Summary
General Electric Company (GE) filed an 8-K on September 20, 2005, reporting on executive compensation and a new deferred salary plan. The key event is the grant of 250,000 performance share units (PSUs) to CEO Jeffrey R. Immelt, representing his sole equity-based compensation for 2005. These PSUs are tied to specific five-year performance targets related to cash flow growth and total shareholder return relative to the S&P 500, aligning executive incentives with long-term company performance. Additionally, GE announced the adoption of the 2006 Executive Deferred Salary Plan, effective January 1, 2006. This plan allows approximately 4,000 executives to defer a portion of their salary, which accrues interest at 8.5% and receives a company credit of 3.5% of the deferred amount. Vesting of interest is contingent on remaining with the company for five years, emphasizing executive retention. Notably, the five highest-paid executive officers in 2004 will not participate in this new plan.
Key Highlights
- 1CEO Jeffrey R. Immelt granted 250,000 performance share units (PSUs) as his only equity compensation for 2005.
- 2PSUs are contingent on achieving specific 5-year performance targets (2005-2009): average 10% annual cash flow growth (adjusted) for half, and outperforming the S&P 500 in total shareholder return for the other half.
- 3Performance period for the PSUs is from 2005 through 2009.
- 4Mr. Immelt will receive quarterly dividend payments on the granted PSUs during the performance period.
- 5GE adopted the 2006 Executive Deferred Salary Plan, effective January 1, 2006, aimed at executive retention.
- 6The plan allows approximately 4,000 executives to defer 10-50% of their 2006 salary, earning 8.5% annual interest and a 3.5% company credit.
- 7Vesting of interest in the deferred salary plan requires five years of service, with exceptions for specific events like retirement or death.