GE Shareholders Reject Executive Compensation Proposals

April 24, 2003 ( - Shareholders at General Electric Co rejected two proposals, albeit by slim margins, designed to reform executive compensation.

One proposal, which would have required shareholder approval for severance agreements that exceed 2.99 times an executive’s base pay and bonus, was defeated 51.7% to 48.3% . The proposal, brought by the Teamster Affiliates Pension Plan, won 39% of the vote at last year’s annual meeting, according to a Dow Jones report.

Another proposal, calling fora shareholder vote before the company could adopt what is known as a poison-pill anti-takeover measure,lost 52.3% to 47.7%, compared with 40% of the vote last year.   Shareholders at several companies have passed similar proposals this year prohibiting boards from adopting poison pills without a shareholder vote, including Hewlett-Packard Co. PG&E Corp.’s shareholders passed a measure seeking to get the company’s board to remove a poison-pill plan and require the board to submit it for a vote to shareholders.

Supporters of the corporate reform proposals said the discussion shows shareholder scrutiny is rising in the wake of corporate scandals and stratospheric executive compensation amounts; particularly awarded to retired GE head Jack Welch. Court papers filed in Welch’s divorce from Jane Beasley Welch have said that, among other perks, Welch received use of GE-provided jets, a company-owned Manhattan apartment, flowers, food-service staffs, tickets for major sporting events and a limousine service.These amenities are in addition to the $357,128 a month in pension payments and a further $377,000 a month from consulting fees Welch nets.

Overall, there were 13 shareholder proposals discussed at the meeting, all of which were opposed by GE’s board of directors.   Not surprisingly, all were defeated.

This is not the first step that GE has taken in the current proxy season to curb executive compensation.   In February, the company announced pension income would no longer be influencing incentive compensation (See  GE Reworks Executive Compensation Structure).