Date | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(1) | | Rice | | | | | | 6/23/1995 | 45,000 | $729,000 | | | | | | | | | | 6/26/1998(a) | 60,000 | 972,000 | | | | | | | | | | 7/29/1999(a) | 30,000 | 486,000 | | | | | 9/10/1999 | 150,000 | | $39.73 | 9/10/2009 | | | | | | | | | | | | | 7/27/2000(a) | 30,000 | 486,000 | | | | | 9/22/2000 | 150,000 | | 57.31 | 9/22/2010 | | | | | | | | 7/26/2001 | 225,000 | | 43.75 | 7/26/2011 | | | | | | | | | | | | | 9/10/2001 | 25,000 | 405,000 | | | | | 9/26/2001 | 112,500 | | 35.48 | 9/26/2011 | | | | | | | | 9/13/2002 | 350,000 | | 27.05 | 9/13/2012 | | | | | | | | 9/12/2003 | 240,000 | | 31.53 | 9/12/2013 | | | | | | | | | | | | | 9/12/2003(a) | 62,500 | 1,012,500 | | | | | 9/17/2004 | 216,000 | 54,000 | 34.22 | 9/17/2014 | | | | | | | | | | | | | 9/17/2004(b) | 30,000 | 486,000 | | | | | | | | | | 7/1/2005 | 150,000 | 2,430,000 | | | | | 9/16/2005 | 180,000 | 120,000 | 34.47 | 9/16/2015 | | | | | | | | | | | | | 9/16/2005(b) | 33,334 | 540,011 | | | | | 9/8/2006 | 100,000 | 150,000 | 34.01 | 9/8/2016 | | | | | | | | | | | | | 9/8/2006(b) | 83,334 | 1,350,011 | | | | | 9/7/2007 | 55,000 | 220,000 | 38.75 | 9/7/2017 | | | | | | | | | | | | | 9/7/2007 | 73,334 | 1,188,011 | | | | | 9/9/2008 | | 300,000 | 28.12 | 9/9/2018 | | | | | | | | | | | | | 9/9/2008 | 100,000 | 1,620,000 | | | | Denniston | | | | | | 6/26/1998(a) | 21,956 | $355,687 | | | | | 9/10/1999 | 54,000 | | $39.73 | 9/10/2009 | | | | | | | | | | | | | 11/1/1999 | 21,956 | 355,687 | | | | | | | | | | 7/27/2000(a) | 14,637 | 237,119 | | | | | 9/22/2000 | 45,000 | | 57.31 | 9/22/2010 | | | | | | | | 7/26/2001 | 60,000 | | 43.75 | 7/26/2011 | | | | | | | | | | | | | 9/10/2001 | 12,273 | 198,823 | | | | | 9/26/2001 | 30,000 | | 35.48 | 9/26/2011 | | | | | | | | 9/13/2002 | 85,000 | | 27.05 | 9/13/2012 | | | | | | | | 9/12/2003 | 60,000 | | 31.53 | 9/12/2013 | | | | | | | | | | | | | 9/12/2003(a) | 17,183 | 278,365 | | | | | 9/17/2004 | 60,000 | 15,000 | 34.22 | 9/17/2014 | | | | | | | | | | | | | 9/17/2004(b) | 8,132 | 131,738 | | | | | 9/16/2005 | 63,000 | 42,000 | 34.47 | 9/16/2015 | | | | | | | | | | | | | 9/16/2005(b) | 11,385 | 184,437 | | | | | 9/8/2006 | 50,000 | 75,000 | 34.01 | 9/8/2016 | | | | | | | | | | | | | 9/8/2006(b) | 40,660 | 658,692 | | | | | | | | | | 7/26/2007 | 15,610 | 252,882 | | | | | 9/7/2007 | 30,000 | 120,000 | 38.75 | 9/7/2017 | | | | | | | | | | | | | 9/7/2007 | 39,027 | 632,237 | | | | | 9/9/2008 | | 175,000 | 28.12 | 9/9/2018 | | | | | | | | | | | | | 9/9/2008 | 58,334 | 945,011 | | |
2008 Outstanding Equity Awards at Fiscal Year-End
| Option Awards | | | | | | Stock Awards | | | | | | Name of Executive | Option Grant Date | Number of Securities Underlying Unexercised Options Exercisable | Number of Securities Underlying Unexercised Options Unexercisable | Option Exercise Price | Option Expiration Date | Stock Award Grant Date | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(1) | | Nissen | | | | | | 6/26/1998(b) | 19,275 | $312,255 | | | | | | | | | | 7/29/1999(b) | 19,275 | 312,255 | | | | | 9/10/1999 | 90,000 | | $39.73 | 9/10/2009 | | | | | | | | | | | | | 7/27/2000(b) | 16,062 | 260,204 | | | | | 9/22/2000 | 80,000 | | 57.31 | 9/22/2010 | | | | | | | | 7/26/2001 | 110,000 | | 43.75 | 7/26/2011 | | | | | | | | 9/26/2001 | 55,000 | | 35.48 | 9/26/2011 | | | | | | | | 9/13/2002 | 200,000 | | 27.05 | 9/13/2012 | | | | | | | | 9/12/2003 | 150,000 | | 31.53 | 9/12/2013 | | | | | | | | | | | | | 9/12/2003(b) | 39,854 | 645,635 | | | | | 9/17/2004 | 180,000 | | 34.22 | 9/17/2014 | | | | | | | | | | | | | 9/17/2004(b) | 19,516 | 316,159 | | | | | 9/16/2005 | 195,000 | | 34.47 | 9/16/2015 | | | | | | | | | | | | | 9/16/2005(b) | 20,619 | 334,028 | | | | | | | | | | 7/27/2006 | 48,791 | 790,414 | | | | | 9/8/2006 | 175,000 | | 34.01 | 9/8/2016 | | | | | | | | | | | | | 9/8/2006(b) | 56,924 | 922,169 | | | | | | | | | | 9/7/2007 | 45,258 | 733,180 | | | | Wright | 9/10/1999 | 450,000 | | $39.73 | 9/10/2009 | | | | | | | | 9/22/2000 | 400,000 | | 57.31 | 9/22/2010 | | | | | | | | 7/26/2001 | 500,000 | | 43.75 | 7/26/2011 | | | | | | | | 9/26/2001 | 250,000 | | 35.48 | 9/26/2011 | | | | | | | | 9/13/2002 | 625,000 | | 27.05 | 9/13/2012 | | | | | | | | 9/12/2003 | 420,000 | | 31.53 | 9/12/2013 | | | | | | | | 9/17/2004 | 420,000 | | 34.22 | 9/17/2014 | | | | | | | | 9/16/2005 | 300,000 | | 34.47 | 9/16/2015 | | | | | | | | 9/8/2006 | 250,000 | | 34.01 | 9/8/2016 | | | | | |
2008 Outstanding Equity Awards at Fiscal Year-End
(1) The market value of the stock awards and the equity incentive plan awards represents the product of the closing price of GE stock as of December 31, 2008, which was $16.20, and the number of shares underlying each such award. The market value for the equity incentive plan awards, representing PSUs, also assumes the satisfaction of both the cumulative total shareowner return condition and the average cash flow from operating activities condition as of December 31, 2008. (2) Additional information on the actual value realized by Mr. Immelt on this award is in the Compensation Discussion and Analysis on page 16. (a), (b) Indicates grants made on the same day with different vesting schedules as set forth in the tables below.
2008 Option Exercises and Stock Vested
2008 Option Exercises and Stock Vested The following table provides information for the named executives on (1) stock option awards exercised during 2008, including the number of shares acquired upon exercise and the value realized at such time, and (2) the number of shares acquired upon the vesting of stock awards in the form of RSUs and PSUs and the value realized at such time, each before payment of any applicable withholding tax and brokerage commission. As described in the Compensation Discussion and Analysis, these named executives are required to hold the net shares acquired upon the exercise of stock options for at least one year. The exercise prices reported in the notes below indicate rounding, since prices prior to 2000 extended to four decimal points. Mr. Immelt retained all of the shares he acquired upon the exercise of stock options and the vesting of PSUs after payment of taxes and exercise prices. He has not sold any of the shares he acquired upon the exercise of stock options or received upon the vesting of RSUs or PSUs since he became our CEO in 2001 and is committed to continue this practice as long as he serves as our CEO.
2008 Option Exercises and Stock Vested
| | Option Awards | | Stock Awards | | | Name of Executive | Number of Shares Acquired on Exercise | Value Realized on Exercise | Number of Shares Acquired on Vesting | Value Realized on Vesting | | Immelt(1) | 270,000 | $596,268 | 215,000 | $7,276,675 | | Sherin(2) | 75,000 | 46,035 | 122,083 | 3,221,108 | | Neal(3) | 108,000 | 238,507 | 151,750 | 4,141,009 | | Rice(4) | 120,000 | 280,908 | 172,083 | 4,558,858 | | Denniston(5) | 54,000 | 120,784 | 47,708 | 1,260,158 | | Nissen(6) | 75,000 | 177,223 | 121,095 | 3,504,939 | | Wright(7) | 375,000 | 697,728 | 1,419,335 | 43,144,512 |
2008 Option Exercises and Stock Vested
(1) Mr. Immelt exercised 270,000 expiring stock options on July 31, 2008, with an exercise price of $26.42 and a market price of $28.63. Upon the vesting of PSUs, he acquired 215,000 shares with a market price of $33.85 on February 8, 2008. (2) Mr. Sherin exercised 75,000 expiring stock options on July 16, 2008, with an exercise price of $26.42 and a market price of $27.03. Upon the vesting of RSUs, he acquired 18,333 shares with a market price of $28.19 on September 7, 2008, 12,500 shares with a market price of $28.10 on September 10, 2008, 57,917 shares with a market price of $26.91 on September 12, 2008 and 33,333 shares with a market price of $23.84 on September 16, 2008. (3) Mr. Neal exercised 108,000 expiring stock options on July 31, 2008, with an exercise price of $26.42 and a market price of $28.63. Upon the vesting of RSUs, he acquired 18,000 shares with a market price of $33.78 on March 14, 2008, 50,000 shares with a market price of $26.76 on July 1, 2008, 18,333 shares with a market price of $28.19 on September 7, 2008, 38,750 shares with a market price of $26.91 on September 12, 2008 and 26,667 shares with a market price of $23.84 on September 16, 2008. (4) Mr. Rice exercised 120,000 expiring stock options on August 6, 2008, with an exercise price of $26.42 and a market price of $28.76. Upon the vesting of RSUs, he acquired 50,000 shares with a market price of $26.76 on July 1, 2008, 18,333 shares with a market price of $28.19 on September 7, 2008, 12,500 shares with a market price of $28.10 on September 10, 2008, 57,917 shares with a market price of $26.91 on September 12, 2008 and 33,333 shares with a market price of $23.84 on September 16, 2008. (5) Mr. Denniston exercised 18,000 expiring stock options on August 29, 2008, with an exercise price of $26.42 and a market price of $28.60, 18,000 expiring stock options on September 4, 2008, with an exercise price of $26.42 and a market price of $28.36, and 18,000 expiring stock options on September 9, 2008, with an exercise price of $26.42 and a market price of $29.00. Upon the vesting of RSUs, he acquired 4,000 shares with a market price of $28.54 on July 26, 2008, 10,000 shares with a market price of $28.19 on September 7, 2008, 6,023 shares with a market price of $28.10 on September 10, 2008, 14,937 shares with a market price of $26.91 on September 12, 2008, 11,385 shares with a market price of $23.84 on September 16, 2008 and 1,363 shares with a market price of $15.81 on November 18, 2008. (6) Mr. Nissen exercised 75,000 expiring stock options on September 8, 2008 with an exercise price of $26.42 and a market price of $28.78. Upon the vesting of RSUs, he acquired 9,832 shares with a market price of $34.63 on February 14, 2008 (to pay FICA taxes), 36,666 shares with a market price of $32.97 on May 1, 2008, 11,666 shares with a market price of $28.19 on September 7, 2008, 41,264 shares with a market price of $26.91 on September 12, 2008 and 21,667 shares with a market price of $23.84 on September 16, 2008. (7) Mr. Wright exercised 175,000 expiring stock options on July 11, 2008, with an exercise price of $26.42 and a market price of $28.06, 125,000 expiring stock options on July 17, 2008, with an exercise price of $26.42 and a market price of $28.00, and expiring 75,000 stock options on July 23, 2008, with an exercise price of $26.42 and a market price of $29.25. Upon the vesting of RSUs, he acquired 690,000 shares with a market price of $32.50 on April 23, 2008, 5,870 shares with a market price of $32.97 on May 1, 2008 (to pay FICA taxes) and 237,465 shares with a market price of $19.50 on November 1, 2008. Upon the vesting of restricted stock, he acquired 270,000 shares with a market price of $32.50 on April 23, 2008 and 216,000 shares with a market price of $32.97 on May 1, 2008.
2008 Pension Benefits
2008 Pension Benefits The table below sets forth information on the pension benefits for the named executives under each of the following pension plans:
2008 Pension Benefits
| • | GE Pension Plan. The GE Pension Plan is a funded and tax-qualified retirement program that covers eligible employees. As applicable to the named executives, the plan provides benefits based primarily on a formula that takes into account the named executive’s earnings for each fiscal year. Since 1989, the formula provides an annual benefit accrual equal to 1.45% of the named executive’s earnings for the year up to “covered compensation” and 1.9% of his earnings for the year in excess of “covered compensation.” “Covered compensation” is $40,000 for 2008 and has varied over the years based in part on changes in the average of the Social Security taxable wage bases. The named executive’s annual earnings taken into account under this formula include base salary and up to one-half of his bonus payments, but may not exceed an IRS-prescribed limit applicable to tax-qualified plans ($230,000 for 2008). As a result, for service in 2008 the maximum incremental annual benefit a named executive could have earned toward his total pension payments under this formula was $4,190 ($349.16 per month), payable after retirement, as described below. Over the years, we have made special one-time adjustments to this plan that increased eligible participants’ pensions (the last adjustment was made in 2007). |
2008 Pension Benefits
The accumulated benefit an employee earns over his or her career with the company is payable starting after retirement on a monthly basis for life with a guaranteed minimum term of five years. The normal retirement age as defined in this plan is 65. For employees who commenced service prior to 2005, including the named executives, retirement may occur at age 60 without any reduction in benefits. Employees vest in the GE Pension Plan after five years of qualifying service. In addition, the plan provides for Social Security supplements and spousal joint and survivor annuity options and requires employee contributions. Section 415 of the Internal Revenue Code limits the benefits payable under the GE Pension Plan. For 2008, the maximum single life annuity a named executive could receive under these limits would be $185,000 per year. This ceiling is actuarially adjusted in accordance with IRS rules to reflect employee contributions, actual forms of distribution and actual retirement dates.
2008 Pension Benefits
| • | GE Supplementary Pension Plan. The company offers the GE Supplementary Pension Plan to nearly 4,000 eligible employees in the executive-band and above, including the named executives, to provide for retirement benefits above amounts available under the company’s tax-qualified and other pension programs. The Supplementary Pension Plan is unfunded and not qualified for tax purposes. An employee’s annual supplementary pension, when combined with certain amounts payable under the company’s tax-qualified and other pension programs and Social Security, will equal 1.75% of the employee’s “earnings credited for retirement benefits” multiplied by the number of the employee’s years of credited service, up to a maximum of 60% of such earnings credited for retirement benefits. The “earnings credited for retirement benefits” are the employee’s average annual compensation (base salary and bonus) for the highest 36 consecutive months out of the last 120 months prior to retirement. Employees are generally not eligible for benefits under the Supplementary Pension Plan if they leave the company prior to reaching age 60. The normal retirement age as defined in this plan is 65. For employees who commenced service prior to 2005, including the named executives, retirement may occur at age 60 without any reduction in benefits. The Supplementary Pension Plan provides for spousal joint and survivor annuities. Benefits under this plan are only available to retirees as monthly payments and cannot be received in a lump sum. |
2008 Pension Benefits
| • | GE Excess Benefits Plan. The GE Excess Benefits Plan is unfunded and not qualified for tax purposes. Benefits payable under this program are equal to the excess of (1) the amount that would be payable in accordance with the terms of the GE Pension Plan disregarding the limitations imposed pursuant to Section 415 of the Internal Revenue Code over (2) the pension actually payable under the GE Pension Plan taking such Section 415 limitations into account. Benefits under the Excess Benefits Plan for the named executives are generally payable at the same time and in the same manner as the GE Pension Plan benefits. There were no accruals under this plan in 2008, and the company expects only insignificant accruals, if any, under this plan in future years. |
2008 Pension Benefits
The amounts reported in the table below equal the present value of the accumulated benefit at December 31, 2008, for the named executives under each plan based upon the assumptions described in note 1.
2008 Pension Benefits
| Name of Executive | Plan Name | Number of Years Credited Service | Present Value of Accumulated Benefit(1) | Payments During Last Fiscal Year | | Immelt | GE Pension Plan | 26.532 | $792,005 | — | | | GE Supplementary Pension Plan | 26.532 | 26,517,736 | — | | | GE Excess Benefits Plan | 26.532 | 934 | — | | Sherin | GE Pension Plan | 27.425 | $697,890 | — | | | GE Supplementary Pension Plan | 27.425 | 12,277,579 | — | | | GE Excess Benefits Plan | 27.425 | — | — | | Neal | GE Pension Plan | 29.233 | $1,027,359 | — | | | GE Supplementary Pension Plan | 29.233 | 22,105,458 | — | | | GE Excess Benefits Plan | 29.233 | 3,518 | — | | Rice | GE Pension Plan | 30.390 | $818,101 | — | | | GE Supplementary Pension Plan | 30.390 | 16,237,459 | — | | | GE Excess Benefits Plan | 30.390 | — | — | | Denniston | GE Pension Plan | 12.333 | $580,313 | — | | | GE Supplementary Pension Plan | 12.333 | 6,294,793 | — | | | GE Excess Benefits Plan | 12.333 | — | — | | Nissen(2) | GE Pension Plan | 27.252 | $1,059,494 | — | | | GE Supplementary Pension Plan | 27.252 | 17,025,537 | — | | | GE Excess Benefits Plan | 27.252 | — | — | | | Other Payments | 27.252 | 3,677,096 | — | | Wright(3) | GE Pension Plan | 32.986 | $1,390,206 | $72,543 | | | GE Supplementary Pension Plan | 39.257 | 60,289,046 | 3,060,058 | | | GE Excess Benefits Plan | 32.986 | 226,419 | 11,815 |
2008 Pension Benefits
(1) The accumulated benefit is based on service and earnings (base salary and bonus, as described above) considered by the plans for the period through December 31, 2008. It includes the value of contributions made by the named executives throughout their careers. Except for Messrs. Denniston, Nissen and Wright, the present value has been calculated assuming the named executives will remain in service until age 60, the age at which retirement may occur without any reduction in benefits, and that the benefit is payable under the available forms of annuity consistent with the assumptions as described in note 6 of the GE financial statements in the Annual Report on Form 10-K for the year ended December 31, 2008, as filed with the SEC. As described in such note, the discount rate assumption is 6.11%. Although illustration of a present value is required under SEC rules, the named executives are not entitled to receive the present values of their accumulated benefits shown above in a lump sum. The post-retirement mortality assumption is based on the Uninsured Pensioner 1994 Mortality Table projected to 2015. The present values for Messrs. Denniston, Nissen and Wright have been calculated based on their ages of 61, 57 and 65 as of the end of 2008, respectively. The only named executives vested in the GE Supplementary Pension Plan as of December 31, 2008 are Messrs. Denniston, Nissen and Wright. (2) Pursuant to an early retirement agreement and subject to non-compete and non-solicitation obligations, Mr. Nissen became vested in his accrued pension benefits and entitled to payment of pension benefits to begin as of January 1, 2009. The value of the pre-age 60 payments is included in the above table in the line entitled “Other Payments.” (3) The company does not have a policy for granting extra pension service but has done so under the GE Supplementary Pension Plan in exceptional situations. Mr. Wright received credit for an additional six years and four months of service under the GE Supplementary Pension Plan in 1990, which includes the years when he was employed at Cox Communications. The impact of the special service credit was limited to an additional 1.3 years because the maximum replacement ratio of 60% of pensionable earnings was reached upon entitlement of 34.3 years of service. The present value of the accumulated benefit attributable to the additional service is $2,246,174. Mr. Wright received pension payments in 2008 following his retirement in May 2008, as noted above.
2008 Nonqualified Deferred Compensation
2008 Nonqualified Deferred Compensation The table below provides information on the nonqualified deferred compensation of the named executives in 2008, including:
2008 Nonqualified Deferred Compensation
| • | Deferral of bonus. Executive-band and above employees, including the named executives, are able to defer all or a portion of their bonus payments in either (1) GE stock (GE Stock Units), (2) an index based on the S&P 500 (the S&P |
2008 Nonqualified Deferred Compensation
| 500 Index Units), or (3) cash units. The participants may change their election among these options four times a year. If a participant elects either to defer bonus payments in GE Stock Units or the S&P 500 Index Units, the company credits a number of such units to the participant’s Deferred Incentive Compensation account based on the respective average price of GE stock and the S&P 500 Index for the 20 trading days preceding the date the Board approves the company’s total bonus allotment. |
2008 Nonqualified Deferred Compensation
Deferred cash units earn interest income on the daily outstanding balance in the account based on the prior calendar month’s average yield for U.S. Treasury Notes and Bonds issued with maturities of 10 and 20 years. The interest income does not constitute an “above-market interest rate” as defined by the SEC and is credited to the participant’s account monthly. Deferred GE Stock Units and S&P 500 Index Units earn dividend equivalent income on such units held as of the start of trading on the NYSE ex-dividend date equal to (1) for GE Stock Units, the quarterly dividend declared by the GE Board, or (2) for S&P 500 Index Units, the quarterly dividend as declared by Standard & Poor’s for the S&P 500 Index for the preceding calendar quarter. Participants are permitted to receive their deferred compensation balance upon termination of employment either through a lump sum payment or in annual installments over 10 to 20 years. Prior to 2009, the company also awarded a special discretionary credit to the named executive’s account, as a result of the limitations imposed by U.S. income tax regulations on the amount of compensation that an employee may save under the company’s 401(k) savings plan, and, consequently, the amount of matching contributions the company can make under that plan. The amount of the discretionary credit was calculated by multiplying 3.5% to an amount determined from the named executive’s non-deferred base salary, plus the lesser of half the bonus amount or non-deferred bonus amount, and subtracting the maximum compensation permitted to be considered under the 401(k) savings plan. Participants who made contributions after 2004 are paid in ten annual installments following termination of employment. The MDCC eliminated this special discretionary credit in February 2009.
2008 Nonqualified Deferred Compensation
| • | Deferral of salary. Executive-band and above employees have historically been able to defer their salary payments under executive deferred salary plans. These plans have generally been offered every three years and were available to approximately 4,000 eligible employees in the company who are subject to U.S. federal income taxes. Individuals who were named executives at the time a deferred salary plan was initiated were not offered the opportunity to participate. The deferred salary plans pay accrued interest, including an above-market interest rate as defined by the SEC, ranging from 8.5% to 14%, compounded annually. Early termination before the vesting date will result in a payout of the deferred amount with no interest income paid, with exceptions for events such as retirement, death and disability. With respect to distributions under all deferred salary plans, participants were provided an election to receive either a lump sum payment or 10 to 20 annual installments. |
2008 Nonqualified Deferred Compensation
| • | Deferral of long-term performance awards. The long-term performance awards for the 1994 to 1996 performance period, which were paid out in 1997, permitted the participating executives to defer some or all of a portion of the payout into GE Stock Units. The terms of this deferral with respect to credits earned and dividend income are similar to the bonus deferral described above. Of the named executives, only Messrs. Neal and Wright participated in this deferral. |
2008 Nonqualified Deferred Compensation
The company makes all decisions with respect to the measures for calculating interest or other earnings on the nonqualified deferred compensation plans. The named executives cannot withdraw any amounts from their deferred compensation balances until they either leave or retire from the company. No withdrawals or distributions were made in 2008.
2008 Nonqualified Deferred Compensation
| Name of Executive | Type of Deferred Compensation Plan | Executive Contributions in Last Fiscal Year(1) | Registrant Contributions in Last Fiscal Year1, 2 | Aggregate Earnings in Last Fiscal Year1, 3 | | Aggregate Balance at Last Fiscal Year-End(4) | | Immelt | Deferred bonus plans | $0 | $0 | ($ | 1,481,244) | $1,407,182 | | | Deferred salary plans | — | — | | 272,323 | 2,540,566 | | Sherin | Deferred bonus plans | $0 | $84,100 | | ($215,480) | $396,698 | | | Deferred salary plans | — | — | | 194,383 | 2,050,982 |
2008 Nonqualified Deferred Compensation
| Name of Executive | Type of Deferred Compensation Plan | Executive Contributions in Last Fiscal Year(1) | Registrant Contributions in Last Fiscal Year1, 2 | Aggregate Earnings in Last Fiscal Year1, 3 | Aggregate Balance at Last Fiscal Year-End(4) | | Neal | Deferred bonus plans | $0 | $104,100 | ($1,016,874) | $1,213,419 | | | Deferred salary plans | — | — | 242,143 | 2,274,520 | | | Deferred long-term performance awards | — | — | (1,729,441) | 1,460,054 | | Rice | Deferred bonus plans | $0 | $91,000 | ($3,483,802) | $5,835,248 | | | Deferred salary plans | — | — | 317,139 | 3,314,645 | | Denniston | Deferred bonus plans | $0 | $55,100 | ($155,705) | $239,299 | | | Deferred salary plans | — | — | 18,997 | 230,041 | | Nissen(5) | Deferred bonus plans | $0 | $83,400 | ($2,286,514) | $3,511,156 | | | Deferred salary plans | — | — | 398,561 | 4,015,362 | | Wright | Deferred bonus plans | $0 | $209,100 | ($12,088,104) | $10,640,594 | | | Deferred salary plans | — | — | 1,936,810 | 17,905,575 | | | Deferred long-term performance awards | — | — | (2,147,279) | 1,812,807 |
2008 Nonqualified Deferred Compensation
(1) The amounts reported are limited to deferred compensation contributed or earned during 2008. They do not include any amounts reported as part of 2008 compensation in the 2008 Summary Compensation Table on page 23, which were credited to the named executive’s deferred account plan, if any, in 2009, and are described in the notes to that table. (2) Reflects the 3.5% special discretionary credit to the deferred bonus account as described above. (3) Reflects earnings on each type of deferred compensation listed in this section. The earnings on deferred bonus payments and deferred long-term performance awards do not include any company or named executive contributions, and are calculated based on the (1) total number of deferred units in the account multiplied by the GE stock or S&P 500 Index price as of December 31, 2008, less the (2) total number of deferred units in the account multiplied by the GE stock or S&P 500 Index price as of December 31, 2007. The earnings on the executive deferred salary plans are calculated based on the total amount of interest earned. See the 2008 Summary Compensation Table on page 23 for the above-market portion of those interest earnings in 2008. (4) Includes interest income for Mr. Sherin ($54,655) and Mr. Rice ($69,561) credited to the account under the 2006 Executive Deferred Salary Plan for which they have not yet met the vesting requirements. If either of these executives were to leave the company prior to vesting, he ceases to be entitled to receive the credited interest income. The fiscal year-end balance reported for the deferred bonus plans includes the following amounts that were previously reported in the 2008 Summary Compensation Table as compensation for 2006 or 2007: Immelt ($107,800), Sherin ($137,800), Neal ($194,400), Rice ($1,420,900) and Wright ($398,600). The fiscal year-end balance reported for the deferred salary plans includes the following amounts that were previously reported in the 2008 Summary Compensation Table as compensation for 2006 or 2007: Immelt ($148,224), Sherin ($674,540), Neal ($124,663), Rice ($891,235) and Wright ($1,104,024). None of the fiscal year-end balances reported for the deferred long-term performance awards was reported in the 2008 Summary Compensation Table as 2006 or 2007 compensation. (5) Pursuant to his early retirement agreement, Mr. Nissen’s deferrals under the 2006 Executive Deferred Salary Plan will continue to accrue interest at a rate of 8.5% and other deferrals will continue to accrue earnings and losses until distributed. Deferrals will be distributed to Mr. Nissen beginning after December 31, 2008.
Potential Payments upon Termination
Potential Payments upon Termination As described in the Compensation Discussion and Analysis, the named executives do not have employment, severance or change of control agreements with the company. The information below describes and quantifies certain compensation that is payable under existing plans and arrangements based on the executive’s actual termination of employment or that would become payable if the named executive’s employment had terminated on December 31, 2008, given the named executive’s compensation and service levels as of such date and, if applicable, based on the company’s closing stock price on that date. These benefits are in addition to benefits available generally to salaried employees who joined the company prior to 2005, such as distributions under the GE 401(k) savings plan, subsidized retiree medical benefits, disability benefits and accrued vacation pay. Due to the number of factors that affect the nature and amount of any benefits provided upon the events discussed below, any actual amounts paid or distributed may be different. Factors that could affect these amounts include the time during the year of any such event, the company’s stock price and the executive’s age. Equity Awards. If a named executive retires at age 60 or thereafter, any unvested equity awards held for at least one year become fully vested. If one of the named executives were to die or become disabled, any unexercisable stock options granted a year or more before the date of that event would become exercisable and remain exercisable until the expiration date of the grant. Remaining restrictions on RSUs that were awarded at least a year prior to the event may lapse immediately in some cases, depending on the terms of the particular award. PSUs are cancelled upon events of death or disability. For these purposes, “disability” generally means disability resulting in the named executive being unable to perform his job. The following table provides the intrinsic value (that is, the value based upon the company’s stock price, and in the case of stock options minus the exercise price) of equity awards that would become exercisable or vested if the named executive had died or become disabled as of December 31, 2008.
Potential Payments upon Termination
| | Upon Death | | Upon Disability | | | Name of Executive | Stock Options(1) | RSUs | Stock Options(1) | RSUs | | Immelt(2) | $0 | $6,633,900 | $0 | $0 | | Sherin | 0 | 10,408,532 | 0 | 3,564,032 | | Neal | 0 | 12,015,038 | 0 | 3,348,038 | | Rice | 0 | 11,704,532 | 0 | 3,564,032 | | Denniston(3) | 0 | 4,230,679 | N/A | N/A | | Nissen(4) | N/A | N/A | N/A | N/A | | Wright(5) | N/A | N/A | N/A | N/A |
Potential Payments upon Termination
(1) Stock option values are $0 because all exercise prices are above our stock price as of December 31, 2008. (2) All of Mr. Immelt’s outstanding options are fully vested and exercisable. (3) As he was retirement-eligible as of December 31, 2008, Mr. Denniston would be eligible to receive retirement benefits instead of the disability benefits. If Mr. Denniston had retired on December 31, 2008, the intrinsic value of unvested stock options that would have become exercisable is $0, and the intrinsic value of RSUs that would have vested is $3,285,668. (4) Mr. Nissen retired on January 1, 2009. Pursuant to an early retirement agreement and subject to non-compete and non-solicitation obligations, upon Mr. Nissen’s retirement, all of his unvested equity awards became fully vested. The effect of this accelerated vesting is reflected in the expenses associated with the awards reported in the Stock Awards and Option Awards column of the 2008 Summary Compensation Table. The intrinsic value of the unvested stock options that became exercisable was $0, and the intrinsic value of unvested RSUs was $4,626,299. (5) Mr. Wright retired on May 1, 2008. Upon Mr. Wright’s retirement, all of his unvested equity awards became fully vested. The intrinsic value of the unvested stock options that became exercisable was $0, and there were no unvested RSUs. Deferred Compensation. The named executives are entitled to receive the amount in their deferred compensation accounts in the event of termination of employment, except that under the 2006 Executive Deferred Salary Plan, certain named executives would forfeit the unvested interest income as indicated in note 4 of the 2008 Nonqualified Deferred Compensation table on page 35 upon a termination for reasons other than retirement, death or disability. The account balances continue to be credited with increases or decreases reflecting changes in the value of the GE Stock Units or S&P 500 Index Units and to accrue interest income or dividend payments, as applicable, between the termination event and the date that distributions are made. Therefore, amounts received by the named executives will differ from those shown in the 2008 Nonqualified Deferred Compensation table. See the narrative accompanying that table for information on the available types of distribution under each deferral plan. Pension Benefits. The 2008 Pension Benefits table on page 33 describes the general terms of each pension plan in which the named executives participate, the years of credited service and the present value of each named executive’s accumulated pension benefit, assuming payment begins at age 60 or, for Messrs. Nissen and Wright, the dates of their respective retirement and for Mr. Denniston, January 1, 2009. The table below provides the pension benefits that would have become payable if the named executives had died, become disabled or voluntarily terminated as of December 31, 2008.
Potential Payments upon Termination
| • | In the event of death before retirement, the surviving spouse may receive a benefit based upon the accrued pension benefits under the GE Pension Plan and GE Excess Benefits Plan either (1) in the form of an annuity as if the named executive had retired and elected the spousal 50% joint and survivor annuity option prior to death, or (2) as an immediate lump sum payment based on five years of pension distributions. The surviving spouse may also receive a lump sum payment under the GE Supplementary Pension Plan based on the greater of the value of (1) the |
Potential Payments upon Termination
| 50% survivor annuity that the spouse would have received under that plan if the named executive had retired and elected the spousal 50% joint and survivor annuity option prior to death, or (2) five years of pension distributions under that plan. The amounts payable depend on several factors, including employee contributions and the ages of the named executive and the surviving spouse. The survivors of each of the named executives would be entitled to receive any annuity distributions promptly following death. |
Potential Payments upon Termination
| • | In the event a disability occurs before retirement, the named executive may receive an annuity payment of accrued pension benefits, payable immediately and reduced for commencement before age 60. The amount of disability payment will also vary depending on a variety of factors. |
Potential Payments upon Termination
The table below shows, for the named executives other than Mr. Wright, the lump sum payable to the surviving spouse in the case of the named executive’s death on December 31, 2008. It also reflects the annual annuity payment payable (1) for the life of the surviving spouse in the case of the named executive’s death on December 31, 2008, (2) for the named executives other than Messrs. Denniston, Nissen and Wright, as a 50% joint and survivor annuity to the named executive in the case of disability on December 31, 2008, and (3) for the named executives other than Messrs. Denniston, Nissen and Wright, as a 50% joint and survivor annuity to such executive payable after age 60 upon voluntary termination on December 31, 2008. The annuity payments upon voluntary termination do not include any payments under the GE Supplementary Pension Plan because it is forfeited upon voluntary termination before age 60. Payments would be made on a monthly basis.
Potential Payments upon Termination
| Name of Executive | Lump Sum upon Death | Annual Annuity upon Death | Annual Annuity upon Disability | Annual Annuity Payable at Age 60 after Voluntary Termination | | Immelt | $22,181,320 | $45,205 | $2,908,947 | $93,749 | | Sherin | 13,171,881 | 43,649 | 1,623,692 | 97,031 | | Neal | 17,103,735 | 50,881 | 2,067,014 | 103,379 | | Rice | 15,815,052 | 46,871 | 1,878,793 | 100,873 | | Denniston(1) | 3,292,867 | 25,600 | N/A | N/A | | Nissen(2) | 13,311,421 | 47,767 | N/A | N/A | | Wright(3) | N/A | 4,845,496 | N/A | N/A |
Potential Payments upon Termination
(1) As he was retirement-eligible as of December 31, 2008, Mr. Denniston would be eligible to receive retirement benefits instead of disability and voluntary termination benefits. If Mr. Denniston had retired on December 31, 2008, his annual pension benefit payable as a 50% joint and survivor annuity would be $545,794. (2) Mr. Nissen retired on January 1, 2009 at age 57 pursuant to an early retirement agreement. As of January 1, 2009, Mr. Nissen became entitled to a 50% joint and survivor annuity of $1,571,991 per year plus temporary early retirement supplements of $5,559 per year pursuant to that agreement. In the event of his subsequent death, his surviving spouse would receive $785,996 per year under such annuity, and the death benefits shown above for Mr. Nissen would no longer apply. (3) Mr. Wright retired on May 1, 2008. Mr. Wright is eligible to receive retirement benefits instead of disability and voluntary termination benefits. As of December 31, 2008, the annual annuity payment payable as a 100% joint and survivor annuity under his pension benefits would be $4,845,496. Life Insurance Benefits. For a description of the supplemental life insurance plans that provide coverage to the named executives, see the 2008 All Other Compensation table on page 24. If the named executives had died on December 31, 2008, the survivors of Messrs. Immelt, Sherin, Neal, Rice, Denniston, Nissen and Wright would have received $22,428,626, $13,162,558, $14,807,860, $13,047,860, $9,045,346, $11,679,252 and $26,615,662, respectively, under this arrangement. The company would continue to pay the premiums in the event of a disability until such time as the policy is fully funded. Other Benefits. In connection with his retirement, Mr. Nissen and the company entered into an early retirement agreement pursuant to which Mr. Nissen will receive benefits comparable to those he would have received, had he retired at age 60 instead of age 57. Receipt of these benefits is conditioned upon Mr. Nissen’s compliance with non-compete and non-solicitation obligations. Pursuant to these obligations, for a period of two years commencing in March 2008, Mr. Nissen may not, without the prior written consent of the company, (1) enter into any employment or contractual relationship to provide services to any competitor of the company in the consumer finance industry, or (2) solicit any person who is an employee of the company to terminate his relationship with the company. In addition to the equity and pension benefits described in the tables above, under the terms of the agreement, he received a $1,310,000 cash bonus, a 50% decrease from 2007, and $4,169,500, a pro-rata portion of the total payout under his long-term performance award measured through June 2008, each of which is reported in the 2008 Summary Compensation Table on page 23.
2008 Non-management Directors’ Compensation
| Name of Director | Fees Earned or Paid in Cash(1) | Stock Awards(2) | All Other Compensation(3) | Total | | James I. Cash, Jr. | $110,000 | $161,583 | $28,945 | $300,528 | | William M. Castell | 100,000 | 146,894 | 580 | 247,474 | | Ann M. Fudge | 50,000 | 173,382 | 38,358 | 261,740 | | Claudio X. Gonzalez | 0 | 293,788 | 2,438 | 296,226 | | Susan Hockfield | 100,000 | 146,894 | 11,061 | 257,955 | | Andrea Jung | 110,000 | 161,583 | 49,315 | 320,898 |
2008 Non-management Directors’ Compensation
| Name of Director | Fees Earned or Paid in Cash(1) | Stock Awards(2) | All Other Compensation(3) | Total | | Alan G. Lafley | 0 | 244,823 | 53,018 | 297,841 | | Robert W. Lane | 0 | 269,306 | 3,864 | 273,170 | | Ralph S. Larsen | 0 | 269,306 | 53,018 | 322,324 | | Rochelle B. Lazarus | 0 | 244,823 | 56,201 | 301,024 | | James J. Mulva | 12,500 | 137,933 | 1,854 | 152,287 | | Sam Nunn | 0 | 269,306 | 44,529 | 313,835 | | Roger S. Penske | 0 | 244,823 | 580 | 245,403 | | Robert J. Swieringa | 44,000 | 226,217 | 43,230 | 313,447 | | Douglas A. Warner III | 120,000 | 176,273 | 11,549 | 307,822 |