Opções gerais de estoque de empregados elétricos

Opções gerais de estoque de empregados elétricos
O Conselho de Administração recomenda que os accionistas aprovem o Plano de Incentivo de Longo Prazo da GE 2007 (o Plano). O objetivo do Plano é encorajar empregados assalariados selecionados a adquirir uma participação proprietária no crescimento e desempenho da empresa, gerar um incentivo maior para contribuir com o sucesso e a prosperidade futura da empresa, aumentando assim o valor da empresa para o benefício de seus empreendedores e aumentar a capacidade da empresa e seus afiliados de atrair e reter indivíduos excepcionalmente qualificados, sobre quem, em grande medida, o progresso, o crescimento e a lucratividade sustentados da empresa dependem.
Esta seção resume o Plano e é qualificado na sua totalidade pelo texto completo do Plano, que está incluído no Apêndice A desta declaração de procuração. Os termos em maiúsculas usados ​​nesta proposta são definidos no Plano. Se aprovado pelos detentores de ações, o Plano substitui o Plano de Incentivo de Longo Prazo GE 1990 (Plano de 1990). Não concedemos e não esperamos conceder quaisquer ações adicionais ao abrigo do Plano de 1990 entre 31 de dezembro de 2006 e a data efetiva do Plano, exceto a concessão de até 1.500.000 ações subjacentes a outorgas de opções de ações e 500.000 ações subjacentes Prêmios além das opções de estoque. Após a aprovação do Plano por parte do proprietário, nenhum prêmio adicional será concedido de acordo com o Plano de 1990. Para obter informações sobre prêmios de compensação de capital em circulação de acordo com nossos planos existentes, consulte a Tabela de Planos de Compensação de Ações na página 51.
O Comitê de Desenvolvimento e Remuneração da Administração (o MDCC), um comitê totalmente independente do nosso Conselho de Administração, é responsável pela administração do Plano. O Plano foi cuidadosamente projetado para permitir que a empresa ofereça uma compensação baseada em ações para atrair e reter seus empregados, sem resultar em diluição excessiva para o patrimônio do proprietário. Para os anos de 2003 a 2005, o número de ações concedidas em percentagem do total de ações ordinárias em circulação pela empresa foi no primeiro ou menor quartil de empresas do Componente Industrial Dow 30. Esta porcentagem também é conhecida como a taxa média de queima do & ldquo; & rdquo; Para 2006, o número de ações autorizadas para emissão mais o número de ações concedidas e em circulação, dividido pelo total de ações ordinárias em circulação, também foi bem dentro do primeiro quartil de empresas do Componente Industrial Dow 30. Isso também é conhecido como o & ldquo; simples overhang. & Rdquo;
Principais Características do Plano.
Limitação das ações solicitadas. O número máximo de ações em relação ao qual as opções de compra de ações e as outorgas de ações podem ser concedidas de acordo com o Plano são 500.000.000 de ações, das quais não podem estar disponíveis mais de 250.000.000 de Prêmios concedidos em qualquer forma prevista no Plano, além de Opções ou Direitos de Valorização de Estoque . Isso representa 4,9% de nossas ações em circulação em 31 de dezembro de 2006. O Plano de 1990, aprovado pelos detentores de ações, autorizou a empresa a conceder 0,95% das ações em circulação disponíveis no início de cada ano, equivalente a aproximadamente 105,9 milhões de ações por ano por dez anos. As aproximadamente 105,9 milhões de ações disponíveis para concessão em 2007 ao abrigo do Plano de 1990 serão retiradas após a aprovação do presente Plano por parte do proprietário. Limitação de concessões de opções de prazo de estoque. O prazo de cada opção de compra não excederá dez anos. Limitação na contagem de partes. As ações entregues pelo pagamento do preço de exercício ou das retenções na fonte em opções de compra de ações ou direitos de valorização de ações e as ações recompradas no mercado aberto com o produto de um exercício de opção, podem não estar disponíveis novamente para emissão nos termos do Plano. Sem reimportação ou concessão de opções de compra com desconto. O Plano não permite a reapreciação das opções ou dos direitos de apreciação de ações, quer alterando um acordo de prêmio existente ou substituindo um novo prêmio por um preço menor. O Plano proíbe a concessão de opções de compra de ações ou direitos de valorização de ações com um preço de exercício inferior ao Valor de Mercado Justo das ações da GE na data da outorga.
Descrição do Plano.
Elegibilidade. Todos os funcionários assalariados da empresa ou de suas afiliadas serão elegíveis para participar do Plano. O Plano não permite subsídios a diretores não empregados.
Administração. O Plano será administrado por um comitê do Conselho composto por pelo menos três diretores não-funcionários (o Comitê). O Comitê terá autoridade para estabelecer regras e diretrizes para a administração do Plano; selecione os empregados assalariados a quem os prêmios são concedidos; determinar os tipos de prêmios a serem concedidos eo número de ações cobertas por tais prêmios; definir os termos e condições de tais prêmios e cancelar, suspender e alterar prêmios. O Comitê tem o único critério para fazer determinações e interpretar o Plano. O Comitê não pode delegar em diretores ou gerentes da empresa sua autoridade para conceder prêmios e cancelar ou suspender prêmios para diretores executivos e diretores da empresa que arquivam relatórios nos termos da Seção 16 do Securities Exchange Act de 1934.
Ações disponíveis para prêmios. As ações entregues de acordo com um prêmio podem consistir em ações autorizadas e não emitidas ou ações em tesouraria. Se as ações cobertas por um prêmio no âmbito do Plano forem perdidas ou rescindidas sem a entrega de ações, as ações cobertas por tal prêmio estarão novamente disponíveis para a concessão de prêmios ao abrigo do Plano. Em uma aquisição, qualquer prêmio feito e qualquer das ações entregues na hipótese ou em substituição de subsídios pendentes feitos pela empresa adquirida não serão contados contra ações disponíveis para outorgar prêmios ao abrigo do Plano. Os equivalentes de dividendos denominados em ações e prêmios não denominados, mas potencialmente pagáveis, em ações serão contados contra o número total de ações disponíveis para outorgar prêmios ao abrigo do Plano nesse montante e no momento em que os equivalentes de dividendos e tais prêmios sejam liquidados em ações . Os prêmios que operam em conjunto com (concedidos simultaneamente ou em um momento diferente), ou que são substituídos, outros prêmios ou prêmios concedidos nos termos do Plano de 1990 só podem ser contados uma vez contra o número total de ações disponíveis. Conforme mencionado acima, as ações entregues pelo pagamento do preço de exercício ou das retenções na fonte em opções de compra de ações ou direitos de valorização de ações e as ações recompradas no mercado aberto com o produto de um exercício de opção, podem não estar novamente disponíveis para emissão nos termos do Plano . Além disso, as ações que estavam sujeitas a uma opção ou a um direito de apreciação de ações resolvido em ações e não foram emitidas após a liquidação líquida ou o exercício líquido dessa opção ou direito de avaliação de ações também não serão disponibilizados para emissão. O último preço de venda das ações da empresa em 1º de fevereiro de 2007 foi de US $ 36,23, conforme divulgado na Bolsa Consolidada de Valores Mobiliários listados na Bolsa de Valores de Nova York.
Opções de ações e direitos de agradecimento de ações. O Comitê pode conceder opções de ações sob a forma de opções de compra de ações ou opções de ações de incentivo, ou direitos de valorização de ações, cada qual com prazo máximo de dez anos. O Comitê estabelecerá o cronograma de aquisição de ações e o método de pagamento para o preço de exercício, que pode incluir dinheiro, ações ou outros prêmios. A aprovação do participante da classe de participantes elegíveis ao abrigo do Plano e os limites do número de opções e direitos de valorização de ações concedidos a qualquer participante de acordo com o Plano também destinam-se a satisfazer as condições de aprovação do acionista para que tais prêmios sejam qualificados como dedutíveis nos termos da Seção 162 (m) do Código Tributário, conforme descrito abaixo.
Unidades de ações restritas e de ações restritas. O Comitê pode conceder ações restritas e unidades de ações restritas e estabelecer as restrições aplicáveis, incluindo qualquer limitação nos direitos de voto ou o recebimento de dividendos. O Comitê pode decidir incluir dividendos ou equivalentes de dividendos como parte de uma outorga de ações restritas ou unidades de ações restritas e podem acumular dividendos, com ou sem juros, até que o prêmio seja pago. O Comitê estabelecerá a maneira e o horário em que as restrições podem caducar. Se o emprego for rescindido durante o período de restrição aplicável, as ações de ações restritas e unidades de ações restritas ainda sujeitas a restrição serão perdidas, exceto quando determinado pelo Comitê.
Prêmios de desempenho e outros prêmios baseados em ações. O Comitê pode conceder prêmios de desempenho, que podem ser denominados em dinheiro, ações, outros valores mobiliários ou outros prêmios e devidos ou exercíveis pelo participante na realização de metas de desempenho durante os períodos de desempenho, conforme estabelecido pelo Comitê. Os critérios de desempenho significam quaisquer medidas, conforme determinado pelo Comitê, que podem ser usadas para medir o nível de desempenho da empresa ou participante durante um período de desempenho. O Comitê pode conceder outros prêmios com base em ações que são denominados ou a pagar em ações, nos termos e condições que o Comitê determinará. O Comitê pode decidir incluir dividendos ou equivalentes de dividendos como parte de um desempenho ou outro prêmio com base em ações, e pode acumular dividendos, com ou sem juros, até que o prêmio seja pago.
Limitações nas Limitações de Transferência e por Pessoa. Os prêmios não são transferíveis senão pelo testamento ou pelas leis de descendência e distribuição, a menos que o Comitê determine o contrário. Os prêmios não podem ser comprometidos ou gravados de outra forma. O número de ações em relação ao qual as opções de compra de ações e os direitos de valorização de ações podem ser concedidos durante um período de três anos para um indivíduo não excederão 9.000.000 de ações e o número de ações relativamente às quais ações restritas, unidades de estoque restritas, prêmios de desempenho e outros prêmios com base em ações que podem ser concedidos em qualquer período de três anos para um indivíduo não excederão 3.000.000 de ações, sujeito a ajuste conforme descrito abaixo.
Alterações. O Comitê buscará a aprovação do proprietário de alterações materiais ao Plano conforme exigido por lei, regulamento ou bolsa de valores. O Comitê pode renunciar a condições ou alterar o prazo de prêmios, ou alterar ou suspender os prêmios já concedidos sob certas condições.
Ajustamentos. No caso de certas transações corporativas ou eventos que afetem o número ou tipo de ações ordinárias em circulação da empresa, incluindo, por exemplo, um dividendo ou outra distribuição (seja em dinheiro ou ações), recapitalização, desdobramento de ações, estoque reverso, reorganização , fusão, consolidação, cisão, cisão, combinação, recompra ou troca de ações ou emissão de warrants, o Comitê fará ajustes conforme julgar apropriado. Esses ajustes incluem a alteração do número e tipo de ações a serem emitidas de acordo com o Plano e prêmios pendentes; alterando as limitações por participante em prêmios e o preço de concessão, compra ou exercício de prêmios em circulação; e alterando a restrição sobre o montante total de ações restritas, unidades de estoque restritas, prêmios de desempenho ou outro prêmio baseado em estoque que pode ser concedido. O Comitê também pode fazer ajustes nos termos de prêmios em conexão com determinadas aquisições e fazer ajustes em critérios de prêmio de desempenho ou nos termos e condições de outros prêmios em reconhecimento de eventos incomuns ou não recorrentes que afetem a empresa ou suas demonstrações financeiras ou de alterações nas leis, regulamentos ou princípios contábeis aplicáveis.
Conseqüências do imposto de renda federal. A concessão de uma opção ou valor de avaliação de ações não criará conseqüências fiscais para o participante ou a empresa. Um participante não terá lucro tributável após o exercício de uma opção de opção de incentivo, exceto que o imposto mínimo alternativo pode ser aplicado. Após o exercício de uma opção diferente de uma opção de opção de incentivo, um participante geralmente deve reconhecer renda ordinária igual ao valor justo de mercado das ações adquiridas menos o preço de exercício. Após a alienação de ações adquiridas mediante o exercício de uma opção de compra de ações de incentivo antes do final dos períodos de retenção de opção de compra de ações aplicáveis, o participante geralmente deve reconhecer renda ordinária igual ao menor de (1) o valor justo de mercado das ações na data de exercício menos o preço de exercício ou (2) o valor realizado mediante a alienação das ações de opção de compra de ações de incentivo menos o preço de exercício. Caso contrário, a disposição de um participante das ações adquiridas após o exercício de uma opção (incluindo uma opção de compra de incentivo para a qual os períodos de retenção da opção de compra de ações de incentivo são atendidas) geralmente resultará em apenas ganho ou perda de capital. Outros prêmios no âmbito do Plano, incluindo opções não qualificadas e direitos de valorização de ações, geralmente resultarão em renda ordinária para o participante no final do momento da entrega de dinheiro, ações ou outros prêmios, ou o tempo que o risco de confisco ou restrição de caducidade de transferibilidade em dinheiro, ações ou outros prêmios entregues anteriormente. Exceto como discutido abaixo, a empresa geralmente terá direito a uma dedução fiscal igual ao valor reconhecido como renda ordinária pelo participante em conexão com uma opção, direitos de valorização de ações ou outro prêmio, mas não terá direito a nenhuma dedução fiscal relativa a montantes que representam um ganho de capital para um participante. Assim, a empresa não terá direito a nenhuma dedução fiscal em relação a uma opção de compra de incentivo se o participante detiver as ações para os períodos de retenção da opção de compra de ações de incentivo. A seção 162 (m) geralmente permite que a empresa obtenha deduções fiscais sem limite para compensação baseada em desempenho. A empresa pretende que as opções e os direitos de valorização de ações e, sob reserva da aprovação dos objetivos de desempenho descritos nesta declaração de procuração, as unidades de ações restritas e os prêmios contingentes de desempenho de longo prazo concedidos de acordo com o Plano continuarão a se qualificar como compensação baseada em desempenho não sujeito a.
Capa de dedutibilidade de US $ 1 milhão da seção 162 (m) e $ 1 milhão. Uma série de requisitos devem ser cumpridos para que uma determinada compensação seja qualificada, no entanto, portanto, não há garantia de que tal compensação no âmbito do Plano seja totalmente dedutível em todas as circunstâncias. Além disso, outros prêmios no âmbito do Plano, como ações restritas e outros prêmios com base em ações, geralmente não podem ser qualificados, de modo que a remuneração paga aos diretores em conexão com tais prêmios não pode ser dedutível.
Esta discussão sobre tributação geral destina-se a informação dos detentores de ações que considerem como votar em relação a esta proposta e não como orientação fiscal aos participantes no Plano. Diferentes regras fiscais podem ser aplicadas a participantes específicos e transações sob o Plano, particularmente em jurisdições fora dos Estados Unidos.
Nosso Conselho de Administração recomenda, portanto, uma votação PARA a proposta de aprovar o Plano de Incentivo de Longo Prazo da GE 2007.

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As opções de compensação são boas em teoria e prática. Este novo tratamento garante que as estimativas do valor da opção de compra de ações refletem tanto a natureza do contrato de incentivo quanto a posterior realidade do mercado. Agora que empresas como a General Electric e o Citigroup aceitaram as opções de estoque de empregados elétricos da premissa são uma despesa, o debate está mudando de relatório para informar as opções sobre demonstrações de renda sobre como denunciá-las.
Um general que eles chamam de ajuste geral de despesa e, finalmente, reconcilia as estimativas de custo feitas em data geral com mudanças subsequentes no valor de estoque das opções, e faz isso de uma forma que elimina erros de previsão e medição ao longo do tempo.
O método captura a principal característica da compensação de opção de estoque - que os funcionários recebem parte de sua compensação sob a forma de uma reivindicação contingente sobre o valor que estão ajudando a produzir.
O mecanismo envolve a criação de entradas no patrimônio e nos capitais próprios do balanço patrimonial. A conta de compensação pré-paga é então passada pelo resultado, e a conta de opção de compra de ações é ajustada no balanço para refletir mudanças no valor justo estimado das opções outorgadas. No final do período de aquisição, a empresa usa opções de valor justo da opção adquirida para fazer um ajuste final na demonstração do resultado para conciliar qualquer diferença entre esse valor justo e o total dos valores já relatados.
Agora que empresas como a General Electric, a Microsoft e o Citigroup aceitaram a premissa de que as opções de compra de ações dos empregados são uma despesa, as opções de contabilização para elas estão passando de se informar as opções nas demonstrações de resultados para como denunciá-las. No entanto, os opositores das despesas, opções para lutar contra uma ação de retaguarda, argumentando que as estimativas de data de concessão do custo das opções de estoque de empregados, com base em fórmulas teóricas, apresentam muito erro de medição.
Eles querem o custo reportado diferido até que ele possa ser determinado com precisão - ou seja, quando as opções de compra de ações são exercidas ou perdidas ou quando o estoque expirar. Mas o diferimento da despesa de opção de estoque de ações de reconhecimento explode os principais princípios contábeis e a realidade econômica. As despesas devem ser acompanhadas das receitas associadas a elas.
O custo de uma concessão de opção deve ser gasto ao longo do tempo, geralmente o período de aquisição, quando se presume que o empregado motivado e retido está ganhando a concessão, gerando receitas adicionais para a empresa. Algum grau de erro de medição não é motivo para diferir o reconhecimento; as demonstrações contábeis são preenchidas com estimativas sobre eventos futuros - sobre despesas de garantia, reservas de perdas de empréstimo, pensões futuras e benefícios pós-emprego e passivos contingentes por danos ambientais e defeitos do produto.
A defesa elétrica do lobby anti-compensatório é sua alegação de que outras estimativas de demonstrações financeiras baseadas em eventos futuros são eventualmente reconciliadas com o valor de liquidação dos itens em estoque. Por exemplo, os custos estimados para benefícios de aposentadoria e pós-aposentadoria e para passivos ambientais e de segurança de produtos são, em última instância, empregados em dinheiro.
Naquele momento, a demonstração do resultado é ajustada para reconhecer qualquer diferença entre o custo real e o custo estimado. Como os adversários do ponto de vista de despesa, nenhum estoque de correção atualmente existe para ajustar as estimativas da data de outorga dos custos das opções de ações.
Esta é uma das razões pelas quais os CEOs da empresa de alta tecnologia, como o Craig Barrett da Intel, ainda se opõem ao padrão FASB proposto para os padrões de contabilidade financeira para a contagem da data de concessão para opções de compra de ações. Um procedimento que chamamos de despesa de valor justo para opções de estoque elimina erros de previsão e medição ao longo do tempo. Um procedimento que chamamos de despesa de valor justo ajusta e, eventualmente, reconcilia as estimativas de custos feitas na data de concessão para a experiência real subseqüente de uma forma que elimina erros de previsão e medição ao longo do tempo.
Nosso método proposto envolve a criação de entradas nos ativos e patrimônio do balanço para cada concessão de opção. Esta contabilidade espelha o que as empresas fariam se estivessem a emitir opções convencionais e vendê-las no mercado nesse caso, o empregado de ativos correspondente ser o produto em dinheiro em vez da compensação pré-paga.
A conta de compensação pré-paga é então passada pela demonstração do resultado seguindo as opções do cronograma de amortização de linha direta regular ao longo do período de aquisição, o tempo durante o qual os empregados estão ganhando sua remuneração baseada em ações e, presumivelmente, produzindo benefícios para a corporação. Ao mesmo tempo em que a conta de compensação pré-paga é contabilizada, a conta de opção de compra de ações é ajustada no balanço para refletir mudanças no valor justo estimado das opções outorgadas.
A empresa obtém a energia elétrica periódica de sua outorga de opções, assim como fez a estimativa da data de concessão, seja de um modelo de avaliação de opções de ações ou uma cotação do banco de investimento. A amortização do pré-pago geral é adicionada à alteração no valor da outorga de opção para fornecer a despesa reportada total da outorga de opções para o ano.
No final do período de aquisição, a empresa usa o valor justo da opção de compra de ações - que agora é igual ao custo de compensação de estoque realizado - para fazer do funcionário de ajuste final a demonstração de resultados para conciliar qualquer diferença entre esse valor justo e o valor justo total dos montantes já relatados da maneira descrita.
As opções agora podem ser bastante elétricas valorizadas, pois já não há restrições sobre elas. Citações de mercado seriam opções em modelos de avaliação amplamente aceitos. Nesse caso, o custo para o empregado da empresa é menor do que se o empregado tivesse mantido as opções porque o funcionário perdeu a valiosa oportunidade de ver a evolução dos preços das ações antes de colocar o dinheiro em risco.
A abordagem que descrevemos é geral, a única maneira de implementar o valor justo de valor. As empresas podem optar por ajustar a conta de compensação antecipada ao valor justo em vez das opções de opções de capital integradas. Nesse caso, as mudanças trimestrais ou anuais no valor da opção serão amortizadas durante a vida restante das opções.
Isso reduziria as flutuações periódicas na despesa de opção, mas envolveu um cálculo de empregado definido um pouco mais complexo. A grande vantagem do valor justo de valor é que ele captura a principal característica da compensação das opções de ações - ou seja, que os funcionários estão recebendo parte de sua compensação sob a forma de reivindicação contingente elétrica sobre o valor que estão ajudando a produzir. A despesa de valor justo capta a principal característica da compensação de opção de estoque - que os funcionários recebem parte de seu salário sob a forma de uma reivindicação contingente sobre o valor que estão ajudando a produzir.
Empregado, o mercado é realmente opções de negociação com exatamente o mesmo preço de exercício e prazo de vencimento, conforme as opções de ações adquiridas, a Kalepu pode usar o preço cotado para essas opções em vez do modelo em que esse preço cotado se basearia.
O que acontece se um funcionário que detém a subvenção decide deixar o empregado antes da aquisição, perdendo assim as opções não adotadas? Quando as opções são adquiridas no dinheiro, no entanto, alguns funcionários podem optar por se exercitar imediatamente ao invés de manter o valor total esperando para se exercitar até que as opções estejam prestes a expirar.
Nesse caso, a empresa pode usar o mercado geral de suas ações nas datas de aquisição e exercício para fechar o relatório da concessão. O objetivo da contabilidade financeira não é reduzir o erro de medição para zero. De forma geral, se o FASB e o Conselho de Normas Internacionais de Contabilidade recomendassem o valor justo de valor para as opções de ações dos empregados, as empresas poderiam fazer suas melhores estimativas sobre o custo de compensação total durante a vida útil das opções, seguidas de ajustes periódicos que o elétrico traz reportou uma despesa de compensação mais próxima do custo econômico real incorrido pela empresa.
Kaplan é um colega sênior e o Marvin Bower Professor de Desenvolvimento de Liderança, Emérito, na Harvard Business School. Ele é um co-autor, com Michael E. Seu carrinho de compras está vazio. Edição de Dezembro Explore o Arquivo. RJ Agora que empresas como a General Electric e o Citigroup aceitaram a premissa de que as opções de compra de ações dos empregados são uma despesa, o debate está mudando para se informar de opções sobre declarações de renda sobre como denunciá-las. A versão de opções deste artigo apareceu na edição de dezembro da Harvard Business Review.
Sobre nós Política de privacidade de carreira Política de direitos autorais de marca comercial Harvard Business Publishing :. Harvard Business Publishing é um afiliado da Harvard Business School.
5 pensamentos sobre & ldquo; opções gerais de estoque de empregados elétricos & rdquo;
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GE Employee Stock Option Plan Garantia da dívida (trimestral) Excel Add-In Codes.
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Compensação.
Aprovação de assessoria do Pay & amp; Freqüência de Votos Futuros.
Sobre o que você está votando?
PROPOSTAS DE GESTÃO NOS. 1 & amp; 2.
De acordo com a Seção 14A da Lei de Câmbio, pedimos aos accionistas que votem com base no conselho:
Diga no salário. Aprovação da compensação paga aos nossos executivos nomeados, conforme descrito nesta declaração de procuração (Proposta de Gestão nº 1). Diga na frequência. Aprovação da frequência de votos futuros por pagamento (Proposta de Gestão nº 2). Os proprietários de ações não votaram para aprovar a recomendação do Conselho, mas sim poderão especificar se os votos futuros devem ocorrer a cada ano, dois anos ou três anos.
Por que o conselho recomenda uma votação para a proposta de pagamento direto.
A Diretoria acredita que nossas políticas e práticas de remuneração são efetivas para alcançar os objetivos da empresa:
Recompensando o desempenho financeiro e operacional sustentado e a excelência de liderança. Alinhando nossos executivos & rsquo; interesses com os de nossos donos de ações para criar valor a longo prazo. Motivando os executivos a permanecerem conosco para carreiras longas e produtivas.
Por que a Diretoria recomenda a realização de votos futuros por voto em cada ano. Participamos de pessoas envolvidas nesta questão e, com base em seus comentários, acreditamos que uma parcela significativa de nossos investidores preferiria uma votação anual expressa. De acordo com a política da Diretoria de prover votos anuais, a próxima votação expressa em pagamento será realizada em nossa reunião anual de 2018.
Impacto dos votos. Essas propostas de assessoria não são vinculativas para o Conselho de Administração. No entanto, o Conselho e o Comitê de Remuneração irão analisar e considerar os resultados da votação ao avaliar nosso programa de remuneração de executivos.
A SUA PLACA RECOMENDA VOTAR PARA PROPOSTA DE PAGAMENTO DE DIREITO E POR FAZER VOTOS FUTUROS DE PAGAMENTO EM CADA CADA ANO.
Visão geral do nosso Programa de Compensação Executiva.
Embora a discussão da remuneração dos executivos nesta declaração de procuração se centre nas decisões de compensação para nossos executivos e mdash nomeados; Jeff Immelt (presidente e CEO), Jeff Bornstein (SVP e CFO), Beth Comstock (vice-presidente e CEO da Business Innovations), David Joyce (vice-presidente e CEO da aviação), John Rice (vice-presidente e vice - CEO da nossa Organização de Crescimento Global) e Keith Sherin (ex-vice-presidente e CEO da GE Capital) & mdash; nossos programas de remuneração de executivos aplicam-se amplamente em todas as categorias de empregados da GE. Por exemplo, cerca de 120.000 funcionários participam de um programa de bônus anual, mais de 5.000 executivos recebem incentivos de ações e aproximadamente 1.000 executivos seniores participam do programa de prêmio de desempenho de longo prazo (LTPA). Nós nos esforçamos para pagar salários justos e competitivos para todos os nossos funcionários, considerando os mercados de trabalho específicos e a compensação entre pares.
Principais considerações na definição do salário.
EMPHASIS EM DESEMPENHO CONSISTENTE, SUSTENTÁVEL E RELATIVO.
Nosso programa de compensação oferece a maior oportunidade de pagamento para executivos nomeados que demonstram desempenho superior por períodos de tempo sustentados. Também os recompensa pela execução da estratégia da GE por meio de ciclos econômicos (por exemplo, mantendo níveis consistentes de investimento em R e D através de ciclos econômicos). Ao avaliar a consistência do desempenho, também pesamos o desempenho de cada parente executivo em relação aos seus pares no segmento ou função da indústria.
DESAFIANDO METROS DE DESEMPENHO ALIGNADOS PARA O NOSSO QUADRO DE INVESTIDORES.
Nós estabelecemos métricas de desempenho para nossos programas de compensação de incentivos que combinam nossos quadros operacionais de curto e longo prazos. Nós estabelecemos níveis de desempenho alvo que são desafiadores, mas realizáveis ​​com um bom desempenho e níveis de desempenho máximos que representam metas de alongamento. Por exemplo, todos os nossos programas de prêmio de desempenho de longo prazo pagaram em menos de 105% do desempenho do alvo, variando entre 71% e 104%.
OPORTUNIDADE PAGA FUTURA VERSUS PAGAMENTO EM CURSO.
O Comitê de Remuneração se esforça para fornecer uma combinação adequada de elementos de compensação, incluindo a busca de um equilíbrio entre a compensação de longo prazo e entre a compensação de incentivo de caixa e capital. Os pagamentos em dinheiro são alinhados e recompensam o desempenho mais recente, enquanto os prêmios de ações incentivam nossos executivos nomeados a continuarem a produzir resultados por um longo período de tempo e também servem como ferramenta de retenção. O comitê acredita que a maioria dos nossos executivos nomeados & rsquo; a compensação deve ser condicionada ao desempenho da empresa, principalmente a longo prazo, desempenho operacional e estoque.
JUSTIÇA DA COMISSÃO DE COMPENSAÇÃO.
Nossos programas de compensação equilibram os acordos onde os pagamentos estão vinculados a objetivos de desempenho quantitativo específicos com aqueles em que o comitê avalia uma ampla gama de fatores quantitativos e qualitativos, como confiabilidade na entrega de metas financeiras e de crescimento, medidas focadas na sustentabilidade (incluindo o desempenho à luz de risco assumido), o desempenho no contexto do ambiente econômico em relação a outras empresas, um histórico de integridade, bom senso, a capacidade de criar mais crescimento e liderar outros e o tamanho absoluto dos pacotes de pagamento total.
SIGNIFICADO DOS RESULTADOS DA COMPANHIA GERAL.
A avaliação do comitê dos executivos nomeados & rsquo; O desempenho coloca forte ênfase em suas contribuições ao desempenho geral da empresa, em vez de se concentrar apenas em seus negócios ou funções específicas. O comitê acredita que os executivos nomeados, como membros-chave da equipe de liderança da empresa, compartilham a responsabilidade de apoiar os objetivos e o desempenho da GE. Rsquo; s. Embora esta filosofia de compensação influencie todas as decisões de remuneração do comitê, ela tem o maior impacto nas bolsas de incentivo patrimoniais anuais.
CONSIDERAÇÃO DE RISCOS.
Nossos programas de compensação são equilibrados e focados no longo prazo para que nossos executivos nomeados possam alcançar a maior compensação através de um desempenho superior consistente durante períodos de tempo sustentados. In addition, large amounts of compensation are usually deferred or realizable only upon retirement, providing strong incentives to manage for the long term while avoiding excessive risk-taking in the short term. Goals and objectives, which include specific, risk-focused measures, reflect a balanced mix of performance measures to avoid placing excessive weight on any single measure. Compensation is also balanced among current cash payments, deferred cash and equity awards. With limited exceptions, the committee retains discretion to adjust compensation pursuant to our clawback policy as well as for quality of performance and adherence to company values. See “How We Oversee & Manage Enterprise Risk” on Governance.
Primary Compensation Elements for 2016.
How Our Incentive Compensation Plans Paid Out for 2016.
This section provides an overview of how GE performed against the goals established under its 2016 annual bonus program and the 2013–2016 PSUs and 2014–2016 PSUs. See “Compensation Actions for 2016” below for amounts paid to the named executives under these programs as well as how we assessed their individual performance. See “Long-Term Performance Awards (LTPAs)” below for information on our 2016–2018 LTPAs.
2016 Annual Bonuses.
BONUS POOL FUNDED AT 80%. We granted bonuses to our named executives under a recently redesigned, more formulaic bonus program. The size of the bonus pool was contingent on the achievement of specified financial and strategic performance metrics as shown below.
NO ADJUSTMENTS TO FINANCIAL PERFORMANCE METRICS. Although the Compensation Committee had the authority under the terms of the bonus program to adjust the financial performance metrics, it did not make any such adjustments for 2016 (i. e., they were calculated the same way GE reported them for financial reporting purposes).
HOW WE PERFORMED AGAINST OUR STRATEGIC GOALS.
EXECUTE ON PORTFOLIO TRANSFORMATION. In 2016, GE aggressively executed on its Alstom integration, with cost synergies ahead of plan and Alstom contributing $0.05 to GE’s earnings per share (excluding foreign exchange impact). The company also capitalized on the oil and gas cycle, planning a combination with Baker Hughes to create a digitized, fullstream oil and gas company (subject to customary closing conditions). GE made strategic investments to recapture supply chain value and grow the company’s Digital and Additive businesses. The company also continued simplifying the portfolio, announcing plans to sell Water and Industrial Solutions and making substantial progress on the GE Capital exit plan (signing deals for 96% of the planned asset sales as of 2016 year-end and terminating GE Capital’s designation as a nonbank SIFI). MAINTAIN BALANCED CAPITAL ALLOCATION STRATEGY. GE executed on a balanced capital allocation strategy in 2016, returning $30.5 billion to investors ($8.5 billion in dividends and $22.0 billion in buyback), which exceeded our investor framework target of approximately $26 billion. The company also made $8.9 billion in organic investments (capital expenditures including R&D, P&E and Digital) and invested $2.3 billion on M&A to support GE’s long-term growth. IMPROVE CHALLENGED GE BUSINESSES. Healthcare had an excellent year, turning around business declines in 2015 to increase segment profit 10% to $3.2 billion and operating margins 100 basis points to 17.3% in 2016, driven by productivity improvements and strong growth in Life Sciences. Oil & amp; Gas experienced continued market pressure from depressed oil prices, but has taken advantage of the cycle by planning a combination with Baker Hughes and reducing costs by $700 million while restructuring the business. Energy Connections & Lighting had a tough year, but is working to integrate Alstom’s grid business and restructure to position the business for growth in 2017. ACCELERATE DIGITAL INDUSTRIAL. The company made significant progress in building out its digital capability in 2016, ending the year with $4 billion Predix-powered and software orders (up 22% year-over-year). GE invested more than $1 billion to acquire ServiceMax, BitStew, Wise. io and Meridium. The company also continued to expand Predix, GE’s software platform for the Industrial Internet, which, at the end of 2016, had approximately 22,000 developers and more than 400 partners. LOWER PRODUCT COSTS. Industrial segment gross margins increased by 40 basis points in 2016 to 27.8% (excluding Alstom).* GE continued to execute on its product cost reduction initiative through investments in additive manufacturing (Concept Laser and Arcam acquisitions) and backwards integration of the supply chain (planned LM Wind Power acquisition). The company also captured $0.9 billion in sourcing value through deflation. REALIZE GE STORE OUTCOMES. Industrial segment organic revenue growth (adjusted to include Alstom for November and December of both 2015 and 2016) of 1%* for 2016 missed our investor framework of 2–4%, and Industrial operating margins (excluding Alstom) were down 30 basis points* (also below target). Industrial return on total capital was down 150 basis points.* However, the company continued to intensify its focus on demonstrating the value of the GE Store (a global exchange of technology, talent and expertise through GE’s broad and diverse network of businesses and markets). GE’s industrial segment revenues from growth markets were $45 billion (up 6%) while growth market infrastructure orders were $47 billion (flat year-over-year). Industrial segment revenues from services were $52 billion (up 9%). Backlog increased by $6 billion to a record $321 billion as of year-end. GE Capital enabled (through financing or arranging financing) more than $13 billion of industrial orders. The company also continued to improve new product introduction efficiency while executing on significant product launches. MANAGE ENTERPRISE RISK AND CULTURE. The company continued to focus on managing critical enterprise risks, including liquidity (maintaining a strong balance sheet, ending 2016 with $48.1 billion in cash and equivalents, including $10.5 billion at the parent level), product quality (reformulating the Board committees to focus on industrial risk), cybersecurity (continuing to expand capabilities), and compliance and business integrations (with a keen focus on Alstom). GE also focused on accelerating its digital industrial cultural transformation with the roll-out of its performance development tool and sending key leaders to its global leadership institute (
28% of salaried employees attended Crotonville in 2016).
The Compensation Committee assessed GE’s performance on its strategic goals at 95% instead of 100% because, although the company overall had a good year, GE missed some of its key investor goals (organic revenue growth and margin expansion) and some key businesses, including Power, Oil & Gas and Energy Connections, experienced challenging business environments.
*Non-GAAP financial measures available below.
HOW WE EVALUATED BUSINESS PERFORMANCE AND ALLOCATED THE BONUS POOL.
HOW THE BONUS PROGRAM WORKS. We pay cash bonuses to our named executives each February or March for the prior year under a program designed to closely align incentive compensation and annual company results. Here’s how the plan works:
2013 & 2014 PSU Grants.
2013 PSUs PAY OUT AT 100% AND 2014 PSUs PAY OUT AT 83%. In February 2017, Mr. Immelt earned 100% of the PSUs granted to him in 2013 and 83% of the PSUs granted to him in 2014. The remaining PSUs from the 2014 grant were forfeited because of the negative adjustment from the TSR modifier. (The table below is specific to Mr. Immelt as we did not start granting PSUs to the full senior leadership team until 2015.)
Compensation Actions for 2016.
CEO Compensation Aligns With Performance.
Jeff Immelt.
CHAIRMAN & CEO Age: 61 Education: Dartmouth; MBA, Harvard GE tenure: 35 years.
DESEMPENHO. As the Chairman & CEO, Mr. Immelt plays a critical role in delivering on the performance framework for the company’s annual bonus program and, as such, his performance goals were the same as the financial and strategic goals used to fund the 2016 bonus pool (see “2016 Annual Bonuses” above). The Compensation Committee believes that Mr. Immelt performed well in a challenging environment.
PAY. In light of his performance, the Compensation Committee awarded Mr. Immelt a $4.3 million cash bonus, 80% of target (same as the company’s bonus pool funding). In addition, the committee granted Mr. Immelt an equity award with a grant date fair value of $6.8 million (down 26% from $9.2 million in 2015), weighted 2/3 PSUs (200k granted) and 1/3 stock options (600k granted). Mr. Immelt’s base salary remained flat at $3.8 million (and has been increased only twice since 2005).
CEO Compensation Analysis.
CEO Accountability.
A significant portion of Mr. Immelt’s compensation is at risk each year, tied to the company’s operating and stock price performance. For 2016, 71% of his compensation was at risk.* As a result, Mr. Immelt may not earn all of the compensation that we are required to include in the Summary Compensation Table.
Over the past five years, GE’s earnings have ranked 10–16th in the S&P 500, while Mr. Immelt’s compensation has ranked 21st–169th among S&P 500 CEOs.**
*Represents the sum of the amounts reported in the Bonus, PSUs & RSUs, Stock Options and LTPAs columns as a percentage of total compensation minus change in pension value.
 **Earnings reflects reported net earnings, except for 2015 and 2016, which reflect Industrial operating + Verticals earnings in light of the GE Capital exit plan charges (based on Bloomberg data). Compensation data is through 2015 (the most recent year for which data is available) and reflects reported SEC total compensation minus change in pension value (based on Equilar data).
OUR CEO OWNS A SUBSTANTIAL AMOUNT OF GE STOCK AND IS ALIGNED WITH SHAREOWNERS.
As an indication of Mr. Immelt’s alignment with shareowners, he has purchased approximately 1.2 million shares in the open market since he became CEO in 2001. Also, since he became CEO, he has not sold any of the shares he has acquired through exercising stock options or the vesting of RSUs or PSUs (except those withheld to pay option exercise prices and taxes on such awards). See “Stock Ownership Information” on Governance for more information on Mr. Immelt’s ownership of GE stock.
CEO PAY ADJUSTMENTS OVER THE LAST 10 YEARS.
8 out of 10 years.
Without a salary increase.
Value of earned 2006–2008 LTPA payment waived.
Mr. Immelt requested (and the committee approved) that he not receive a bonus.
PSUs and options canceled because of the rigor of the performance targets.
Compensation for Our Other Named Executives.
Jeff Bornstein.
Age: 51 Education: Northeastern GE Tenure: 28 Years.
CFO, GE (since 2013) and senior vice president; previously CFO of GE Capital, Aircraft Engine Services and Plastics.
The committee recognized Mr. Bornstein’s contribution toward the overall GE and Corporate goals for the annual bonus program as well as his execution on the company’s capital allocation strategy (returning $30.5 billion to investors) and leadership of key initiatives to reduce costs and improve cash conversion.
COMPENSATION DECISIONS FOR 2016.
Base salary — increased by 11% to $1.775 million, effective July 2016, after an 18-month interval since his last salary increase that is standard for GE’s named executives Cash bonus — $1.9 million, 80% of $2.4 million target (same as Corporate’s 80% funding) Equity grant — $2.3 million grant date fair value (same as other vice chairs), divided evenly among PSUs, RSUs and options.
Beth Comstock.
Age: 56 Education: William & Mary GE tenure: 24 years.
CEO, Business Innovations (since 2015) and vice chair; previously chief marketing and commercial officer; president of integrated media at NBC Universal.
The committee recognized Ms. Comstock’s contribution toward the overall GE and Business Innovations goals for the annual bonus program as well as her leadership in accelerating the company’s simplification initiative by driving a more entrepreneurial culture through FastWorks.
COMPENSATION DECISIONS FOR 2016.
Base salary — remained flat at $1.5 million, with her last salary increase effective September 2015 Cash bonus — $1.2 million, 66% of $1.9 million target (equal to Lighting/Corporate’s blended funding of 37/80%, with Corporate weighted 2/3) Equity grant — $2.3 million grant date fair value (same as the other vice chairs), divided evenly among PSUs, RSUs and options Special retention grant — 150k RSUs for retention.
David Joyce.
Age: 60 Education: Michigan State; MA Finance, Xavier GE tenure: 37 years.
President & CEO, Aviation (since 2008) and vice chair, leading GE Additive; previously vice president and general manager of commercial engines and held other GM positions within Aviation.
The committee recognized Mr. Joyce’s contribution toward the overall GE and Aviation goals for the annual bonus program as well as his leadership in launching GE’s new additive manufacturing business and acquiring Arcam and Concept Laser.
COMPENSATION DECISIONS FOR 2016.
Base salary — increased by 8% to $1.3 million, effective March 2016, after an 18-month interval since his last salary increase that is standard for GE’s named executives; subsequently increased by 12% to $1.45 million, effective September 2016, upon his promotion to vice chair Cash bonus — $1.4 million, 89% of $1.6 million target (same as Aviation’s 89% funding), plus $100,000 for extraordinary performance at Aviation and with GE Additive Equity grant — $2.3 million grant date fair value (same as the other vice chairs), divided evenly among PSUs, RSUs and options Special retention grant — 150k RSUs for retention.
Age: 60 Education: Hamilton GE tenure: 39 years.
President & CEO, Global Growth Organization (since 2010) and vice chair; previously CEO of Technology Infrastructure, Industrial, Energy and Transport Systems.
The committee recognized Mr. Rice’s contribution toward the overall GE and GGO goals for the annual bonus program as well as his leadership in building out the company’s project finance capabilities and partnering with export credit agencies to help finance key infrastructure projects.
COMPENSATION DECISIONS FOR 2016.
Base salary — increased by 7% to $2.8 million, effective January 1, 2017, after an 18-month interval since his last salary increase that is standard for GE’s named executives Cash bonus — $3.3 million, 75% of $4.4 million target (equal to GGO/Corporate’s blended funding of 69/80%, each weighted 1/2) Equity grant — $2.3 million grant date fair value (same as other vice chairs), divided evenly among PSUs, RSUs and options.
Keith Sherin.
Age: 58 Education: Notre Dame; MBA, Columbia GE tenure: 36 years.
Former Chairman & CEO, GE Capital and vice chair (retired December 31, 2016); previously CFO, GE; leadership roles at many key GE businesses.
The committee recognized Mr. Sherin’s contribution toward the overall GE and GE Capital goals for the annual bonus program, including his leadership of the GE Capital exit plan.
COMPENSATION DECISIONS FOR 2016.
Base salary — increased by 6% to $2.65 million, effective July 1, 2016, after an 18-month interval since his last salary increase that is standard for GE’s named executives Cash bonus — $3.8 million, 94% of $4.0 million target (same as GE Capital’s 94% funding) Equity grant — did not receive an equity grant in light of his planned retirement.
Realized Compensation.
The SEC’s calculation of total compensation, as shown in the Summary Compensation Table below, includes several items driven by accounting and actuarial assumptions. As a result, total compensation as defined by the SEC differs substantially from the compensation actually realized by our named executives in a particular year. To supplement the SEC-required disclosure, the table below shows compensation actually realized by the named executives, as reported on their IRS W-2 forms. These amounts are not a substitute for the amounts reported as SEC total compensation. Information on how realized compensation is calculated can be found in the supplemental materials on GE’s proxy website (see Helpful Resources).
2016 VS. 2015 AMOUNTS. The increase in realized compensation from 2015 to 2016 is due primarily to the payout in early 2016 of LTPAs earned over the three-year performance period from 2013 to 2015. On average, these payouts comprised 45% of the named executives’ realized compensation in 2016.
Summary Compensation.
Summary Compensation Table.
Year-over-year changes in pension value generally are driven in large part by changes in actuarial pension assumptions as well as increases in service, age and compensation. For 2016, the change in pension value for Mr. Immelt was lower than 2015, due in part to his lower bonus payment and being over age 60. Except for Mr. Sherin, the other named executives’ change in pension value was higher than 2015 in part due to the 27-basis-point decrease in the statutory discount rate assumption from 4.38% to 4.11%. See “Pension Benefits” below for additional information, including the present value assumptions used in this calculation. For Mr. Sherin, the change in pension value includes early retirement allowance payments valued at $7,191,154 (see “Early Retirement Agreement with Mr. Sherin” below).
Above-market earnings represent the difference between market interest rates calculated under SEC rules and the 6% to 14% interest contingently credited by the company on salary that the named executives deferred under various executive deferred salary programs in effect between 1987 and 2016. See “Deferred Compensation” below for additional information.
ALL OTHER COMP. We provide our named executives with other benefits that we believe are reasonable, competitive and consistent with our overall executive compensation program. The costs of these benefits for 2016, minus any reimbursements by the named executives, are shown in the table below.
Life Insurance Premiums. Taxable payments to cover premiums for universal life insurance policies they own. These policies include: (1) Executive Life, which provides universal life insurance policies for the named executives totaling $3 million in coverage at the time of enrollment and increased 4% annually thereafter; and (2) Leadership Life, which provides universal life insurance policies for the named executives with coverage of 2X their annual pay (salary + most recent bonus).
Retirement Savings Plan. GE’s matching contributions to the named executives’ RSP accounts equaling 3.5% of pay up to the caps imposed under IRS rules.
Personal Use of Aircraft. For security purposes, the committee requires our CEO to use company aircraft for all air travel (personal and business). Amounts reflect the incremental cost to GE for the named executives’ personal use of company aircraft, based on the following variable costs: a portion of ongoing maintenance and repairs, aircraft fuel, satellite communications and any travel expenses for the flight crew. These amounts exclude non-variable costs, such as exterior paint, interior refurbishment and regularly scheduled inspections, which would have been incurred regardless of whether there was any personal use. Aggregate incremental cost, if any, of travel by the executive’s family or guests is also included.
Leased Cars. Expenses for the leased cars program, such as leasing and management fees, administrative costs and maintenance costs.
Financial & amp; Tax Planning. Expenses for the use of advisors for financial, estate and tax preparation and planning, and investment analysis and advice.
HQ Relocation. Expenses for relocating the named executives and their families in connection with the move of GE’s corporate headquarters from Fairfield, CT to Boston, MA. Benefits for the named executives, including the tax benefits described below, generally were consistent with those provided to all employees who were asked to relocate, except that the company’s officers received a higher potential home loss buyout benefit than other employees.
Relocation Tax Benefits. Tax benefits provided in connection with the company’s headquarters relocation.
De outros. Total amount of other benefits provided, none of which individually exceeded the greater of $25,000 or 10% of the total amount of benefits included in the Personal Use of Aircraft, Leased Cars, Financial & Tax Planning, HQ Relocation and Other columns for the named executive (except as otherwise described in this section). These other benefits included items such as: (1) car service fees; (2) home alarm and generator installation, maintenance and monitoring; (3) participation in the Executive Products and Lighting Program, which was terminated for executives in June 2016 when we sold our Appliances business; (4) an annual physical examination; and (5) certain expenses associated with the named executives’ and their invited guests’ attendance at the 2016 Olympic Games in Rio de Janeiro, Brazil, of which GE was an official sponsor.
With respect to Mr. Rice, this column also reports the following benefits provided to him in connection with his non-permanent relocation, at the company’s request, to Hong Kong. These benefits, which are consistent with those we provide to employees working on non-permanent assignments outside their home countries, consisted of: (1) cost-of-living adjustment ($397,622); (2) housing and utilities ($699,125); and (3) other expatriate and relocation allowances and expenses ($84,276). Any benefits paid in Hong Kong dollars (HKD) were converted to USD on a monthly basis using the following average monthly exchange rates for 2016 (expressed as HKD per USD): January through June — ​7.75; July through December — ​7.76.
SEC TOTAL. Total compensation, as determined under SEC rules.
ADJUSTED SEC TOTAL. We are presenting this supplemental column to show how the Compensation Committee views the named executives’ annual compensation. This column adjusts the amounts reported in the SEC Total column by subtracting the change in pension value reported in the Pension & Deferred Comp. column to show how year-over-year changes in pension value impact total compensation. The amounts reported in this column differ substantially from, and are not a substitute for, the amounts reported in the SEC Total column.
Long-Term Incentive Compensation.
Long-Term Performance Awards (LTPAs)
We grant LTPAs only once every three or more years, in contrast to many companies that grant such awards annually. These awards have formulaically determined payouts, based on equally weighted performance metrics that the Compensation Committee sets at the beginning of each three-year performance period. Over the last five LTPA programs, the committee has largely used consistent performance metrics (earnings, cash generation and ROTC), modifying them only to realign them with changes in our strategic focus (as with the Industrial operating profit margin and cash returned to investors metrics in our 2016–2018 LTPA program). LTPAs are paid in cash or, at the committee’s discretion, in stock.
2016–2018 LTPAs . In March 2016, the Compensation Committee granted contingent LTPAs for the 2016–2018 performance period to approximately 1,000 executives across the company, including the named executives. The awards are payable based on achievement of the performance metrics shown in the table below. The terms and conditions of this LTPA program are the same as the 2013–2015 LTPA program, except for the following modifications:
Five equally weighted performance metrics. Cash returned to investors was added as a metric to the four metrics in the prior program to incentivize returning excess cash to shareowners, and margins replaced the Industrial earnings percentage metric in light of the substantial progress made on the GE Capital exit plan; Lower payout multiples for the named executives. Payout multiples were set at 0.50X, 1.00X, 2.00X at threshold, target and maximum performance (versus 0.75X, 1.50X and 2.00X in the prior program) as part of the committee’s consideration of the size of total pay packages; and Payout multiples based on final salary + average bonus during the performance period. Payout multiples are based on salary in effect at the end of the performance period plus the average bonus received for the three years in the performance period (compared to the higher of participants’ 2014 and 2015 bonuses in the prior program) in light of the increased volatility in bonus amounts under our new annual bonus program.
1 Under the LTPA program, the Compensation Committee can adjust these metrics for extraordinary items. For information on how these metrics are calculated, see “Explanation of Non-GAAP Financial Measures and Performance Metrics” abaixo.
2 Includes GE CFOA (Industrial CFOA plus dividends from GE Capital) plus proceeds from Industrial dispositions (after taxes).
3 Includes Industrial segment profit plus adjusted Corporate operating costs (excludes non-operating pension costs, restructuring and other charges & gains).
4 Includes dividends plus share repurchases.
5 Target performance levels, which were pre-established by the Compensation Committee, are not disclosed (N. D.). Consistent with our historical practice, we will disclose them following completion of the 3-year performance period.
TARGET PERFORMANCE LEVELS ARE CHALLENGING. As with our prior LTPA programs, the target performance levels of the 2016–2018 LTPA metrics are challenging and difficult to achieve, while the maximum performance levels represent stretch goals.
PAST LTPA PAYOUT LEVELS FOR NAMED EXECUTIVES.
HOW THE COMPENSATION COMMITTEE CALCULATES PAYOUTS. For each named executive, LTPA payouts are calculated as shown below (payout multiples for other participants start at significantly lower levels). There is no payout for performance below the threshold level, and amounts are prorated for performance between the established levels. LTPAs are subject to forfeiture under our compensation recoupment policy or if employment terminates before the end of the performance period for any reason other than disability, death or retirement.
2016–2018 LTPA PAYOUT CALCULATION.
HOW THE PAYOUT STRUCTURE FOR OUR NAMED EXECUTIVES DIFFERS FROM THE STRUCTURE FOR OTHER EXECUTIVES. To enhance the transparency of the LTPA program and reinforce the impact of participants’ efforts over each year in the performance period, LTPAs are credited to each named executive’s deferred compensation account in annual installments but not actually paid out until after the third year. (This installment structure does not apply to Mr. Joyce for the 2016–2018 LTPAs, as he was not a named executive when they were granted.) The amount of each installment is calculated, following the end of each year in the performance period, by multiplying total cash compensation at the time by 30% of the projected total 3-year payout percentage (up to the target payout level for the first year). Following the third year, the named executives receive the amounts credited, without interest, adjusted to reflect GE’s actual 3-year performance. The first-year installment is reported as 2016 compensation in the LTPAs column in the Summary Compensation Table above.
Annual Equity Incentive Awards.
Historically, GE used a different equity compensation structure for the CEO than for other senior leaders: the CEO typically received equity compensation solely in the form of PSUs while other senior leaders received it largely in the form of stock options. In 2015, we began granting annual equity incentive awards to all named executives in the form of stock options, RSUs and PSUs to better align the equity compensation structure for the company’s most senior leaders and drive greater accountability.
How we determine award amounts. Annual equity incentive awards are targeted to be equally weighted (by approximate accounting value) among stock options, RSUs and PSUs, except that the CEO’s award is targeted to be weighted 2/3 PSUs and 1/3 options (he does not receive RSUs). In determining award amounts, the committee evaluates executives’ achievement of specific performance goals — with strong emphasis on their contributions to overall company performance in addition to their individual business or function — as well as expected future contributions to GE’s long-term success, using past performance as a key indicator.
Why we use equity awards. Equity awards encourage our named executives to continue to deliver results over a longer period of time, and they also serve as a retention tool.
Why we use stock options and RSUs. W e believe that stock options and RSUs are a means to effectively focus our named executives on delivering long-term value to our shareowners. Options have value only to the extent that the price of GE stock rises between the grant date and the exercise date, and RSUs reward and retain the named executives by offering them the opportunity to receive GE stock if they are still employed by us on the date the restrictions lapse. Why we use PSUs. We see PSUs as a means to focus our named executives on GE’s long-term operating goals. PSUs have formulaically determined payouts that convert into shares of GE stock only if the company achieves specified performance goals. See the “Outstanding Equity Awards Table” below for information regarding the performance conditions for outstanding PSUs.
Long-Term Incentive Compensation Table.
The following table — also known as the Grants of Plan-Based Awards Table — shows LTPAs, PSUs, RSUs and stock options granted to our named executives in 2016 under the 2007 Long-Term Incentive Plan, a plan that shareowners approved in 2007 and 2012 (and that shareowners are being asked to reapprove at the annual meeting, see “Management Proposal No. 3 — Approval of the GE 2007 Long-Term Incentive Plan, as Amended to Extend the Plan and Increase the Number of Plan Shares” on Shareowner Proposals).
*Amounts reported as RSUs and stock options for Mr. Sherin reflect awards previously granted that were modified pursuant to Mr. Sherin’s early retirement agreement (see “Early Retirement Agreement with Mr. Sherin” below). The exercise price reflects the weighted average exercise price for the previously granted options that were modified.
ESTIMATED FUTURE PAYOUTS UNDER LONG-TERM PERFORMANCE AWARDS. The named executives were granted LTPAs under the 2016–2018 LTPA program (reported as a multiple of the executive’s salary and bonus at the time of grant), subject to achievement of the threshold, target and maximum goals for all five performance measures. The actual payouts, if any, will be calculated using the executive’s base salary as in effect in December 2018 and the average of the executive’s bonuses awarded for 2016 through 2018. The potential LTPA payouts are performance-driven and therefore completely at risk. See “Long-Term Performance Awards (LTPAs)” above for a description of the performance goals and salary and bonus multiples for determining payouts. See the Summary Compensation Table above for the first-year (2016) installments for these awards.
ESTIMATED FUTURE PAYOUTS UNDER PERFORMANCE SHARE UNITS. The named executives were granted PSUs in 2016 that could convert into shares of GE stock at the end of the three-year performance period based on two equally weighted operating goals: Total Cash and Operating Margin. Each operating goal has specified threshold and target performance levels such that performance below threshold results in no PSUs being earned, performance at threshold results in 50% of the PSUs being earned, and performance at or above target results in 100% of the PSUs being earned (with proportional adjustments for performance between threshold and target). In addition, the PSUs have a relative TSR modifier so that the number of PSUs that convert into shares based on achievement of the two operating goals may be adjusted upward or downward by up to 25%, depending on the company’s TSR performance versus the S&P 500 over the performance period. Accordingly, the named executives may receive between 0% and 125% of the target number of PSUs granted. Dividend equivalents are paid out only on shares actually received.
The number of PSUs shown in the threshold, target and maximum columns are calculated as follows: (1) threshold assumes that GE achieves the threshold performance level for only one operating goal and there is a negative 25% adjustment for relative TSR performance, (2) target assumes that GE achieves the target performance level for both operating goals and there is no adjustment for relative TSR performance, and (3) maximum assumes that GE achieves the target performance level for both operating goals and there is a positive 25% adjustment for relative TSR performance. See “PSUs” below for additional information.
RESTRICTED STOCK UNITS. The number of RSUs granted in 2016, which will vest in five equal annual installments, with the first installment (20%) vesting one year from the grant date (except that Mr. Joyce’s special retention grant in July will cliff vest 100% on December 31, 2019). Dividend equivalents are paid out only on shares actually received.
STOCK OPTIONS. The number of stock options granted in 2016, which will vest in five equal annual installments, with the first installment (20%) becoming exercisable one year from the grant date. See the Outstanding Equity Awards Table below and “Potential Termination Payments” below for information on accelerated vesting for retirement-eligible awards.
STOCK OPTION EXERCISE PRICE. Stock option exercise prices reflect the closing price of GE stock on the grant date.
GRANT DATE FAIR VALUE OF AWARDS. Generally, the aggregate grant date fair value is the amount that the company expects to expense in its financial statements over the award’s vesting schedule.
For stock options, fair value is calculated using the Black-Scholes value of each option on the grant date (resulting in a $3.75 per unit value for the September grants and a $3.57 per unit value for the November grant). For RSUs, fair value is calculated based on the closing price of the company’s stock on the grant date, reduced by the present value of dividends expected to be paid on GE common stock before the RSUs vest (resulting in a $31.19 per unit value for Ms. Comstock’s July grant, a $31.20 per unit value for Mr. Joyce’s July grant, and a $30.05 per unit value for the September grants) because dividend equivalents on unvested RSUs (granted after 2013) are accrued and paid out only if and when the award vests. For PSUs, the actual value of units received will depend on the company’s performance, as described above. Fair value is calculated by multiplying the per unit value of the award ($28.87 for the September grants and $26.12 for the November grant) by the number of units corresponding to the most probable outcome of the performance conditions as of the grant date. The per unit value is based on the closing price of the company’s stock on the grant date, adjusted to reflect the relative TSR modifier by using a Monte Carlo simulation that includes multiple inputs such as stock price, performance period, volatility and dividend yield.
Outstanding Equity Awards Table.
The following table — also known as the Outstanding Equity Awards at Fiscal Year-End Table — shows the named executives’ stock and option grants as of year-end. It includes unexercised stock options (vested and unvested) and RSUs and PSUs for which vesting conditions were not yet satisfied as of December 31, 2016.
MARKET VALUE. The market value of RSUs and PSUs is calculated by multiplying the closing price of GE stock as of December 31, 2016 ($31.60) by the number of shares underlying each award and, with respect to the PSUs, assuming satisfaction of the target levels for the applicable performance conditions. For options, the market value is calculated by multiplying the number of shares underlying each award by the spread between the award’s exercise price and the closing price of GE stock as of December 31, 2016.
VESTING SCHEDULE.
Options vest on the anniversary of the grant date in the years shown in the table. The table shows an accelerated stock option vesting schedule for Ms. Comstock and Messrs. Immelt, Joyce and Rice because their awards qualified for retirement-eligible vesting between 2016 and 2020. See “Potential Termination Payments” below for the requirements for an award to qualify for retirement-eligible accelerated vesting (the executive is age 60 or older and the award has been held for at least one year). RSUs vest on the anniversary of the grant date in the years shown in the table, except that certain awards vest on the named executive’s 65th birthday or upon the awards qualifying for retirement-eligible vesting (as discussed above for Options). PSUs vest at the beginning of the year indicated when the Compensation Committee certifies that the performance conditions have been achieved. See “2013 & 2014 PSU Grants” above for details on the performance conditions and payouts for the 2013 and 2014 grants, which have vested. See the table below for details on the performance conditions for the 2015 and 2016 grants.
HOW WE DEFINE THE PERFORMANCE GOALS*
Total cash = GE CFOA (Industrial CFOA + dividends from GE Capital) + proceeds from Industrial dispositions (after tax)
Operating margin = Industrial segment operating margin for 2015 grant (excludes adjusted corporate operating costs); Industrial operating margin for 2016 grant (includes adjusted corporate operating costs)
*The Compensation Committee has the authority to adjust these metrics for extraordinary items.
+/- 25% adjustment to # of PSUs earned refers to:
GE TSR performance 75th percentile positive 25% adjustment GE TSR performance 40th percentile negative 25% adjustment GE TSR performance 50th percentile no adjustment (with proportional adjustment for performance between 40th–75th percentiles)
Why are the total cash and operating margin targets for the 2016 grant lower than the 2015 grant?
The difference in threshold/target performance levels between the 2015 and 2016 grants is due primarily to differences in how we calculate the metrics, as shown below:
Option Exercises and Stock Vested Table.
The table below shows the number of shares the named executives acquired and the values they realized upon the exercise of options and the vesting of RSUs and PSUs during 2016. Values are shown before payment of any applicable withholding taxes or brokerage commissions.
STOCK AWARDS. For Messrs. Immelt and Rice, includes partial vesting of certain awards for U. S. Federal Insurance Contributions Act (FICA) tax purposes. For Mr. Sherin, includes accelerated vesting of certain awards pursuant to his retirement agreement. Receipt of a portion of these awards ($6,054,019) is subject to a six-month delay under applicable U. S. federal income tax regulations.
Compensação diferida.
The company has offered both a deferred bonus program and, from time to time, a deferred salary program. These deferral programs are intended to promote retention by providing a long-term savings opportunity on a tax-efficient basis. The deferred salary program is viewed as a strong retention tool because executives generally must remain with the company for at least five years after deferral to receive any interest on deferred balances. In addition, because the deferral programs are unfunded and deferred payments are satisfied from the company’s general assets, they provide an incentive for the company’s executives to minimize risks that could jeopardize the long-term financial health of the company.
Bonus Deferrals.
ELIGIBILITY AND DEFERRAL OPTIONS. Employees in our executive band and above, including the named executives, can elect to defer all or a portion of their bonus payments into the deferral options shown below. Participants may change their election among these options four times per year.
TIME AND FORM OF PAYMENT. Participants can elect to receive their deferred compensation balance upon termination of employment either in a lump sum or in 10 to 20 annual installments.
Salary Deferrals.
ELIGIBILITY . We periodically offer eligible employees in our executive band and above the opportunity to defer their salary payments (the last such plan was offered in 2010 for 2011 salary). Individuals who are named executives at the time a deferred salary program is initiated are not eligible to participate.
INTEREST INCOME. These programs provide accrued interest on deferred amounts (including an above-market interest rate as defined by the SEC) ranging from 6% to 14% compounded annually. A participant who terminates employment before the end of the five-year vesting period will receive a payout of the deferred amount but will forfeit the accrued interest (with exceptions for events such as retirement, death and disability).
TIME AND FORM OF PAYMENT . Our deferred salary programs have required participants to elect, before the salary was deferred, to receive deferred amounts either in a lump sum or in 10 to 20 annual installments.
The company makes all decisions regarding the measures for calculating interest or other earnings on deferred bonuses and salary. The named executives cannot withdraw any amounts from their deferred compensation balances until they either leave or retire from GE.
Deferred Compensation Table.
The table below — also known as the Nonqualified Deferred Compensation Table — shows amounts credited to the named executives’ accounts under nonqualified deferred compensation plans and plan balances as of December 31, 2016. For 2016, the company did not make any matching contributions into these plans. In addition, no withdrawals or distributions were made in 2016.
EXECUTIVE CONTRIBUTIONS IN 2016. Amounts represent compensation deferred during 2016. They do not include any amounts reported as part of 2016 compensation in the Summary Compensation Table above, which were credited to the named executive’s deferred account, if any, in 2017.
AGGREGATE EARNINGS IN 2016. Reflects earnings on each type of deferred compensation listed in this section that were deposited into the named executive’s deferred compensation account during 2016. The earnings on deferred bonus payments may be positive or negative, depending on the named executive’s investment choice, and are calculated based on: (1) the total number of deferred units in the account multiplied by the GE stock or S&P 500 Index price as of December 31, 2016; minus (2) that amount as of December 31, 2015; minus (3) any named executive contributions during the year. The earnings on the deferred salary programs are calculated based on the total amount of interest earned. See the Summary Compensation Table above for the above-market portion of those interest earnings in 2016.
AGGREGATE BALANCE AT 12/31/16. The fiscal year-end balances reported in the table above include the following amounts that were previously reported in the Summary Compensation Table as 2014 and 2015 compensation:
Pension Benefits.
The company provides retirement benefits to the named executives under the same GE Pension Plan and GE Supplementary Pension Plan in which other eligible employees participate. The Pension Plan is a funded, tax-qualified plan. The Supplementary Pension Plan, which increases retirement benefits above amounts available under the Pension Plan, is an unfunded, unsecured obligation of the company and is not qualified for tax purposes. Because participants generally forfeit any benefits under this plan if they leave the company before age 60, we believe it is a strong retention tool that significantly reduces departures of high-performing executives and greatly enhances the caliber of the company’s executive workforce. In addition, because the Supplementary Pension Plan is unfunded and benefit payments are satisfied from the company’s general assets, it provides an incentive for executives to minimize risks that could jeopardize the long-term financial health of GE.
GE Pension Plan.
ELIGIBILITY AND VESTING. The GE Pension Plan is a broad-based retirement program that is closed to new participants. Eligible employees vest in the plan after five years of qualifying service. The plan also requires employee contributions, which vest immediately.
BENEFIT FORMULA. For the named executives, the plan provides benefits based primarily on a formula that takes into account their earnings for each fiscal year. Since 1989, this formula has provided an annual benefit accrual equal to 1.45% of a named executive’s earnings for the year up to covered compensation and 1.9% of his or her earnings for the year in excess of covered compensation. “Covered compensation” was $50,000 for 2016 and has varied over the years based in part on changes in the Social Security taxable wage base. For purposes of the formula, annual earnings include base salary and up to one-half of bonus payments, but may not exceed an IRS-prescribed limit applicable to tax-qualified plans ($265,000 for 2016). As a result, the maximum incremental annual benefit a named executive could have earned for service in 2016 was $4,810. Over the years, we have made special one-time adjustments to this plan that increased eligible participants’ pensions, but we did not make any such adjustment in 2016.
TIME AND FORM OF PAYMENT. The accumulated benefit an employee earns over his or her career is payable after retirement on a monthly basis for life with a guaranteed minimum benefit of five years. The normal retirement age as defined in this plan is 65; however, employees who began working at GE prior to 2005, including the named executives, may retire at age 60 without any reduction in benefits. In addition, the plan provides for Social Security supplements and spousal joint and survivor annuity options.
TAX CODE LIMITATIONS ON BENEFITS. The tax code limits the benefits payable under the GE Pension Plan. For 2016, the maximum single life annuity a named executive could have received under these limits was $210,000 per year. This ceiling is actuarially adjusted in accordance with IRS rules to reflect employee contributions, actual forms of distribution and actual retirement dates.
GE Supplementary Pension Plan.
ELEGIBILIDADE. The GE Supplementary Pension Plan is an unfunded and non-tax-qualified retirement program that is offered to eligible employees in the executive band and above, including the named executives, to provide retirement benefits above amounts available under our other pension programs. The portion of the plan providing the benefits described below has been closed to new participants.
BENEFIT FORMULA. A named executive’s annual supplementary pension, when combined with certain amounts payable under the company’s other pension programs and Social Security, will equal 1.75% of his or her “earnings credited for retirement benefits” multiplied by the number of 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 named executive’s average annual compensation (base salary and bonus) for the highest 36 consecutive months out of the last 120 months prior to retirement.
TIME AND FORM OF PAYMENT. Employees are generally not eligible for benefits under the Supplementary Pension Plan if they leave the company before age 60. The normal retirement age under this plan is 65; however, employees who began working at GE prior to 2005, including the named executives, may retire at age 60 without any reduction in benefits. The plan provides for spousal joint and survivor annuities for the named executives. Benefits under this plan would be available to the named executives only as monthly payments and could not be received in a lump sum.
GE Excess Benefits Plan.
ELEGIBILIDADE. The GE Excess Benefits Plan is an unfunded and non-tax-qualified retirement program that is offered to employees whose benefits under the GE Pension Plan are limited by certain tax code provisions. There were no accruals for named executives under this plan in 2016, and the company expects only insignificant accruals, if any, under this plan in future years.
BENEFIT FORMULA. Benefits payable under this plan are equal to the amount that would be payable under the terms of the GE Pension Plan disregarding the limitations imposed by certain tax code provisions minus the amount actually payable under the GE Pension Plan taking those limitations into account.
TIME AND FORM OF PAYMENT. Benefits for the named executives are generally payable at the same time and in the same manner as their GE Pension Plan benefits.
Pension Benefits Table.
The table below shows the present value of the accumulated benefit at year-end for the named executives under each plan, as calculated based upon the assumptions described below. Although SEC rules require us to show this present value, the named executives are not entitled to receive these amounts in a lump sum. None of the named executives received a payment under these plans in 2016.
*Excludes early retirement allowance payments valued at $7,191,154 (see “Early Retirement Agreement with Mr. Sherin” below).
PRESENT VALUE OF ACCUMULATED BENEFIT. The accumulated benefit is based on years of service and earnings (base salary and bonus, as described above) considered by the plans for the period through December 31, 2016. It also includes the value of contributions made by the named executives throughout their careers. For purposes of calculating the present value, we assume that all named executives who are not yet 60 (except for Mr. Sherin, who retired before age 60) will remain in service until age 60, the age at which they may retire without any reduction in benefits. We also assume that benefits are payable under the available forms of annuity consistent with the assumptions described in the Postretirement Benefit Plans notes in GE’s financial statements in our 2016 annual report on Form 10-K, including the statutory discount rate assumption of 4.11%. The postretirement mortality assumption used for present value calculations is the RP-2014 mortality table, adjusted for GE’s experience and factoring in projected generational improvements.
Potential Termination Payments.
In this section, we describe and quantify certain compensation that would have been payable under existing compensation plans and arrangements had a named executive’s employment terminated on December 31, 2016. For this hypothetical calculation, we have used each executive’s compensation and service levels as of this date (and, where applicable, GE’s closing stock price on this date). Since many factors (e. g., the time of year when the event occurs, GE’s stock price and the executive’s age) could affect the nature and amount of benefits a named executive could potentially receive, any amounts paid or distributed upon a future termination may be different from those shown in the tables below. The amounts shown are in addition to benefits generally available to salaried employees who joined the company before 2005, such as distributions under the Retirement Savings Plan, subsidized retiree medical benefits and disability benefits.
EARLY RETIREMENT AGREEMENT WITH MR. SHERIN. Mr. Sherin retired on December 31, 2016 after a 35-year career with GE. In connection with this, we entered into an early retirement agreement with Mr. Sherin pursuant to which, subject to a 12-month non-compete, Mr. Sherin will receive: (1) his 2016 annual cash bonus (as reported in the Summary Compensation Table) and a prorated 2016–2018 LTPA payment, in each case based upon actual company performance and determined in accordance with the company’s normal processes; (2) accelerated vesting (the PSUs remain subject to actual company performance) and up to a 5-year extension of the expiration period for his outstanding equity awards (the value of which is reported in the Summary Compensation Table), consistent with the benefits provided to other employees impacted by the GE Capital exit plan; (3) vesting at age 60 of his accrued benefits under the GE Supplementary Pension Plan (with benefits based on his approximately 35 years of service as of his retirement date); and (4) an early retirement allowance, payable monthly, from his retirement through age 60 (and, for certain amounts, through age 63 2⁄3).
Our Policies on Post-Termination Payments.
NO EMPLOYMENT OR INDIVIDUAL SEVERANCE AGREEMENTS. Our named executives serve at the will of the Board and do not have individual employment, severance or change-of-control agreements. This preserves the Compensation Committee’s flexibility to set the terms of any employment termination based on the particular facts and circumstances.
SHAREOWNER APPROVAL OF SEVERANCE AND DEATH BENEFITS. If the Board were to agree to pay severance or unearned death benefits to a named executive, we would seek shareowner approval. For severance benefits, this policy applies only when the executive’s employment had been terminated before retirement for performance reasons and the value of the proposed severance benefits exceeded 2.99 times the sum of his or her base salary and bonus. See the Board’s Governance Principles (at Helpful Resources) for the full policies.
Equity Awards.
The following table shows the intrinsic value of equity awards that would have vested or become exercisable if the named executive had died, become disabled or retired as of December 31, 2016. Intrinsic value is based upon the company’s stock price (minus the exercise price in the case of stock options). Amounts shown assume the achievement of all applicable performance objectives.
POTENTIAL TERMINATION PAYMENTS TABLE (EQUITY BENEFITS)
DEATH/DISABILITY. Unvested options would vest and remain exercisable until their expiration date. In the case of disability, this applies only to options that have been held for at least one year. Unvested RSUs would become fully vested in some cases, depending on the award terms. PSUs would be earned, subject to the achievement of the performance objectives. For these purposes, “disability” generally means the executive being unable to perform his or her job.
RETIREMENT. Unvested options or RSUs held for at least one year would become fully vested and would remain exercisable until their expiration date. This treatment applies to the named executives either becoming retirement-eligible (reaching the applicable retirement age) or retiring at age 60 or thereafter, depending on the award terms, and provided the award holder has at least five years of service with GE. Messrs. Immelt, Joyce and Rice had reached the applicable retirement age as of December 31, 2016.
Pension Benefits.
“Pension Benefits” above describes the general terms of each pension plan in which the named executives participate, the years of credited service and the present value of their accumulated pension benefit (assuming payment begins at age 60 or, for those named executives age 60 or above, January 1, 2017). The table below shows the pension benefits that would have become payable if the named executives had died, become disabled, voluntarily terminated or retired as of December 31, 2016.
In the event of death before retirement, the named executive’s surviving spouse may receive the following pension benefits:
GE Pension Plan and GE Excess Benefits Plan. Either an annuity, as if the named executive had retired and elected the spousal 50% joint and survivor annuity option prior to death, or an immediate lump-sum payment based on five years of pension distributions, in each case based upon the accrued benefits under these plans. GE Supplementary Pension Plan. A lump-sum payment based on whichever of the following has a higher value: (1) the 50% survivor annuity that the spouse would have received under this 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 this plan.
The amounts payable depend on several factors, including employee contributions and the ages of the named executive and surviving spouse.
In the event a disability occurs before retirement, the named executive may receive an annuity payment of accrued pension benefits, payable immediately.
POTENTIAL TERMINATION PAYMENTS TABLE (PENSION BENEFITS)
LUMP SUM UPON DEATH. Lump sum payable to the surviving spouse.
ANNUAL ANNUITY UPON DEATH. Annuity payable for the life of the surviving spouse. In accordance with his early retirement agreement, in the event of Mr. Sherin’s death prior to age 60, his surviving spouse would receive payments beginning on his 60th birthday based on the 50% joint and survivor annuity option under the pension plans.
ANNUAL ANNUITY UPON DISABILITY. 50% joint and survivor annuity payable to each executive.
ANNUAL ANNUITY UPON VOLUNTARY TERMINATION. 50% joint and survivor annuity payable to each executive at age 60; this does not include any payments under the GE Supplementary Pension Plan because they are forfeited upon voluntary termination before age 60.
ANNUAL ANNUITY UPON RETIREMENT. 50% joint and survivor annuity, except for Mr. Sherin. Mr. Sherin’s amounts reflect his elections under his early retirement allowance, which is valued at $7,191,154 (see “Early Retirement Agreement with Mr. Sherin” above).
Compensação diferida.
The named executives are entitled to receive the amount in their deferred compensation accounts if their employment terminates. Between the termination event and the date that distributions are made, these accounts would continue to increase or decrease in value based on changes in the value of GE Stock Units or S&P 500 Index Units, and to accrue interest income or dividend payments, as applicable. Therefore, amounts received by the named executives would differ from those shown in the Deferred Compensation Table above. See “Deferred Compensation” above for information on the available distribution types under each deferral plan.
Life Insurance Benefits.
For a description of the supplemental life insurance plans that provide coverage to the named executives, see “Life Insurance Premiums” acima. If the named executives had died on December 31, 2016, the survivors of the named executives would have received the following under these arrangements. The company would continue to pay the premiums in the event of a disability until the policy is fully funded.
Other Executive Compensation Practices & Policies.
Roles and Responsibilities in Succession Planning and Compensation.
COMPENSATION COMMITTEE. The committee has primary responsibility for helping the Board develop and evaluate potential candidates for executive positions and for overseeing the development of executive succession plans. As part of this responsibility, the committee oversees the compensation program for the CEO and the other named executives.
MANAGEMENT. Our CEO and our senior vice president, human resources, help the committee administer our executive compensation program. The senior vice president, human resources, also advises the committee on matters such as past compensation, total annual compensation, potential accrued benefits, GE compensation practices and guidelines, company performance, industry compensation practices and competitive market information.
How We Establish Performance Goals and Evaluate Performance.
ESTABLISHING PERFORMANCE GOALS. At the beginning of each year, Mr. Immelt develops the objectives that he believes should be achieved for the company to be successful. He then reviews these objectives with the Compensation Committee for the corollary purpose of establishing how the committee will assess his and the other named executives’ performance, including forming the basis for the performance metrics and strategic goals included in the annual bonus plan. These objectives are derived largely from the company’s annual financial and strategic planning sessions, during which the Board and management conduct in-depth reviews of the company’s growth opportunities and establish goals for the upcoming year. The objectives include quantitative financial measurements as well as qualitative strategic, risk and operational considerations, and are focused on those factors that our CEO and the committee believe create long-term shareowner value.
EVALUATING PERFORMANCE. Mr. Immelt leads the assessment of each named executive’s individual performance against the objectives established for that executive, the company’s overall performance and the performance of the executive’s business or function, and makes an initial compensation recommendation to the Compensation Committee for each executive. In doing so, he solicits the input of, and receives advice and data from, our senior vice president, human resources. Mr. Immelt also reviews and discusses preliminary considerations as to his own compensation with the committee, but does not participate in the final determination of his compensation. The named executives also play no role in their compensation determinations, other than discussing with the CEO their individual performance against predetermined objectives.
Our Policies on Compensation Consultants and Peer Group Comparisons.
STRATEGIC USE OF COMPENSATION CONSULTANTS. From time to time, the Compensation Committee and the company’s human resources function have sought the views of Frederic W. Cook & Co., Inc. (Frederic Cook) about market intelligence on compensation trends and on particular compensation programs designed by our human resources function. For 2016, the Compensation Committee chair and the company’s human resources function consulted with Frederic Cook on market practices related to senior executive compensation. In addition, the Governance Committee and the company’s legal function consulted with Frederic Cook on market practices relating to compensation and benefits for non-employee directors. In addition, the company’s human resource function consulted with Exequity to obtain its views and information on the company’s broad-based 2007 Long-Term Incentive Plan. All of these services were obtained under hourly fee arrangements rather than through a standing engagement.
COMPENSATION CONSULTANT INDEPENDENCE POLICY. Any compensation consultant that advises the Board on executive or director compensation will not at the same time advise the company on any other human resources matter, and the committee has determined that Frederic Cook’s work with the committee, Governance Committee and the company’s human resources function does not raise any conflict of interest.
LIMITED USE OF PEER GROUP COMPARISONS. The Compensation Committee considers executive compensation at the other Dow 30 companies as just one among several factors in setting pay. It does not target a percentile within this group and instead uses the comparative data merely as a reference point in exercising its judgment about compensation types and amounts.
Clawbacks and Other Remedies for Potential Misconduct.
CLAWBACKS. The Board may seek reimbursement from an executive officer if it determines that the officer engaged in conduct that was detrimental to the company and resulted in a material inaccuracy in either our financial statements or in performance metrics that affected the officer’s compensation. If the Board determines that the officer engaged in fraudulent misconduct, it will seek such reimbursement. For more information, see the Board’s Governance Principles (see Helpful Resources).
OTHER REMEDIES. In cases of detrimental misconduct by an executive officer, the Board may also take a range of other actions to remedy the misconduct, prevent its recurrence, and discipline the individual as appropriate, including terminating the individual’s employment. These remedies would be in addition to, and not in lieu of, any actions imposed by law enforcement agencies, regulators or other authorities.
Share Ownership and Equity Grant Policies.
SHARE OWNERSHIP REQUIREMENTS. We require our named executives to own significant amounts of GE stock as shown on the next page. The required amounts are set at multiples of base salary. All named executives are in compliance with our stock ownership requirements. For details on these requirements, see the Compensation Committee’s Key Practices (see Helpful Resources). The named executives’ ownership is shown in the Common Stock & Total Stock-Based Holdings Table on Governance.
STOCK OWNERSHIP REQUIREMENTS.
(multiples of base salary)
for vice chairs.
for senior vice presidents.
HOLDING PERIOD REQUIREMENTS. Our executive officers must also hold for at least one year any net shares of GE stock they receive through stock option exercises.
NO HEDGING. We believe our executive officers and directors should not speculate or hedge their interests in our stock. We therefore prohibit them from entering into any derivative transactions in GE stock, including any short sale, forward, equity swap, option or collar that is based on GE’s stock price.
NO PLEDGING. We prohibit executive officers and directors from pledging GE stock.
NO OPTION BACKDATING OR SPRING-LOADING. The exercise price of each stock option is the closing price of GE stock on the grant date (the date of the Compensation Committee meeting at which equity awards are determined). Board and committee meetings are generally scheduled at least a year in advance and without regard to major company announcements.
NO OPTION REPRICING. We prohibit the repricing of stock options. This includes amending outstanding options to lower their exercise price, substituting new awards with a lower exercise price or executing a cash buyout.
NO UNEARNED DIVIDEND EQUIVALENTS. PSUs, as well as RSUs granted to executive officers after 2013, do not pay dividend equivalents on shares that are not yet owned. Instead, dividend equivalents are accrued during the vesting or performance period and paid out only on shares actually received. For more information, see the Compensation Committee’s Key Practices (see Helpful Resources).
Tax Deductibility of Compensation.
The Internal Revenue Code generally imposes a $1 million limit on the amount that a public company may deduct for compensation paid to the company’s named executives. This limitation does not apply to compensation that meets the tax code requirements for “qualifying performance-based” compensação. With respect to compensation reported in the Summary Compensation Table for 2016 above, annual cash bonus payments as well as PSU, RSU and stock option grants were designed to satisfy the requirements for deductible compensation (but we may pay compensation that does not qualify as deductible). To allow annual bonus payments, LTPA payments and grants of PSUs and RSUs to qualify as deductible, the Compensation Committee established a performance goal (positive net earnings, adjusted to remove the impact under GAAP of unusual events) and the maximum amounts that could be granted to the executive officers (expressed as a percentage of adjusted net earnings). That goal was met for 2016, and the bonus payments and PSU and RSU grant amounts were within the pre-established limits. Because deductibility is determined under a set of standards that may be subject to different interpretations in application, arrangements intended to satisfy the deductibility requirements may subsequently be determined not to be deductible.
Explanation of Non-GAAP Financial Measures and Performance Metrics.
Information on how GE calculates the following metrics:
Industrial segment organic revenue growth (incl. Alstom for Nov. & Dec. of 2015 & 2016), Industrial operating + Verticals EPS, Industrial operating profit, Industrial operating margin, Industrial operating margin, Industrial segment operating margin (ex. Alstom Appliances), Industrial segment gross margin (ex. Alstom), Industrial ROTC, GE Capital Verticals earnings, GE CFOA (ex. deal taxes & pension funding), Free cash flow + dispositions, and Total cash generation,
is disclosed in the supplemental materials on GE’s proxy website (see Helpful Resources) and in the “Supplemental Information” section of GE’s annual report on Form 10-K for 2016. Information on how GE calculates the funding metrics for the annual bonus program as well as the performance metrics for the 2016–2018 LTPA program and 2013–2016 and 2014–2016 PSUs is also disclosed in the supplemental materials on GE’s proxy website.
Caution Concerning Forward-Looking Statements.
This document contains “forward-looking statements” & mdash; that is, statements related to future events that by their nature address matters that are, to different degrees, uncertain. For details on the uncertainties that may cause our actual future results to be materially different than those expressed in our forward-looking statements, see the Forward-Looking Statements Information page on our Investor Relations website (see Helpful Resources) as well as our annual reports on Form 10-K and quarterly reports on Form 10-Q. We do not undertake to update our forward-looking statements. This document also includes certain forward-looking projected financial information that is based on current estimates and forecasts. Actual results could differ materially.
Compensation Committee Report.
The Compensation Committee has reviewed the compensation discussion and analysis, and discussed that analysis with management. Based on its review and discussions with management, the committee recommended to the Board that the compensation discussion and analysis be included in the company’s annual report on Form 10-K for 2016 and this proxy statement. This report is provided by the following independent directors, who comprise the committee:
John J. Brennan (Chairman)
Marijn E. Dekkers.
Rochelle B. Lazarus.
Diretor de Compensação.
The compensation program for independent directors is designed to achieve the following goals:
Fairly pay directors for the work required at a company of GE’s size and scope; Align directors’ interests with the long-term interests of GE shareowners; and Be simple, transparent and easy for shareowners to understand.
Compensação anual.
OVERVIEW. Our independent directors receive annual compensation as shown in the table below. There are no additional meeting fees. The lead director and members of our Board committees receive additional compensation due to the workload and broad responsibilities of these positions.
HOW DEFERRED STOCK UNITS WORK. Each DSU is equal in value to a share of GE stock and is fully vested upon grant, but does not have voting rights. To calculate the number of DSUs to be granted, we divide the target value of the DSUs by the average closing price of GE stock for the 20 days preceding and including the grant date. DSUs accumulate quarterly dividend-equivalent payments, which are reinvested into additional DSUs. The DSUs are paid out in cash beginning one year after the director leaves the Board. Directors may elect to take their DSU payments as a lump sum or in payments spread out for up to 10 years.
OTHER COMPENSATION. Our independent directors may also receive the following benefits:
Matching Gifts Program. Independent directors may participate in the GE Foundation’s Matching Gifts Program on the same terms as GE employees. Under this program, the GE Foundation matched for each participant up to $25,000 for 2016 contributions to approved charitable organizations. Charitable Award Program. Each director who joined the Board before 2016 may, upon leaving the Board, designate up to five charitable organizations to share in a $1 million GE contribution. Directors may not choose a private foundation with which they are affiliated. Executive Products and Lighting Program. Independent directors could participate in our Executive Products and Lighting Program on the same basis as our named executives. Under this program, directors could receive up to $30,000 in GE appliances over a three-year period. This program terminated in June 2016 when we sold our Appliances business, but directors can continue to receive light bulbs going forward. Incidental Board Meeting Expenses. The company occasionally provides travel and sponsors activities for spouses or other guests of the directors in connection with Board meetings.
Changes to Director Compensation.
The Governance Committee reviews director compensation annually, assisted periodically by an independent compensation consultant. In 2016, with the advice of Frederic Cook, the Board made the following changes:
Increased the annual retainers by $25,000 for independent directors and by an additional $10,000 for members of the Audit, Governance and Industrial Risk Committees. Commensurately increased directors’ stock ownership requirements. The Board increased the director stock ownership requirement from $500,000 to $550,000 to keep the level at 5X the cash portion of the annual retainer. Established an annual limit for director compensation, which was set at $1,500,000 annually.
Over the past few years, in line with the company’s simplification initiative, the Board has taken several actions to reduce benefits provided to directors, including lowering the maximum annual match under the Matching Gifts Program from $50,000 to $25,000, and closing the Charitable Award Program to new directors.
Director Compensation Table.
This table shows the compensation that each independent director earned for his or her 2016 Board and committee service. Amounts reflect partial-year Board service for Messrs. Cash, Swieringa and Warner, who retired from the Board in April 2016.
CASH FEES. Amount of cash compensation earned in 2016 for Board and committee service.
STOCK AWARDS. Aggregate grant date fair value of DSUs granted in 2016, as calculated in accordance with SEC rules, including amounts that the directors deferred into DSUs in lieu of all or a part of their cash compensation. Grant date fair value is calculated by multiplying the number of DSUs granted by the closing price of GE stock on the grant date, which was $31.79 for March 31, 2016 grants, $31.48 for June 30, 2016 grants, $29.62 for September 30, 2016 grants, and $31.60 for December 31, 2016 grants. The table below shows the cash amounts that the directors deferred into DSUs in 2016 and the number of DSUs accrued as of 2016 fiscal year-end.
ALL OTHER COMPENSATION. The following table provides more information on the type and amount of benefits included in the All Other Compensation column.
Matching gifts. Under the terms of the Matching Gifts Program, contributions made within a calendar year are eligible to be matched if they are reported to GE by April 15 of the following year. Amounts shown in this column reflect all contributions reported to the company in 2016, including 2015 contributions reported to GE by April 2016 and excluding any 2016 contributions that were not reported until 2017. Other benefits. This column includes: (1) the fair market value of products received under the Executive Products and Lighting Program, the appliances portion of which terminated in June 2016; and (2) a $1,000,000 contribution under our legacy Charitable Award Program for each of our retiring directors (Cash, Swieringa and Warner).
No Additional Director Compensation.
Independent directors do not receive any cash incentive compensation, hold deferred compensation balances or receive pension benefits. Since 2003, DSUs have been the only equity incentive compensation awarded to the independent directors; we ceased granting stock options to directors in 2002, and no independent director had stock options outstanding at 2016 fiscal year-end. Directors who are company employees do not receive any compensation for their services as directors.
Share Ownership Requirements for Independent Directors.
All independent directors are required to hold at least $550,000 (5X the cash portion of their annual retainer) worth of GE stock and/or DSUs while serving as GE directors. They have five years to meet this ownership threshold. All directors are in compliance with this requirement.
Director and Officer (D&O) Insurance.
GE provides liability insurance for its directors and officers. The annual cost of this coverage is approximately $7.5 million.
Approval of the GE 2007 Long-Term Incentive Plan, as Amended to Extend the Plan and Increase the Number of Plan Shares.
What are you voting on?
MANAGEMENT PROPOSAL NO. 3.
We are asking shareowners to approve the GE 2007 Long-Term Incentive Plan (Plan), as amended to extend the term of the Plan, increase the number of authorized shares and make other changes.
Why the Board recommends a vote FOR the amended plan.
The purposes of the plan are to:
Encourage selected salaried employees to acquire a proprietary interest in the growth and performance of GE; Generate an increased incentive to contribute to GE’s future success and prosperity, thus enhancing the value of the company; and Enhance the ability of the company to attract and retain exceptionally qualified individuals upon whom the sustained progress, growth and profitability of GE depend.
The amended plan would further these objectives by allowing GE to continue to grant awards under the Plan for another four to five years.
YOUR BOARD RECOMMENDS A VOTE FOR APPROVAL OF THE GE 2007 LONG-TERM INCENTIVE PLAN, AS AMENDED.
Balanced mix of PSUs, RSUs & options for senior officers Long-term vesting with 5 years for options/RSUs, 3 years for PSUs No dividend equivalent payments to executive officers on unearned RSUs/PSUs Share buybacks to offset dilution from equity programs.
Overview of the 2007 LTIP.
On February 10, 2017, the Board adopted, subject to shareowner approval, an amendment to the GE 2007 Long-Term Incentive Plan (Plan) to extend the term of the Plan, which otherwise would terminate at the 2017 annual meeting, and to increase the Plan’s share pool — that is, the number of shares that GE is authorized to issue for awards under the Plan. When shareowners previously approved the Plan at our 2007 and 2012 annual meetings, they authorized the issuance of up to 925 million shares for Plan awards (of which 223.5 million were available for future awards as of December 31, 2016).
If shareowners approve this proposal, the Plan would be amended to:
Authorize GE to issue up to 150 million additional shares for use under the Plan, which would bring the total number of authorized shares to 1,075 million (although 25 million of these shares would come from the reallocation of shares from the Consultant’s Plan to the Plan), of which 373.5 million would be available for new grants after 2016. Extend the term of the Plan by ten years, with the 2027 annual meeting as the end date. Raise the limit on the number of shares available for incentive stock options by 150 million (same as the increase in the share pool). Add non-employee directors as participants under the Plan, bringing the director DSU program under the auspices of the Plan. Establish an annual limit for director compensation (both cash and equity) at $1.5 million per year. Clarify that Plan awards are subject to the company’s clawback policy. Make other, non-substantive changes to the Plan.
How Long We Expect the Share Pool to Last.
We expect that the proposed share pool for new grants under the Plan (i. e., the 373.5 million shares available for grants after 2016), if shareowners approve this proposal, will last four to five years. However, regardless of actual Plan usage, as a matter of good corporate governance, we intend to ask shareowners to reapprove the Plan no later than the 2022 annual meeting. This is consistent with our historical practice of seeking shareowner approval for the Plan every five years.
How the Plan is Designed to Protect Shareowners’ Interests.
The following features of the Plan will continue to protect the interests of our shareowners:
Limits on authorized shares — no evergreen provision. If the amendment to the Plan is approved, the maximum number of shares available for grants of stock options and other stock awards will be 1,075 million, including shares that have been granted since the Plan’s adoption in 2007. Of these shares, no more than 230 million are available for “full value” awards (e. g., RSUs and PSUs). The Plan does not have an “evergreen” característica. Limits on terms of stock options. The maximum terms of each stock option and SAR that can be granted under the Plan is ten years. Limits on share counting. Shares surrendered or withheld for the payment of the exercise price or taxes under stock options or SARs, shares surrendered or withheld for the payment of taxes on RSUs, PSUs and other full value awards, and shares repurchased in the open market with the proceeds of an option exercise, may not again be made available for issuance under the Plan. No stock option repricing. The Plan prohibits the repricing of “underwater” options and SARs, whether by amending an existing award, substituting a new award at a lower price or executing a cash buyout. No discounted stock option grants. The Plan prohibits granting stock options or SARs with an exercise price less than the fair market value of GE stock on the date of grant. No automatic change-of-control benefits. The Plan does not provide any automatic benefits upon a change of control or any excise tax gross-ups.
Key Data About Our Grant Practices.
Burn rate measures how rapidly we are using the Plan’s share pool. We measure burn rate on both a gross basis (does not take into account shares returned to the share pool due to forfeiture) and a net basis (takes into account shares returned to the share pool due to forfeiture), calculated as follows:
(total shares granted) (Weighted average GE shares outstanding (undiluted)) NET BASIS.
(total shares granted) — (shares returned to the share pool) (Weighted average GE shares outstanding (undiluted))
GE COMPARES FAVORABLY TO DOW 30. Over the last three years, our gross burn rate averaged 0.6%, compared to 0.9% for the Dow 30, and our net burn rate averaged 0.5%, compared to 0.7% for the Dow 30.* See the Historical GE Data table for more information.
GE PERSPECTIVE. The committee manages burn rate by considering the aggregate value of our annual equity grants in the context of the company’s stock price and other compensation actions. Over the last five years, the committee has twice “reset” overall grant levels (i. e., reducing the amount) in light of these considerations.
Overhang measures the potential shareowner dilution from outstanding equity awards and shares available for grant. We use a “simple overhang” measurement, calculated as follows:
(awards outstanding) + (shares available for grant) (Weighted average GE shares outstanding (undiluted))
GE COMPARES FAVORABLY TO DOW 30. Over the last three years, our overhang averaged 7.8%, compared to 10.5% for the Dow 30.* See the Historical GE Data table for more information. If this proposal is approved, our potential dilution would increase from 7.6% in 2016 to 9.2%.
GE PERSPECTIVE. The company manages shareowner dilution from equity compensation through its buyback program. In 2016, the company repurchased $22 billion of GE shares, approximately $1.9 billion of which was to offset dilution from the Plan.
Concentration Ratio.
Concentration ratio measures the percentage of Plan awards granted to our named executives and is a useful indicator of whether a plan is broad-based. We calculate concentration ratio as follows:
(shares granted to named executives) (total shares granted)
GE COMPARES FAVORABLY TO DOW 30. Over the last three years, our concentration ratio averaged 4.2%, compared to 7.6% for the Dow 30.* See the Historical GE Data table for more information.
GE PERSPECTIVE. The committee believes that it is important for a broad group of GE executives and other employees to receive equity awards so that their interests are aligned with shareowners. In 2016, more than 5,000 GE employees received awards under the Plan.
*Represents the median of the Dow 30 companies’ average over the three-year period 2013–2015 (the last year for which data is available).
Historical GE Data.
*See “PSUs” above for a description of the performance metrics for the PSUs.
** Basic weighted average.
Equity Compensation Plan Information.
The following table provides information regarding the total share authorization under the Plan if this proposal is approved.
The following table provides information regarding outstanding equity awards and shares available for future issuance under all of GE’s equity plans. As required by SEC rules, it does not give effect to the proposed amendment to the Plan.
Frequently Asked Questions About the Plan.
This summary is qualified by reference to the complete text of the Plan, which can be found in Appendix A to this proxy statement.
Who can participate in the Plan?
All salaried employees of GE and its affiliates — approximately 185,000 employees in total — are eligible to participate in the Plan, along with the company’s 17 non-employee directors (assuming Dr. Lavizzo-Mourey is elected).
Who administers the Plan?
GENERALLY. The Plan is administered by the Compensation Committee, an independent committee of the Board. The committee has the authority to make any determination or take any action that it deems necessary or desirable to administer the Plan, and also has the sole discretion to interpret the Plan and all award agreements. With limited exceptions, the committee can delegate its authority under the Plan to the committee chairman, a subcommittee or to GE officers or managers.
AS IT RELATES TO DIRECTOR COMPENSATION. If this proposal is approved, the Governance Committee will administer the Plan as it relates to director compensation.
How many shares are available for Plan awards?
If this proposal is approved, a total of 1,075 million shares will have been authorized for issuance under the Plan (including 25 million shares that were reallocated from the Consultant’s Plan), of which 701.5 million have been granted as of December 31, 2016. Shares delivered pursuant to an award may consist of authorized and unissued shares or treasury shares.
& middot; WHAT REDUCES THE SHARE POOL. Awards settled in shares and dividend equivalents denominated in shares.
& middot; WHAT DOES NOT REDUCE THE SHARE POOL. Awards made upon the assumption of or in substitution for outstanding grants made by a company that we acquire and awards settled in cash.
& middot; WHICH SHARES CAN RETURN TO THE SHARE POOL. Shares covered by an award that is terminated or forfeited because payout conditions are not met.
& middot; WHICH SHARES CANNOT RETURN TO THE SHARE POOL. Shares surrendered to pay the exercise price or withholding taxes for stock options or SARs, shares repurchased in the open market with the proceeds of an option exercise, shares that were subject to an option or stock-settled SAR that were not issued upon its net settlement, and shares withheld to pay withholding taxes on RSUs, PSUs and other full value awards.
The last sales price of GE’s common shares, $0.06 par value, on February 10, 2017 was $29.72 per share, as reported on the NYSE.
What kind of awards can the committee grant under the Plan?
STOCK OPTIONS AND SARs. The maximum term for either stock options or SARs is ten years. Options may be either nonqualified stock options or incentive stock options. The committee will establish the vesting schedule and the method for paying the exercise price of these awards.
RESTRICTED STOCK AND RSUs. The committee will establish the applicable restrictions (including limitations on voting and dividend rights) and vesting schedule of these awards.
PERFORMANCE AWARDS. These awards may be denominated in either cash or shares, and are subject to the achievement of performance goals over set performance periods, as established by the committee.
OTHER STOCK-BASED AWARDS. The committee may grant other stock-based awards, including DSUs, that are valued by reference to or denominated or payable in shares, under such terms as it determines.
In addition, the committee will determine (1) whether an award includes dividends or dividend equivalents (other than stock options or SARs); (2) what happens if a participant terminates employment; and (3) whether shares of GE stock issuable under an award are subject to additional restrictions. Awards generally are not transferable.
Are there minimum vesting periods for Plan awards?
The Plan does not have minimum vesting periods for Plan awards. However, the committee generally believes that options and RSUs should have vesting periods of at least five years (absent compelling recruitment and retention considerations) and PSUs should have performance periods of at least three years. Consistent with this, over the last three years, more than 95% of the awards granted under the Plan met these conditions.
Are Plan awards subject to a clawback policy?
Plan awards granted to executive officers and directors are subject to the company’s clawback policy (see “Clawbacks and Other Remedies for Potential Misconduct” above).
What are the per-person award limits?
Subject to any adjustments that the committee makes (as described below), the Plan limits the number of shares that can be granted to an individual in any three-year period as follows:
In addition, if this proposal is approved, there will be an annual limit on director compensation set at $1,500,000 per director. This would include awards granted under the Plan as well as cash or other compensation paid by the company with respect to service as a director. In certain circumstances, the committee may make an exception and grant compensation above this limit (up to an additional $1,000,000). For example, this exception would permit awards under the company's Charitable Award Program (which has been closed to new directors.)
What adjustments can the committee make under the Plan?
ANTI-DILUTION ADJUSTMENTS. In the event of certain corporate transactions affecting GE’s outstanding common shares — ​such as a dividend, recapitalization, stock split, merger, consolidation, split-up, spin-off, or exchange of shares — ​the committee will make adjustments as it deems appropriate to prevent dilution or enlargement of Plan benefits. This could include changes to the number and type of shares to be issued under the Plan and outstanding awards, the exercise price of outstanding awards, and Plan and per-person limits on the number of shares that can be granted.
PERFORMANCE CRITERIA ADJUSTMENTS. The committee may adjust performance award criteria in recognition of unusual or infrequently recurring events affecting GE or its financial statements or changes in applicable laws, regulations, or accounting principles.
ACQUISITION-RELATED ADJUSTMENTS. The committee may also adjust award terms in connection with business acquisitions in which GE assumes outstanding employee awards or the right to make future awards.
What’s the duration of the Plan?
The Plan became effective on the date of our 2007 annual meeting. If this proposal is approved, the Plan will be extended for an additional ten years, such that no award may be granted under the Plan after the date of our 2027 annual meeting.
How can the Plan or awards be amended?
AMENDMENTS TO THE PLAN. The Board may amend, suspend or terminate the Plan, but will seek shareowner approval of any amendment that would:
& middot; Increase the number of authorized shares under the Plan (except in connection with anti-dilution adjustments as discussed above);
& middot; Permit underwater stock options or SARs to be repriced, replaced or exchanged; ou.
& middot; Otherwise be considered a material amendment under NYSE rules.
AMENDMENTS TO AWARDS. The committee may waive award conditions or amend or terminate awards, but may not impair the rights of the award holder without his or her consent.
Other Information About the Plan.
Summary of U. S. Federal Income Tax Consequences.
The following summary of tax consequences to GE and to Plan participants is intended to be used solely by shareowners in considering how to vote on this proposal and not as tax guidance to participants in the Plan. It relates only to federal income tax and does not address state, local or foreign income tax rules or other U. S. tax provisions, such as estate or gift taxes. Different tax rules may apply to specific participants and transactions under the Plan, particularly in jurisdictions outside the United States. In addition, this summary is as of the date of this proxy statement; federal income tax laws and regulations are frequently revised and may be changed again at any time. Therefore, each recipient is urged to consult a tax advisor before exercising any award or before disposing of any shares acquired under the Plan.
STOCK OPTIONS AND SARs. The grant of an option or SAR will create no tax consequences for the participant or the company. A participant will have no taxable income upon exercise of an incentive stock option, except that the alternative minimum tax may apply. Upon exercise of an option other than an incentive stock option, a participant generally must recognize ordinary income equal to the fair market value of the shares acquired minus the exercise price. When disposing of shares acquired by exercise of an incentive stock option before the end of the applicable incentive stock option holding periods, the participant generally must recognize ordinary income equal to the lesser of (1) the fair market value of the shares at the date of exercise minus the exercise price or (2) the amount realized upon the disposition of the shares minus the exercise price. Otherwise, a participant’s disposition of shares acquired upon the exercise of an option (including an incentive stock option for which the incentive stock option holding periods are met) generally will result in only capital gain or loss.
OTHER AWARDS. Other awards under the Plan generally will result in ordinary income to the participant at the later of the time of delivery of cash, shares, or other awards, or the time that either the risk of forfeiture or restriction on transferability lapses on previously delivered cash, shares or other awards.
COMPANY DEDUCTION. Except as discussed below, the company is generally entitled to a tax deduction equal to the amount recognized as ordinary income by the participant in connection with options, SARs or other awards, but not for amounts the participant recognizes as capital gain. Thus, the company will not be entitled to any tax deduction with respect to an incentive stock option if the participant holds the shares for the incentive stock option holding periods.
IMPACT OF SECTION 162(m) DEDUCTION LIMITATION. Section 162(m) generally allows deductions without limit for compensation that qualifies as performance based. GE intends that options and SARs granted under the Plan will continue to qualify as performance-based compensation not subject to a deductibility cap (based on our shareowners’ original approval of the Plan), as will RSUs and performance awards if shareowners approve the material terms of the performance goals described under “Management Proposal No. 4 — Approval of the Material Terms of Senior Officer Performance Goals” on Shareowner Proposals. However, a number of requirements must be met in order for particular compensation to so qualify, so there can be no assurance that these types of compensation under the Plan will be fully deductible under all circumstances. In addition, other types of compensation provided under the Plan may not qualify as performance-based compensation under Section 162(m) and therefore may not be deductible.
Plan Benefits.
NEW PLAN BENEFITS. Awards granted under the Plan are within the discretion of the committee. As the committee has not determined future awards or who might receive them, the benefits that will be provided under the Plan are not currently determinable.
EXISTING PLAN BENEFITS. The following table contains information with respect to options and other awards previously granted under the Plan as of December 31, 2016. Until this proposal is approved, non‑employee directors cannot participate in the Plan.
APPROVAL OF THE MATERIAL TERMS OF SENIOR OFFICER PERFORMANCE GOALS.
What are you voting on?
MANAGEMENT PROPOSAL NO. 4.
At the 2012 annual meeting, shareowners approved the material terms of performance goals to be used by the Compensation Committee for awarding certain compensation to executives until the date of the 2017 annual meeting. The Board is now requesting that shareowners reapprove the material terms of the performance goals so GE can continue to have a shareowner-approved arrangement under which certain compensation awarded to executives until the date of the 2022 annual meeting may qualify as performance-based compensation for purposes of Section 162(m) of the Internal Revenue Code.
Why are we asking you to vote?
Section 162(m) imposes a $1 million limit on the amount that a public company may deduct for compensation paid to the company’s CEO or any of the company’s three other most highly compensated executive officers (other than the CFO) who are employed as of the end of the year. This limitation does not apply to compensation that meets the requirements under Section 162(m) for “qualifying performance-based” compensação. One of the requirements for compensation to qualify is that the material terms of the performance goals for such compensation be approved by shareowners every five years.
YOUR BOARD RECOMMENDS A VOTE FOR APPROVAL OF THE MATIERAL TERMS OF SENIOR OFFICER PERFORMANCE GOALS.
Material Terms of the Performance Goals.
For purposes of Section 162(m), the material terms of the performance goals include the following:
which employees would be subject to the goals; the business measurements on which the performance goals would be based; and the formula that would be used to calculate the maximum amount of compensation that can be paid to an employee under the arrangement.
Each of these aspects is discussed below, and shareowner approval of this proposal constitutes re-approval of each of these aspects for purposes of Section 162(m).
Employees Covered.
The company’s executive officers (those employees who are required to file reports under Section 16 of the Exchange Act) would be subject to the performance goals described in this proposal. Although Section 162(m) only limits deductibility for compensation paid to a sub-set of this group, we may apply the performance goals to all executive officers in the event that any of them becomes a covered employee under Section 162(m).
Business Measurements.
The Compensation Committee expects to continue to use annual net earnings as determined under GAAP, adjusted to remove the effect under GAAP of unusual events (adjusted net earnings), as the basis for payment of annual bonuses and LTPAs as well as grants of RSUs (including PSUs).
COMMITTEE AUTHORITY TO MEASURE PERFORMANCE GOALS. The committee may establish performance goals that are measured either individually, alternatively or in any combination, are applied to either the company as a whole or to a business unit or related company, and are measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to a previous year’s results or to a designated comparison group, in each case as specified by the committee in the award.
COMMITTEE AUTHORITY TO ADJUST PERFORMANCE GOALS. The committee may adjust the performance goals to remove the effect of charges for restructurings, discontinued operations and all items of gain, loss or expense determined to be unusual in nature or infrequent in occurrence, related to the disposal of a segment or a business, or related to a change in accounting principle or otherwise.
Per-Person Maximum Amounts.
The maximum amounts granted (in the case of RSUs and PSUs) or payable (in the case of annual bonuses and LTPAs) to any senior officer under each performance goal are:
The committee has established business measurements and maximum amounts that it considers appropriate in light of foreseeable business conditions. If approved by shareowners, this proposal would not limit GE’s right to condition payment of annual bonuses, RSUs or LTPAs on achievement of additional quantitative or qualitative performance goals or to award or pay other or additional forms of compensation (including, but not limited to, salary, other incentive-based cash compensation or other stock-based awards under the Plan). These other forms of compensation may be paid regardless of whether the performance goals described in this proposal are achieved in any future year, and whether or not payment of such other forms of compensation would be tax deductible, but will be designed so as not to affect the deductibility of arrangements intended to qualify as performance-based compensation under Section 162(m). However, there can be no guarantee that amounts payable under these programs and awards will be treated as qualified performance-based compensation under Section 162(m).
If you hold your shares directly with GE or in the GE RSP:
If you hold your shares through a bank or a broker:

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As opções de chamada e colocação são citadas em uma tabela chamada de folha de corrente. A folha de corrente mostra o preço, o volume e o interesse aberto para cada preço de exercício da opção e mês de vencimento.
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Opções de ações da GE ou patrimônio líquido.
21 funcionários relataram esse benefício.
Comentários dos empregados.
Geralmente pobre, principalmente oferecido a um preço mais elevado.
Muito boa política excelente. Não é necessária nenhuma alteração.
alguém pode comprar ações, a empresa também contribui para compartilhar a compra.
Trabalhar na GE? Compartilhe suas experiências.
Estrela Muito Insatisfeito Estrela Insatisfeito Estrela Neutra (& # 034; OK & # 034;) Star Satisfied Star Muito Satisfeito.
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