SEC Sides With GE In Pension Proposal Position

February 6, 2002 ( - The Securities and Exchange Commission (SEC) backed a move by General Electric Co. to block a shareholder proposal to increase pensions from its proxy statement.

Former GE employee William Lynch proposed last June that GE use its $21 billion pension trust over funding to create a ‘bonus system’ that could provide a yearly supplement for pensions.

“Part of the reason it remains over funded is because of the interest on money I and other employees put in,’ Lynch told Reuters. “I figured employees deserve a part of that, at least to the extent that the plan remains over funded.’  Lynch was a GE engineering technician for more than 37 years.

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The GE pension trust was about $50 billion as of the end of 2000, a spokesman said. The trust was about $21 billion over funded for that same period, he said.

“The company wants to be sure that it will have the means to meet its pension obligations in future years,’ the GE spokesman said.

“Ordinary Business Matters”

The proposal will be excluded from the proxy because pension matters are ordinary business operations, the spokesman said.

According to a rule under the 1934 Exchange Act, matters relating to ordinary business operations can be excluded from proxy statements, GE said.

The SEC said in a letter that there appeared to be “some basis’ to GE’s argument.

“We will not recommend enforcement action to the commission if General Electric omits the proposal from its proxy materials,’ the SEC said in a “no action’ letter dated January 16 and released to the public Tuesday.