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GE (General Electric) 2010 Compensation Decisions
| 2011-June-06, 8:49 PM | |
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Over the last decade, through two recessions, GE has earned $161 billion and generated $172 billion of cash from operating activities, cumulatively, more than twice as much as in the prior decade. Over the last five years, GE has earned $83 billion and generated $97 billion of cash from operating activities, cumulatively. As measured by cumulative earnings and cash from operating activities over the past decade, GE is one of the ten largest companies in the world. Throughout this period, management kept the company safe and secure and GE and GE Capital were profitable in every quarter. At the same time, the company went through a substantial portfolio transformation, including the dispositions of Employers Reinsurance Corporation, GE Plastics and NBCU, which reduced volatility and generated funds for investment in higher-growth infrastructure businesses. In 2010, GE had a very strong year, including 15% earnings growth, a 9% reduction in GE Capital’s ending net investment (ENI), $14.7 billion of industrial cash from operating activities and strong order growth ending the year with a record $175 billion backlog. This performance is a direct result of actions taken by Mr. Immelt and the GE leadership team over the last few years to reduce the size of GE Capital and focus it on businesses where we are more competitively advantaged, to increase liquidity to improve the safety of GE in an uncertain environment, to invest in technology and research to increase organic growth in our industrial businesses, to emphasize global markets and growth opportunities, and to execute on strategic acquisitions and dispositions. In light of this recovery and historical performance, after two years of taking no bonus, Mr. Immelt received a bonus of $4 million for 2010, compared to a bonus of $5.8 million for 2007, the last year he accepted a bonus. In 2010, Mr. Immelt also received a special equity grant of two million stock options in order to increase the equity-based portion of his compensation and to underscore the Board’s confidence in his leadership. Although reported to have a $7.4 million value under applicable SEC rules, Mr. Immelt will only realize compensation from this award if he continues to work for the company over the five-year vesting period and GE’s stock price increases. $6.2 million of Mr. Immelt’s $21.4 million compensation reflects the year-over¬year increase in pension value, which is based on an increase in his service and age and changes in actuarial pension assumptions, and is not the result of any changes in his actual compensation. In a November 2010 survey conducted by the Wall Street Journal of CEO pay at 456 U.S. companies with revenues of $4 billion or more, Mr. Immelt’s pay was ranked 310 (the survey excluded year-over-year changes in pension value). Compensation increases in 2010 for the other named executive officers reflect their strong contributions to the company’s overall performance and that of their respective businesses or function. Total compensation for our other named executive officers was also significantly affected by the year-over-year increase in pension value. | |
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