General Electric Co.
Summary:
Besides the options and termination clause sections, it looks like these guys are raking in the dough, especially the head baker himself, CEO Jeffrey Immelt. The company's performance was good so you would expect to see the executives being well compensated, but WOW. How do they do in an exceptional year!
Analysis:
In spite of the tough economy, many of the companies within the Electrical Equipment Industry performed well in 2007. Their performance is even more impressive when you add in the fact that they are under constant pressure from rising costs. The companies that are most successful in this category are ones who have developed a good overseas strategy.
General Electric is one such company that has performed well, in spite of pressure from their operating environment and the domestic economy. The company has also focused on high growth emerging economies. This focus has made their revenue stream more diverse, with over 50% of revenues coming from abroad. Although the stock price has dipped in 2008, the long-term outlook appears to be good for GE. For their performance in 2007, we would expect to see the execs getting good bonuses and incentive awards.
So… What Are They Paid?
Judging from the compensation given out to GE's top execs, you would think GE not only had a good year, but a fantastic year. The pay is high in several categories, including: Salary, Bonus, and Stock Awards. The CEO and the NEOs received unusually high salaries in 2007, $3.3 million for the CEO and an average of $1.8 million for the NEOs. This is approximately double the usual amount given out.
The bonus given out to the CEO was valued at approximately $5.8 million. In 2007, he also received 150,000 PSUs (stock units) at 2006 terms, worth somewhere between $4.5 and $5.5 million. The NEOs also received healthy bonuses, with an average payout of $4.4 million. Stock awards were also high. The CEO received nearly $10 million worth, while the NEOs received an average of $3.4 million.
When we looked at the
perquisite section we saw that the CEO and NEOs all spent a significant
amount of time using corporate aircraft for personal reasons. The
CEO racked up a bill of $235,000 in incremental costs for personal
use of the company planes, while the NEOs' bill ranged from $55,000
to $265,000. The amount given out for cars was low or non-existent
for the executives (I guess they only use planes for traveling,
huh? 
).
All the other perks given out look pretty normal.
On a more positive note, the value of 2007 options granted to the execs was pretty low. Also, as described in the Proxy Statement, GE does not have any severance or change in control agreements with their executives. It's good to know that the Board can make a change up top without paying out huge severance payments.
Compensation Details:
| CEO | NEO Avg. | |
|---|---|---|
| Base Salary | $3,300,000 | $1,801,042 |
| Bonus | $5,800,000 | $4,367,500 |
| Stock | $9,802,359 | $3,409,715 |
| Options | $214,664 | $1,547,628 |
| non-Equity Incentives | N/A | N/A |
Reference Links:
(1) Annual
Proxy Statement
(2) Annual
Report