What are Performance Share Units (PSUs) and why are they important for investors?

PSUs are a form of executive compensation where shares of company stock are awarded only if specific performance targets are met over a defined period. They are important for investors because they align executive incentives with long-term company success and shareholder value creation, as seen in this case with targets tied to cash flow growth and shareholder return.

What are the specific performance targets for CEO Immelt's PSUs?

Half of the PSUs vest if GE's adjusted cash flow from operating activities grows by an average of 10% or more per year between 2006 and 2010. The other half vest if GE's total shareholder return outperforms the S&P 500 over the same five-year period.

What is the significance of Lloyd G. Trotter's appointment as Vice Chairman and President & CEO of GE Industrial?

This appointment suggests a potential increased focus or restructuring within GE's industrial operations. It elevates a key executive to a significant leadership role, indicating strategic importance placed on this segment of the business.

Are the terms of these PSUs similar to previous grants?

Yes, the filing states that these PSUs have the same terms as those granted to Mr. Immelt in 2003, 2004, and 2005, with the exception of the specific performance period (2006-2010) and how dividend equivalents are handled.

GE 8-K: Material Agreements

Summary

General Electric Company (GE) filed an 8-K on September 11, 2006, reporting two key events that occurred on September 8, 2006. The most significant development for investors relates to executive compensation, specifically the grant of 250,000 performance share units (PSUs) to CEO Jeffrey R. Immelt. These PSUs are tied to stringent performance metrics: 50% vest based on GE's average annual adjusted cash flow growth of at least 10% from 2006-2010, and the remaining 50% vest based on GE's total shareholder return outperforming the S&P 500 over the same period. Dividend equivalents will accrue during the performance period. Additionally, the company announced the election of Lloyd G. Trotter as Vice Chairman and President & CEO of GE Industrial, a move that could signal a strategic focus or organizational restructuring within the industrial segment.

Key Highlights

1CEO Jeffrey R. Immelt was granted 250,000 performance share units (PSUs) tied to future company performance.
2Vesting of 50% of Immelt's PSUs is contingent on GE achieving an average annual adjusted operating cash flow growth of 10% or more from 2006-2010.
3Vesting of the other 50% of Immelt's PSUs depends on GE's total shareholder return exceeding the S&P 500's return over the same five-year period.
4Dividend equivalents will be paid on vested PSUs, reflecting GE's dividend payouts during the performance period.
5The performance period for these PSUs is from 2006 through 2010.
6Lloyd G. Trotter was appointed Vice Chairman of GE and will serve as President & CEO of GE Industrial.
7An amended award grant agreement for performance stock units under the GE 1990 Long Term Incentive Plan was filed as an exhibit.

GENERAL ELECTRIC CO 8-K Report, Material Agreement (Sep 11, 2006)

Summary

Key Highlights

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