CalPERS to GE: Use Pay for Performance

October 15, 2002 ( - The California Public Employees' Retirement System (CalPERS) Tuesday approved plans to file a shareholder challenge to "excessive" executive compensation policies at General Electric Corp. demanding the company adopt a pay-for-performance approach.

CalPERS, which owns about $1.4 billion in GE stock, will join with Amalgamated Bank to co-sponsor a shareholder resolution urging GE’s board of directors to ensure that future stock option grants to senior executives are linked to company performance, Reuters reported.

California state Treasurer Phil Angelides, who had encouraged CalPERS to take a stand on GE, issued a statement declaring that moves to rein in executive pay packages would curb “excesses which undermine the economy and jeopardize the public’s faith in the marketplace.”

Angelides’ office said the focus on General Electric arose out of the lack of any measurable link between pay and performance at the company, noting that former GE Chief Executive Officer Jack Welch received a compensation increase of 80% in his final year despite a drop in the company’s aggregate market value.