NOTICE OF 1997
ANNUAL MEETING
AND
PROXY STATEMENT
CONTENTS
Notice of 1997 Annual Meeting of Share Owners................................ 5
Proxy Statement ............................................................. 6
* Election of Directors................................................ 6
Information Relating to Directors, Nominees
and Executive Officers............................................ 12
Report of the Compensation Committee
of the Board of Directors ........................................ 17
Summary Compensation Table ......................................... 22
Financial Performance Comparison Graphs............................. 24
Stock Options and Stock Appreciation Rights......................... 26
Contingent 1997-1999 Long-Term Performance Incentive Awards......... 28
Retirement Benefits................................................. 29
* Appointment of Independent Auditors................................. 30
* Proposal for 2-for-1 Stock Split and Increase
in Number of Authorized Shares.................................... 30
* Proposal to Approve Executive Officer Performance Goals............. 32
* Proposal to Amend and Extend the GE 1990 Long-Term
Incentive Plan.................................................... 36
Share Owner Proposals relating to:
* No. 1 Term Limit for Outside Directors...................... 42
* No. 2 GE's Nuclear Power Business........................... 42
* No. 3 Environmental Report.................................. 44
* No. 4 Maquiladoras Report................................... 45
* No. 5 Executive Compensation Limits......................... 46
* No. 6 Military Contracts Standards.......................... 48
Other Matters....................................................... 49
Exhibit A: Proposed GE 1990 Long-Term Incentive Plan,
as amended and restated as of April 23, 1997...................... 51
*To be voted on at the meeting
EVERY SHARE OWNER'S VOTE IS IMPORTANT
PLEASE COMPLETE, SIGN, DATE AND RETURN
YOUR PROXY FORM
[RECYCLE SYMBOL APPEARS HERE] Printed on recycled paper using soybean ink
[GE LOGO APPEARS HERE]
General Electric Company
3135 Easton Turnpike, Fairfield, CT 06431
March 12, 1997
Dear Share Owner,
You are invited to attend the 1997 Annual Meeting to be held on Wednesday,
April 23, in Charlotte, North Carolina.
The Annual Meeting will begin with a report on Company operations, followed
by discussion and voting on the matters set forth in the accompanying Notice of
Annual Meeting and Proxy Statement and on other business matters properly
brought before the meeting.
If you plan to attend the meeting, please complete and return the advance
registration form on the back page of this Proxy Statement. An admission card,
which will expedite your admission to the meeting, will be mailed to you about
three weeks prior to the meeting.
Whether or not you plan to attend, you can be sure your shares are
represented at the meeting by promptly completing, signing, dating and returning
your proxy form in the enclosed envelope.
Cordially,
John F. Welch, Jr.
Chairman of the Board
5
NOTICE OF 1997 ANNUAL MEETING
OF SHARE OWNERS
10:00 a.m., EDT, April 23,1997
Charlotte Convention Center
501 South College Street
Charlotte, North Carolina 28202
March 12, 1997
To the Share Owners:
General Electric Company's 1997 Annual Meeting of Share Owners will be held in
the Ballroom of the Charlotte Convention Center, 501 South College Street,
Charlotte, North Carolina, on Wednesday, April 23, 1997, at 10:00 a.m., EDT.
Following a report on GE's business operations, the share owners will act on the
matters listed below:
(a) Election of Directors for the ensuing year;
(b) Approval of the appointment of Independent
Auditors for 1997;
(c) Management proposal to approve 2-for-1 Stock Split and Increase in
Authorized Shares;
(d) Management proposal to approve Executive Officer Performance Goals;
(e) Management proposal to amend and extend the GE 1990 Long-Term
Incentive Plan;
(f) Share Owner proposals described in the accompanying Proxy
Statement; and
(g) Consideration of any other matters which may
properly come before the meeting.
Share owners of record at the close of business on March 6, 1997, will be
entitled to vote at the meeting and any adjournments.
Benjamin W. Heineman, Jr.
Secretary
6
PROXY STATEMENT
General Electric Company, Fairfield, Connecticut 06431
This Proxy Statement is furnished in connection with the solicitation of proxies
by General Electric Company on behalf of the Board of Directors for the 1997
Annual Meeting of Share Owners. Distribution of this Proxy Statement and a proxy
form to share owners is scheduled to begin on or about March 12, 1997.
You can ensure that your shares are voted at the meeting by completing,
signing, dating and returning the enclosed proxy form in the envelope provided.
Sending in a signed proxy will not affect your right to attend the meeting and
vote. A share owner who gives a proxy may revoke it at any time before it is
exercised by voting in person at the Annual Meeting, by submitting another proxy
bearing a later date, or by notifying the Inspectors of Election in writing of
such revocation.
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ELECTION OF DIRECTORS
At the 1997 Annual Meeting, 14 directors are to be elected to hold office until
the 1998 Annual Meeting and until their successors have been elected and have
qualified. The nominees listed on pages 7 to 11 with brief biographies are all
now GE directors. Mr. Sam Nunn was elected to the Board in January 1997. Under
the Board's retirement policy, Mr. Robert E. Mercer, who has served as a
director since 1984, will not be standing for re-election. The Board knows of no
reason why any nominee may be unable to serve as a director. If any nominee is
unable to serve, the shares represented by all valid proxies will be voted for
the election of such other person as the Board may recommend.
7
[PICTURE OF D. WAYNE CALLOWAY APPEARS HERE]
D. WAYNE CALLOWAY, 61, DIRECTOR AND RETIRED CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER, PEPSICO, INC., BEVERAGES, SNACK FOODS AND RESTAURANTS,
PURCHASE, N.Y. DIRECTOR SINCE 1991.
A graduate of Wake Forest University, Mr. Calloway joined PepsiCo in 1967,
became president and chief operating officer of Frito-Lay, Inc. in 1976 and
chairman of the board and chief executive officer of Frito-Lay in 1978. Mr.
Calloway became executive vice president, chief financial officer and
director of PepsiCo in 1983, president and chief operating officer in 1985
and chairman and chief executive officer in 1986. In 1996, he retired as
chief executive officer. He is also a director of Citicorp and Exxon, and a
trustee of Wake Forest University.
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[PICTURE OF SILAS S. CATHCART APPEARS HERE]
SILAS S. CATHCART, 70, RETIRED CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE
OFFICER, ILLINOIS TOOL WORKS, INC., DIVERSIFIED PRODUCTS, CHICAGO, ILL. DIRECTOR
1972-1987 AND SINCE 1990.
Following his graduation from Princeton in 1948, Mr. Cathcart joined
Illinois Tool Works, Inc., a manufacturer of tools, fasteners, packaging
and other products. He was named a vice president in 1954, executive vice
president in 1962, president and director in 1964, and served as chairman
from 1972 to 1986. From 1987 to 1989, he served as chairman of the board of
Kidder, Peabody Group Inc. Mr. Cathcart is a director of Allegiance
Corporation, Montgomery Ward & Co., Inc. and Quaker Oats Company. He also
serves on the board of the Chicago Botanic Garden and is a trustee of the
Buffalo Bill Historical Society.
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[PICTURE OF DENNIS D. DAMMERMAN APPEARS HERE]
DENNIS D. DAMMERMAN, 51, SENIOR VICE PRESIDENT, FINANCE, AND CHIEF
FINANCIAL OFFICER, GENERAL ELECTRIC COMPANY. DIRECTOR SINCE 1994.
Mr. Dammerman joined GE after graduating from the University of Dubuque in 1967.
He had financial assignments in several GE businesses before being named vice
president and comptroller of General Electric Credit Corporation (now GE Capital
Corporation) in 1979. In 1981, he became vice president and general manager of
GE Capital's Commercial Financial Services Department and, later that year, of
GE Capital's Real Estate Financial Services Division. In 1984, he was elected
senior vice president for finance and became an executive officer of GE.
8
[PICTURE OF PAOLO FRESCO APPEARS HERE]
PAOLO FRESCO, 63, VICE CHAIRMAN OF THE BOARD AND EXECUTIVE OFFICER, GENERAL
ELECTRIC COMPANY. DIRECTOR SINCE 1990.
Mr. Fresco received a law degree from the University of Genoa. After practicing
law in Rome, he joined GE's Italian subsidiary, Compagnia Generale di
Elettricita (COGENEL), in 1962 as corporate counsel, becoming president and
general manager of that company in 1972. In 1976, he joined GE's International
Group and was elected a vice president in 1977. Mr. Fresco became vice president
and general manager - Europe and Africa Operations in 1979, and in 1985 was
named vice president and general manager - International Operations. In 1987, he
was elected senior vice president - GE International. He became a member of the
Board in 1990, and was elected vice chairman of the Board and executive officer
in 1992. He is a director of Fiat SPA.
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[PICTURE OF CLAUDIO X. GONZALEZ APPEARS HERE]
CLAUDIO X. GONZALEZ, 62, CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER,
KIMBERLY-CLARK DE MEXICO, S.A. DE C.V., MEXICO CITY, AND DIRECTOR,
KIMBERLY-CLARK CORPORATION, CONSUMER AND PAPER PRODUCTS. DIRECTOR SINCE 1993.
Mr. Gonzalez is a graduate of Stanford University. He was employed by
Kimberly-Clark in 1956 and by Kimberly-Clark de Mexico, S.A. in 1957. He was
elected vice president of operations of Kimberly-Clark de Mexico, S.A. in 1962
and executive vice president and managing director in 1966. He assumed his
present position in 1973. Mr. Gonzalez is a director of Kellogg Company, The
Mexico Fund, Inc., Planet Hollywood, Inc., Banco Nacional de Mexico, Grupo
Carso, Grupo Industrial ALFA, Grupo Modelo and Telefonos de Mexico.
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[PICTURE OF GERTRUDE G. MICHELSON APPEARS HERE]
GERTRUDE G. MICHELSON, 71, FORMER SENIOR VICE PRESIDENT - EXTERNAL AFFAIRS AND
FORMER DIRECTOR, R. H. MACY & CO., INC., RETAILERS, NEW YORK, N.Y. DIRECTOR
SINCE 1976.
Mrs. Michelson received a BA degree from Pennsylvania State University in 1945
and an LLB degree from Columbia University in 1947, at which time she joined
Macy's - New York. Mrs. Michelson was elected a vice president in 1963, senior
vice president in 1979, and was named senior vice president - external affairs
in 1980. She served as senior advisor to R. H. Macy & Co., Inc. from 1992 to
1994. She is also a director of The Chubb Corporation, The Goodyear Tire &
Rubber Company and Stanley Works. Mrs. Michelson is chairman emeritus of the
Board of Trustees of Columbia University and a governor of the American Stock
Exchange.
9
[PICTURE OF SAM NUNN APPEARS HERE]
SAM NUNN, 58, PARTNER, KING & SPALDING, LAW FIRM, ATLANTA, GA. DIRECTOR SINCE
1997.
After attending Georgia Institute of Technology and serving in the U.S. Coast
Guard, Mr. Nunn received an AB degree from Emory University in 1960 and an LLB
degree from Emory Law School in 1962. He then practiced law and served in the
Georgia House of Representatives before being elected to the United States
Senate in 1972, where he served as the chairman and ranking member on both the
Senate Armed Services Committee and the Senate Permanent Committee on
Investigations before retiring in 1997. Mr. Nunn is a director of The Coca-Cola
Company, National Service Industries, Inc., Scientific-Atlanta, Inc., and Total
Systems Services, Inc., and is involved in public policy work at the Center for
Strategic and International Studies (CSIS) and the Sam Nunn School of
International Affairs at the Georgia Institute of Technology.
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[PICTURE OF JOHN D. OPIE APPEARS HERE]
JOHN D. OPIE, 59, VICE CHAIRMAN OF THE BOARD AND EXECUTIVE OFFICER, GENERAL
ELECTRIC COMPANY. DIRECTOR SINCE 1995.
Mr. Opie joined GE after graduating from Michigan College of Mining and
Technology with a BS degree in 1961. He has held key leadership positions in
several GE materials and electrical products businesses. He became vice
president of the Lexan Products Division in 1980, vice president of the
Specialty Plastics Division in 1982, vice president of the Construction
Equipment Business Operations in 1983, and senior vice president and head of GE
Lighting in 1986. He was elected vice chairman of the Board and executive
officer in 1995.
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[PICTURE OF ROGER S. PENSKE APPEARS HERE]
ROGER S. PENSKE, 60, CHAIRMAN OF THE BOARD, PENSKE CORPORATION, PENSKE
MOTORSPORTS, INC., DETROIT DIESEL CORPORATION, AND PENSKE TRUCK LEASING
CORPORATION, TRANSPORTATION AND AUTOMOTIVE SERVICES, DETROIT, MICH. DIRECTOR
SINCE 1994.
A 1959 graduate of Lehigh (Pa.) University, Mr. Penske founded Penske
Corporation in 1969. He became chairman of the board of Penske Truck Leasing
Corporation in 1982; chairman and chief executive officer of Detroit Diesel
Corporation in 1988; and chairman of the board of Penske Motorsports, Inc., in
1996. Mr. Penske is also a director of Gulfstream Aerospace Corporation and
Philip Morris Companies Inc. He serves as a trustee of the Henry Ford Museum and
Greenfield Village, a director of Detroit Renaissance, and is a member of the
Business Council.
10
[PICTURE OF BARBARA SCOTT PREISKEL APPEARS HERE]
BARBARA SCOTT PREISKEL, 72, FORMER SENIOR VICE PRESIDENT, MOTION PICTURE
ASSOCIATIONS OF AMERICA, NEW YORK, N.Y. DIRECTOR SINCE 1982.
Mrs. Preiskel graduated from Wellesley College and Yale Law School. She joined
the Motion Picture Associations of America in 1959 as deputy attorney and served
as senior vice president and general counsel from 1977 to 1983. Mrs. Preiskel is
a trustee of Wellesley College and Tougaloo College. She is a director of
American Stores Company, Massachusetts Mutual Life Insurance Company, Textron
Inc. and The Washington Post Company.
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[PICTURE OF FRANK H. T. RHODES APPEARS HERE]
FRANK H. T. RHODES, 70, PRESIDENT EMERITUS, CORNELL UNIVERSITY, ITHACA, N.Y.
DIRECTOR SINCE 1984.
An English-born naturalized U.S. citizen, Dr. Rhodes holds bachelor of science,
doctor of philosophy and doctor of science degrees from the University of
Birmingham (U.K.). He served as president of Cornell University from 1977 to
1995. Dr. Rhodes is a director of Tompkins County Trust Company. He is a trustee
of the Mellon Foundation and the Dyson Charitable Fund. He was appointed by
President Reagan as a member of the National Science Board, of which he is a
former chairman, and by President Bush as a member of the President's Education
Policy Advisory Committee.
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[PICTURE OF ANDREW C. SIGLER APPEARS HERE]
ANDREW C. SIGLER, 65, RETIRED CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER,
CHAMPION INTERNATIONAL CORPORATION, PAPER AND FOREST PRODUCTS, STAMFORD, CONN.
DIRECTOR SINCE 1984.
A graduate of Dartmouth College with an MBA degree from its Amos Tuck School of
Business Administration, Mr. Sigler joined Champion Papers Inc., a predecessor
of Champion International, in 1956. He became executive vice president of
Champion International in 1972, a director in 1973, president and chief
executive officer in 1974, and served as chairman from 1979 until his retirement
in 1996. Mr. Sigler is also a director of Allied Signal, Inc., Bristol-Myers
Squibb Company and The Chase Manhattan Corporation, and is a member of the Board
of Trustees of Dartmouth College. He is a member of the Business Council and is
active in various civic organizations.
11
[PICTURE OF DOUGLAS A. WARNER III APPEARS HERE]
DOUGLAS A. WARNER III, 50, CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE OFFICER AND
PRESIDENT, J.P. MORGAN & CO. INCORPORATED AND MORGAN GUARANTY TRUST COMPANY, NEW
YORK, N.Y. DIRECTOR SINCE 1992.
Following graduation from Yale University in 1968, Mr. Warner joined Morgan
Guaranty Trust Company, a wholly owned subsidiary of J.P. Morgan & Co.
Incorporated. He was named an executive vice president of the bank in 1987,
executive vice president of the parent in 1989, and managing director of the
bank and its parent in 1989. He was elected president and director of the bank
and its parent in 1990 and became chairman and chief executive officer in 1995.
Mr. Warner is also a director of Anheuser-Busch Companies, Inc., vice chairman
of the Board of Managers and the Board of Overseers of the Memorial
Sloan-Kettering Cancer Center, vice chairman of the Business Council, and a
trustee of Cold Spring Harbor Laboratory and of the Pierpont Morgan Library.
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[PICTURE OF JOHN F. WELCH, JR. APPEARS HERE]
JOHN F. WELCH, JR., 61, CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER, GENERAL ELECTRIC COMPANY.
DIRECTOR SINCE 1980.
A 1957 graduate of the University of Massachusetts with MS and PhD degrees from
the University of Illinois, Mr. Welch joined GE in 1960. Following managerial
assignments in the plastics and chemical and metallurgical businesses, he was
elected a vice president in 1972. In 1973, he was named vice president and group
executive of the Components and Materials Group. He became a senior vice
president and sector executive of the Consumer Products and Services Sector in
1977 and was elected a vice chairman and named an executive officer in 1979. Mr.
Welch was elected chairman and named chief executive officer in 1981.
12
INFORMATION RELATING TO DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
The following table includes all GE stock-based holdings, as of February 7,
1997, of the Company's directors and five most highly compensated executive
officers. This table indicates the alignment of the named individuals' financial
interests with the interests of the Company's share owners because the value of
their total GE holdings will increase or decrease in line with the price of GE's
stock.
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COMMON STOCK AND TOTAL STOCK-BASED HOLDINGS
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Name Stock<F1> Total<F2> Name Stock<F1> Total<F2>
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D. Wayne Calloway 12,500 20,000 Sam Nunn 0 3,000
Silas S. Cathcart 125,398<F3> 132,898 John D. Opie 109,538 678,914
Dennis D. Dammerman 53,424 690,160 Roger S. Penske 6,250 13,901
Paolo Fresco 95,254 1,041,976 Barbara Scott Preiskel 24,971<F4> 34,975
Claudio X. Gonzalez 9,900 21,705 Frank H. T. Rhodes 19,900 36,242
Benjamin W. Heineman, Jr. 77,682 526,229 Andrew C. Sigler 23,500 31,000
Robert E. Mercer 21,500 29,000 Douglas A. Warner III 12,100<F5> 19,600
Gertrude G. Michelson 21,100 55,993 John F. Welch, Jr. 423,739<F6> 3,228,026
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Common stock holdings of all directors and executive officers as a group were 1,214,800<F7>
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<FN>
NOTES:
<F1> This column lists voting securities, including restricted stock held by
executive officers over which the officers have voting power but no
investment power. Otherwise, each director or officer has sole voting and
investment power over the shares reported, except as noted. This column
also includes 10,500 shares for Mr. Calloway, 13,500 shares for Mr.
Cathcart, 7,500 shares for Messrs. Gonzalez and Warner, 2,250 shares for
Mr. Penske and 19,500 shares for each other non-employee director except
for Mr. Nunn, which may be acquired by such director pursuant to stock
options that are or will become exercisable within 60 days. No director or
executive officer owns more than one-tenth of one percent of the total
outstanding shares, nor do all directors and executive officers as a group
own more than one percent of the total outstanding shares.
<F2> This column shows the individual's total GE stock-based holdings, including
the voting securities shown in the "Stock" column (as described in note 1),
plus non-voting interests, including, as appropriate, the individual's
holdings of stock appreciation rights, restricted stock units, deferred
compensation accounted for as units of GE stock, and stock options that
will not become exercisable within 60 days.
<F3> Includes 5,440 shares over which Mr. Cathcart has shared voting and
investment power.
<F4> Includes 2,000 shares over which Mrs. Preiskel has shared voting and
investment power but as to which she disclaims any other beneficial
interest.
<F5> Includes 600 shares over which Mr. Warner has shared voting and investment
power but as to which he disclaims any other beneficial interest.
<F6> Includes 49,000 shares over which Mr. Welch has shared voting and
investment power but as to which he disclaims any other beneficial
interest.
<F7> Includes 481,114 shares over which there are shared voting and/or
investment powers.
13
* BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held nine meetings during 1996. The average attendance by
directors at Board meetings, and Committee meetings they were scheduled to
attend, was over 97%.
Among the committees of the Board of Directors are a Nominating Committee, a
Management Development and Compensation Committee, and an Audit Committee.
Members of the Nominating Committee are Directors Sigler (Chairman),
Calloway, Cathcart, Michelson and Warner. This committee's responsibilities
include the selection of potential candidates for director and the
recommendation of candidates to the Board. It also makes recommendations to the
Board concerning the structure and membership of the other Board Committees. The
Nominating Committee held three meetings during 1996. This committee will
consider share owner recommendations for director sent to the Nominating
Committee, c/o Benjamin W. Heineman, Jr., Secretary, General Electric Company,
Fairfield, CT 06431.
Members of the Management Development and Compensation Committee are
Directors Cathcart (Chairman), Gonzalez, Michelson, Rhodes and Sigler. This
committee has two primary responsibilities: (1) to monitor the Company's
management resources, structure, succession planning, development and selection
process and the performance of key executives; and (2) to review and approve
executive compensation and changes. It also serves as the committee
administering the GE 1990 Long-Term Incentive Plan and the Incentive
Compensation Plan. This committee met nine times during 1996.
Members of the Audit Committee are Directors Michelson (Chairman), Cathcart,
Penske, Preiskel and Rhodes. This committee is primarily concerned with the
effectiveness of the audits of GE by its internal audit staff and by the
independent auditors. Its duties include: (1) recommending the selection of
independent auditors; (2) reviewing the scope of the audit to be conducted by
them, as well as the results of their audit; (3) reviewing the organization and
scope of GE's internal system of audit and financial controls; (4) appraising
GE's financial reporting activities (including its Proxy Statement and Annual
Report) and the accounting standards and principles followed; and (5) examining
other reviews relating to compliance by employees with important GE policies.
There were four meetings of the Audit Committee during 1996.
Non-employee directors are paid an annual retainer of $50,000 plus a fee of
$1,400 for each Board meeting and for each Board Committee meeting attended. A
director may make an irrevocable election each year to defer all or a portion of
annual retainer and fees. At the director's option, his or her account is
credited with units accounted for as GE common stock or the dollar amount of the
deferral. Accounts are also credited with common stock dividend equivalents or
interest equivalents based on the yield for long-term U.S. government bonds.
Participants will receive payments from their account in cash, in either a lump
14
sum or annual installments, after termination of Board service. Non-employee
directors are also paid a travel allowance for attendance at Board meetings.
Any non-employee director who has served as a director for at least five
years, is 65 years of age or older, and retires directly from the Board is
eligible to elect to receive: (1) an annual retirement benefit for the lives of
the director and eligible surviving spouse in the amount of the retainer fee in
effect at retirement; or (2) in lieu thereof, a life insurance benefit in the
amount of $450,000. The Board has decided that no director shall stand for
re-election after his or her 73rd birthday. GE also provides each non-employee
director with group life and accidental death insurance in the aggregate amount
of $150,000. The non-employee directors are not eligible to participate in GE's
Incentive Compensation Plan, employee stock option plans or in any pension plans
of GE or its subsidiaries.
GE has had directors' and officers' liability insurance in effect since 1968.
GE also has fiduciary liability insurance covering fiduciaries of GE's employee
benefit plans. Zurich Insurance Company and American International Specialty
Lines Company are the principal underwriters. The directors' and officers'
liability insurance covers directors, officers and certain managers of GE and
its subsidiaries. The fiduciary liability insurance covers, among others,
directors, officers and employees who may be fiduciaries of any of GE's employee
benefit plans. The current policies expire on June 11, 2001. The total annual
premium is approximately $4.3 million.
As part of the Company's overall support for charitable institutions, and in
order to preserve its ability to attract directors with outstanding experience
and ability, the Company maintains a plan which permits each director to
recommend up to five charitable organizations that would share in a $1 million
contribution to be made by the Company upon the director's retirement or death.
The Company's payment of the contributions will ultimately be recovered from
life insurance policies that the Company maintains on the directors for this
purpose. The directors will not receive any financial benefit from this program
since the insurance proceeds and charitable deductions accrue solely to the
Company. The overall program will not result in a material cost to the Company.
To further align the non-employee directors' interests with the long-term
interests of the share owners, the 1996 Stock Option Plan for Non-Employee
Directors automatically provides yearly grants of options from 1997 through 2003
(with each grant becoming exercisable in four equal annual installments) to each
non-employee director who is serving on the Board at the time of such grant.
Each annual grant permits the holder to purchase from GE up to 3,000 shares of
GE's common stock at the fair market value of such shares on the date the option
was granted. The first grant was made on January 31, 1997 at an exercise price
of $103.50 per share, and annual grants will be made on the last day of trading
of GE stock in each January thereafter through 2003. The options expire ten
years after the date they were granted or at such earlier date as may be
provided by the Plan provisions upon retirement, disability, death or other
15
termination of service. The Plan is administered by a committee of employee
directors, none of whom is eligible to receive awards under the Plan. In
September 1996, after the share owners had approved the Plan at the 1996 Annual
Meeting, a share owner filed a civil suit (the Cohen action) in New York State
Supreme Court, New York County, purportedly as a class action on behalf of all
share owners and as a derivative action brought on behalf of the Company,
seeking compensatory damages and invalidation of the Plan and of all options
granted under the Plan. The suit names the directors, other than Mr. Nunn, as
defendants and claims that the defendants breached their fiduciary duties
because the 1996 Proxy Statement, which recommended share owner approval of the
Plan, did not quantify the value of the options and stated that the options have
no value whatsoever to the directors unless the GE stock price increases above
the market price on the date of the grant. The Company and the other defendants
in the suit believe the claims are without merit and are defending the suit.
The directors (other than Messrs. Dammerman, Nunn, Opie and Penske) are also
defendants in two civil suits purportedly brought on behalf of the Company as
share owner derivative actions (the Kidder actions) in New York State Supreme
Court, New York County, in 1994. The suits claim that the Company's directors
breached their fiduciary duties by failing to adequately supervise and control
its indirect subsidiary, Kidder, Peabody & Co., Incorporated, where an employee
created $350 million of false trading profits. The suits seek compensatory
damages and other relief. The court has granted the Company's motion to dismiss
the suits, and an appeal has been filed.
The directors (other than Messrs. Calloway, Gonzalez, Nunn, Opie, Penske and
Warner) and certain officers are also defendants in a civil suit purportedly
brought on behalf of the Company as a share owner derivative action (the McNeil
action) in New York State Supreme Court, New York County, in 1991. The suit
alleges the Company was negligent and engaged in fraud in connection with the
design and construction of containment systems for nuclear power plants and
contends that, as a result, GE has incurred significant financial liabilities
and is potentially exposed to additional liabilities from claims brought by the
Company's customers. The suit alleges breach of fiduciary duty by the directors
and seeks unspecified compensatory damages and other relief. The Company and the
defendants believe these claims are without merit and are defending the suit.
* CERTAIN TRANSACTIONS
Mr. Penske has an indirect financial interest in Penske Truck Leasing Co., L.P.,
a limited partnership formed in 1988 between a subsidiary of Penske Corporation
and a subsidiary of GE Capital Corporation (GE Capital) in order to operate a
truck leasing and rental business. In 1996, the partnership repurchased, for
$275 million which was loaned to the partnership by GE Capital and is currently
outstanding, a portion of the 50% partnership interest held by the Penske
Corporation subsidiary, reducing that interest to 21% and increasing GE
16
Capital's interest in the partnership from 50% to 79%. In addition, the Penske
Corporation subsidiary will receive annual payments, declining from $11.3
million to $9.3 million over a 10-year period, with the majority of such
payments contingent upon the partnership achieving certain revenue thresholds.
Consistent with its general practices for providing working capital funding for
its affiliates and certain joint ventures, GE Capital has guaranteed
approximately $494 million of the partnership's debt, and $79.4 million of a
letter of credit reimbursement obligation of the partnership, and has provided
the partnership a $2 billion revolving line of credit, under which approximately
$1.3 billion was outstanding at the end of 1996, all on terms substantially
equivalent to those extended to such entities.
GE has, for a number of years, used the services of the law firm of King &
Spalding, in which Mr. Nunn became a partner in 1997, for a variety of matters.
Also, GE and its subsidiaries have obtained investment banking and other
financial services from J.P. Morgan &Co., Incorporated, of which Mr. Warner is
Chairman of the Board and Chief Executive Officer, and its subsidiaries. GE and
its subsidiaries also have purchase, lease, finance, insurance and other
transactions and relationships in the normal course of business with companies
and organizations with which GE directors are associated, but which are not
sufficiently significant to be reportable. Management believes that all of these
transactions and relationships during 1996 were on terms that were reasonable
and competitive. Additional transactions and relationships of this nature may be
expected to take place in the ordinary course of business in the future. In the
normal course of his employment by the Company, Mr. Opie's son earned
compensation in excess of $60,000 during 1996. In connection with the relocation
of William J. Conaty at the time of his promotion to the position of Senior Vice
President - Human Resources in 1993, the Company provided a $500,000 loan to
assist him in purchasing a home. The loan was secured by a second mortgage on
the home and has been repaid in full, with interest at the Company's commercial
paper borrowing rate.
17
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
* COMPENSATION POLICIES FOR EXECUTIVE OFFICERS
The Management Development and Compensation Committee of the Board of Directors
(the Committee), consisting entirely of non-employee Directors, approves all of
the policies under which compensation is paid or awarded to the Company's
executive officers. The Company's basic compensation program for executive
officers currently consists of the following elements: annual payments of salary
and bonuses; annual grants of stock options; and periodic grants of restricted
stock units (RSUs) and other contingent long-term financial performance awards.
As described more fully below, each element of the Company's executive
compensation program has a somewhat different purpose. All stock option, RSU and
contingent long-term financial performance awards were made under the
share-owner-approved GE 1990 Long-Term Incentive Plan (the Plan), which limits
total annual awards to less than 1% of issued shares.
As in prior years, all of the Committee's judgments during 1996 regarding the
appropriate form and level of executive compensation payments and awards were
ultimately based upon the Committee's assessment of the Company's executive
officers, the increasingly competitive demand for superior executive talent, the
Company's overall performance, and GE's future objectives and challenges.
Although the Committee did not generally rely solely upon a guideline or formula
based on any particular performance measure or single event in 1996, key factors
affecting the Committee's judgments included, among other things: strong
increases in the earnings of the Company and a record operating margin rate
reflecting solid productivity gains in a period of intense competition;
development and implementation of aggressive quality initiatives to achieve
preeminent leadership in all the Company's product and service offerings;
increased revenues generated outside the United States and further improvements
in the Company's global competitive position through a number of strategic
transactions and joint ventures with partners in developing markets; accelerated
growth of the Company's global service offerings; leadership in insuring
compliance with applicable law and Company ethics policies; and continuation of
productivity, asset utilization and employee involvement initiatives that, among
other things, improved cash flow and increased return on share owner equity. The
Committee also considered the compensation practices and performances of other
major corporations which are most likely to compete with the Company for the
services of executive officers. Based upon all factors it deemed relevant,
including those noted above and the Company's superior overall long-term
performance, the Committee considered it appropriate, and in the best interest
of the share owners, to set the overall level of the Company's salary, bonus and
other compensation awards well above the average of companies in the comparison
18
group in order to enable the Company to continue to attract and retain the
highest level of executive talent possible.
Salary payments in 1996 were made to compensate ongoing performance
throughout the year. Bonuses for 1996 were based upon the Committee's
determination that the Company's 1996 financial results had exceeded performance
goals previously established by the Committee and upon its judgment regarding
the significance of the executive officers' contributions during 1996. Stock
options, stock appreciation rights (SARs) and RSUs provide strong incentives for
continued superior performance because, under the terms of these awards,
unexercised stock options and SARs, and RSUs for which restrictions have not
lapsed, are forfeited if the executive officer is terminated by the Company for
performance or voluntarily leaves the Company before retirement. Generally, the
restrictions on 25% of RSUs lapse three years after grant, an additional 25%
lapse in seven years, and the remaining 50% lapse at retirement. Stock options
and SARs generally become exercisable in two installments, the first half after
three years and the other half after five years from the date of grant. The
number of stock options granted to the Company's five most highly compensated
executive officers, and the hypothetical potential value of the awards, are
shown in the table on page 27. Each stock option permits the holder, generally
for a period of ten years, to purchase one share of GE stock from the Company at
the market price of GE stock on the date of grant. In 1996, the Committee
changed its practice and granted stock options instead of SARs to executive
officers and also replaced all outstanding SARs that had not become exercisable
in 1996 with stock options. The replacement stock options have grant prices,
forfeiture provisions, and vesting and expiration dates identical to the SARs
which they replaced in order to provide the same incentive values as the
original SARs without increasing the economic benefit to any executive officer.
After determining that the Company's performance from July 1994 through
December 1996 had met or exceeded the financial performance goals for return on
equity, cash flow, and earnings per share which it had previously established,
the Committee authorized payments totalling $154.6 million to senior operating
managers and key executives under contingent long-term financial performance
incentive awards granted in 1994, and determined that a minimum of 25% of the
payments would be made in GE stock, or in GE stock units payable in cash after
termination of employment. The Company's market value to its share owners
increased by more than $82 billion during the performance period of this
Long-Term Incentive Program. Specific payments to the Company's named executive
officers are shown in the "LTIP Payouts" column of the Summary Compensation
Table on page 23. In 1997, the Committee also approved similar contingent
long-term financial performance incentive awards for senior operating managers
and key executives to provide a continued emphasis throughout 1997-1999 on
specified performance goals which the Committee considers to be important
contributors to long-term share owner value. These awards are contingent upon
19
share owner approval of the material terms of the performance goals in
accordance with Section 162(m) of the Internal Revenue Code, as proposed
beginning on page 32, and will be subject to forfeiture if the executive's
employment terminates before December 31, 1999 for any reason other than
disability, death or retirement. The new awards are described more fully on page
28.
The Committee's decisions concerning the specific 1996 compensation elements
for individual executive officers, including the Chief Executive Officer, were
made within this broad framework and in light of each executive officer's level
of responsibility, performance, current salary, prior-year bonus and other
compensation awards. As noted above, in all cases the Committee's specific
decisions involving 1996 executive officer compensation were ultimately based
upon the Committee's judgment about the individual executive officer's
performance and potential future contributions, and about whether each
particular payment or award would provide an appropriate reward and incentive
for the executive to sustain and enhance the Company's long-term superior
performance.
* BASES FOR CHIEF EXECUTIVE OFFICER COMPENSATION; EMPLOYMENT AND
POST-RETIREMENT AGREEMENT
For 1996, Mr. Welch received total cash payments of $6,300,000 in salary and
bonus, as shown in the Summary Compensation Table on page 22. The Committee
continued to consider this level of payment appropriate in view of Mr. Welch's
leadership of one of the world's top companies in terms of earnings, balance
sheet strength, creation of share owner value and management processes.
In 1996, the Committee also granted Mr. Welch 320,000 stock options, half of
which will become exercisable in 1999, and half in 2000. The primary basis for
the Committee's determination to grant such stock options to Mr. Welch in 1996
was to provide a strong incentive for him to increase the value of the Company
during the remainder of his employment.
The bases for the Committee's determinations regarding Mr. Welch's
compensation in 1996 included his aggressive leadership which drove the
Company's outstanding financial results and improved its overall global
competitive position; his vision and determination to achieve preeminent quality
in all of the Company's products and services; and his drive to reinforce a
culture of integrity, stretch targets, boundaryless behavior, and employee
involvement throughout the Company. As in prior years, the key judgment the
Committee made in determining Mr. Welch's 1996 compensation was its assessment
of his ability and dedication to continue increasing the long-term value of the
Company for the share owners, which is highlighted in the Sixteen-Year
Performance Graph on page 25, by continuing to provide the leadership and vision
that he has provided throughout his tenure as Chairman and Chief Executive
Officer.
In view of Mr. Welch's unique contribution to the creation of more than $150
billion of share owner value during his leadership of the Company, the Committee
20
also recommended, and the Board of Directors concluded, that it would be in the
best interests of the Company and its share owners to ensure that Mr. Welch's
skill and experience would be available to the Company in the future. In 1996,
the Board of Directors accordingly entered into an employment contract with Mr.
Welch which requires him to serve as the Chairman and Chief Executive Officer of
the Company until December 31, 2000, at the pleasure of the Board of Directors
on terms no less favorable than his present conditions of employment. In
addition, after that date, the contract requires Mr. Welch, when requested by
the Company's then current Chief Executive Officer, to be available for up to 30
days a year for the remainder of his lifetime to provide consulting services or
to participate in external events or activities on behalf of the Company. In
return for these commitments by Mr. Welch, the Board agreed to pay him, during
the term of the consulting agreement, a daily consulting fee for the days he
renders services based on his daily salary rate in the year prior to his
retirement, the first five days of which will be paid in advance through an
annual retainer, and to provide him continued lifetime access to Company
facilities and services comparable to those which are currently made available
to him by the Company.
* BROAD-BASED EMPLOYEE STOCK OPTION PLAN
In addition to granting 1.3 million stock options (about 14% of the total number
of stock options awarded in 1996) to the Company's 21 executive officers under
the program described above, the Committee also granted 8.2 million stock
options (about 86% of the total) to more than 7,000 other GE employees under the
Company's broad-based stock option program. This broad-based program was
initiated in 1989 and is a vital element of the Company's drive to empower and
motivate outstanding long-term contributions by the high-performing employees
who will lead GE into the 21st century. It is designed to create in the Company
the entrepreneurial environment and spirit of a small company and to provide
broad incentives for the day-to-day achievements of these employees in order to
sustain and enhance GE's long-term performance. The Committee believes that the
superior performance of these individuals has contributed significantly to the
productivity gains that led to the solid financial performance of the Company's
operations in 1996. Currently, there are approximately 22,000 individuals below
the executive officer level who have been awarded one or more stock option
grants under this broad-based program.
21
* COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Management Development and Compensation Committee is composed of the
following non-employee directors: Silas S. Cathcart (Chairman), Claudio X.
Gonzalez, Gertrude G. Michelson, Frank H. T. Rhodes and Andrew C. Sigler.
Mr. Cathcart was reappointed to the Committee in 1992 and became Chairman
in 1993. He served as a member of the Committee from 1977 to 1987, and as a
director of the Company since 1972, except for the period during 1987 to
1989 when he served as Chairman and CEO of Kidder, Peabody Group Inc., a
former operating subsidiary of the Company.
*****
The foregoing report on executive compensation is provided by the following
non-employee directors, who constituted the Management Development and
Compensation Committee during 1996:
Silas S. Cathcart (Chairman) Frank H. T. Rhodes
Claudio X. Gonzalez Andrew C. Sigler
Gertrude G. Michelson
22
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
- -------------------------------------------------------------------------------------------------
NAME AND OTHER ANNUAL TOTAL ANNUAL
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION<F1> COMPENSATION
- -------------------------------------------------------------------------------------------------
JOHN F. WELCH, JR. 1996 $2,300,000 $4,000,000 -- $6,300,000
Chairman of the Board and 1995 2,000,000 3,250,000 $ 71,228 5,321,228
Chief Executive Officer 1994 1,850,000 2,500,000 -- 4,350,000
PAOLO FRESCO 1996 $1,183,333 $1,875,000 -- $3,058,333
Vice Chairman of the Board 1995 1,025,000 1,550,000 $60,059 2,635,059
and Executive Officer 1994 875,000 1,250,000 -- 2,125,000
JOHN D. OPIE 1996 $ 875,000 $1,150,000 -- $2,025,000
Vice Chairman of the Board 1995 716,700 800,000 -- 1,516,700
and Executive Officer 1994 621,250 550,000 -- 1,171,250
DENNIS D. DAMMERMAN 1996 $ 950,000 $1,050,000 -- $2,000,000
Senior Vice President, 1995 850,000 850,000 -- 1,700,000
Finance 1994 775,000 700,000 -- 1,475,000
BENJAMIN W. HEINEMAN, JR. 1996 $ 850,000 $ 915,000 -- $1,765,000
Senior Vice President, 1995 800,000 775,000 $ 64,081 1,639,081
General Counsel and Secretary 1994 762,500 665,000 -- 1,427,500
- -------------------------------------------------------------------------------------------------
<FN>
Notes:
<F1> This column includes the aggregate incremental cost to the Company of
providing various perquisites and personal benefits in excess of reporting
thresholds.
<F2> This column shows the market value of restricted stock unit (RSU) awards
on date of grant. The Committee periodically grants restricted stock or RSUs to
senior officers of the Company. The aggregate holdings and market value of
restricted stock and RSUs held on December 31, 1996, by the individuals listed
in this table, are: Mr. Welch, 567,500 shares or units/$56,111,563; Mr. Fresco,
203,500 shares or units/$20,121,063; Mr. Opie, 153,000 shares or
units/$15,127,875; Mr. Dammerman, 179,500 shares or units/$17,748,063; and Mr.
Heineman, 107,500 shares or units/$10,629,063. The restrictions on these units
lapse on a scheduled basis over the executive officer's career, or upon death,
with the restrictions on 25% of the units generally scheduled to lapse three and
seven years after the date of grant, and the restrictions on the remaining 50%
scheduled to lapse at retirement. Regular quarterly dividends or dividend
equivalents are paid on restricted stock and RSUs held by these individuals.
<F3> These amounts represent the dollar value of payouts in 1997 pursuant to
the long-term financial performance incentive awards granted in 1994 as
described in the Compensation Committee Report on page 18.
<F4> These amounts represent Company payments of 3 1/2% of eligible pay made
in connection with the Company's Savings and Security Program.
23
LONG-TERM COMPENSATION
- --------------------------------------------------------------------------------
AWARDS PAYOUTS
------ -------
NUMBER
RESTRICTED OF STOCK
NAME AND STOCK OPTIONS LTIP
PRINCIPAL POSITION YEAR UNITS<F2> OR SARs PAYOUTS<F3>
- --------------------------------------------------------------------------------
JOHN F. WELCH, JR. 1996 -- 320,000 $15,105,000
Chairman of the Board and 1995 $11,425,000 320,000 --
Chief Executive Officer 1994 -- 320,000 --
PAOLO FRESCO 1996 -- 160,000 $ 7,370,416
Vice Chairman of the Board 1995 $ 5,712,500 160,000 --
and Executive Officer 1994 -- 160,000 --
JOHN D. OPIE 1996 -- 100,000 $ 4,477,271
Vice Chairman of the Board 1995 $ 3,427,500 85,000 --
and Executive Officer 1994 -- 65,000 --
DENNIS D. DAMMERMAN 1996 -- 85,000 $ 4,916,250
Senior Vice President, 1995 $ 3,427,500 85,000 --
Finance 1994 1,687,500 95,000 --
BENJAMIN W. HEINEMAN, JR. 1996 -- 45,000 $ 2,939,958
Senior Vice President, 1995 $ 1,713,750 45,000 --
General Counsel and Secretary 1994 -- 45,000 --
- --------------------------------------------------------------------------------
ALL OTHER COMPENSATION
- ------------------------------------------------------------------------------------------------
PAYMENTS
RELATING TO EARNINGS ON VALUE OF
EMPLOYEE DEFERRED SUPPLEMENTAL
NAME AND SAVINGS COMPEN- LIFE INSURANCE TOTAL ALL OTHER
PRINCIPAL POSITION YEAR PLAN<F4> SATION<F5> PREMIUMS<F6> COMPENSATION
- ------------------------------------------------------------------------------------------------
JOHN F. WELCH, JR. 1996 $137,375 $314,961 $134,749 $587,085
Chairman of the Board and 1995 113,750 195,605 200,689 510,044
Chief Executive Officer 1994 103,225 101,112 189,794 394,131
PAOLO FRESCO 1996 $ 41,417 $136,316 $ 31,600 $209,333
Vice Chairman of the Board 1995 35,875 77,555 47,068 160,498
and Executive Officer 1994 30,626 35,450 46,187 284,416<F7>
JOHN D. OPIE 1996 $ 44,625 $ 29,208 $ 36,430 $110,263
Vice Chairman of the Board 1995 34,750 26,007 52,151 112,908
and Executive Officer 1994 29,322 22,384 49,228 100,934
DENNIS D. DAMMERMAN 1996 $ 48,125 $ 26,269 $ 43,411 $117,805
Senior Vice President, 1995 42,050 18,591 53,144 113,785
Finance 1994 36,901 10,970 43,404 91,275
BENJAMIN W. HEINEMAN, JR. 1996 $ 43,313 $ 29,154 $ 51,683 $124,150
Senior Vice President, 1995 39,650 26,048 65,157 130,855
General Counsel and Secretary 1994 36,594 15,252 54,485 106,331
- ------------------------------------------------------------------------------------------------
<FN>
Notes (continued):
<F5> This compensation represents the difference between market interest
rates determined pursuant to SEC rules and the 10% to 14% interest credited by
the Company on salary deferred by the executive officers under various salary
deferral plans in effect between 1987 and 1996. Under all such plans, the
executive officers must remain employed by the Company for at least four years
following the deferrals, or retire after the full year of deferral, in order to
obtain the stated interest rate.
<F6> This column sets forth the maximum potential estimated dollar value of
the Company's portion of insurance premium payments for supplemental life
insurance. GE will recover all premiums paid by it, generally upon the later of
ten years after purchase of the policy or when the insured executive reaches age
60. The maximum potential value is calculated, in line with current SEC
directions, as if the 1996 premiums were advanced to the executive officers
without interest until the time the Company expects to recover the premium.
Under the terms of the policies, the executive officers would receive
significantly reduced value from the premiums paid by the Company if they were
to leave the Company prior to retirement.
<F7> This figure includes net payments to Mr. Fresco of $172,153 which
represent customary payments made to employees who are temporarily located
outside their home country.
24
FIVE-YEAR PERFORMANCE GRAPH: 1991 - 1996
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG GE, S&P 500 AND
DOW JONES INDUSTRIAL AVERAGE (DJIA)
The annual changes for the five- and sixteen-year periods shown in the graphs on
this and the following page are based on the assumption that $100 had been
invested in GE stock and each index on December 31, 1991 (as required by SEC
rules) and 1980, respectively, and that all quarterly dividends were re-invested
at the average of the closing stock prices at the beginning and end of the
quarter. The total cumulative dollar returns shown on the graphs represent the
value that such investments would have had on December 31, 1996.
[GRAPH APPEARS HERE]
- -------------------------------------------------------------
GE DJIA S&P 500
- -------------------------------------------------------------
1991 $100.00 $100.00 $100.00
1992 115.12 107.42 107.62
1993 145.17 125.67 118.45
1994 145.53 132.04 120.05
1995 211.44 180.85 165.15
1996 296.90 233.16 203.07
- -------------------------------------------------------------
25
SIXTEEN-YEAR PERFORMANCE GRAPH: 1980 - 1996
COMPARISON OF SIXTEEN-YEAR CUMULATIVE TOTAL RETURN AMONG GE, S&P 500 AND
DOW JONES INDUSTRIAL AVERAGE (DJIA)
The graph below shows the cumulative total return to GE share owners since
December 31, 1980, shortly before Mr. Welch became GE's Chairman and Chief
Executive Officer in April 1981, compared with the same indices shown on the
previous graph, thus illustrating the relative performance of the Company during
his tenure in that position.
[GRAPH APPEARS HERE]
- ------------------------------------------------------------------------
GE DJIA S&P 500
- ------------------------------------------------------------------------
1980 $ 100.00 $ 100.00 $100.00
1981 98.65 96.36 95.05
1982 171.26 122.60 115.58
1983 219.19 154.64 141.66
1984 219.68 156.59 150.47
1985 292.72 209.40 198.32
1986 356.72 266.39 235.36
1987 375.33 280.94 247.52
1988 393.72 326.44 288.50
1989 586.48 432.07 380.03
1990 538.09 429.53 368.06
1991 739.06 533.82 480.14
1992 850.77 573.45 516.74
1993 1,072.86 670.87 568.72
1994 1,075.52 704.88 576.41
1995 1,562.65 965.42 792.97
1996 2,194.30 1,244.67 975.03
- ------------------------------------------------------------------------
26
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
As discussed in the Compensation Committee Report beginning on page 17, stock
options were granted in 1996 as an incentive for future superior performance
leading to increased share owner value. Each stock option permits the holder,
generally for a period of ten years, to purchase one share of GE stock from the
Company at the market price of GE stock on the date of grant. The relationship
between the potential gains in share owner value and the stock options granted
to employees in 1996 is illustrated in the examples set forth in the first table
on the opposite page.
That table shows, among other data, hypothetical potential gains from stock
options granted in 1996, and the corresponding hypothetical potential gains in
total share owner value. These hypothetical gains are based entirely on assumed
annual growth rates of 5% and 10% in the value of the Company's stock price over
the ten-year life of the stock options granted in 1996 (which would equal a
total increase in stock price of 63% and 159%, respectively). These assumed
rates of growth were selected by the Securities and Exchange Commission for
illustration purposes only, and are not intended to predict future stock prices,
which will depend upon market conditions and the Company's future performance
and prospects.
The stock options granted to Mr. Welch in 1996, for example, would produce
the pre-tax gain of $44,966,000 shown in the first table only if the Company's
stock price rises to over $228 per share before Mr. Welch exercises the stock
options. Based on the number of shares outstanding at the end of 1996, such an
increase in the Company's stock price would produce a corresponding aggregate
pre-tax gain of over $231 billion for the Company's share owners. In other
words, Mr. Welch's potential gain from stock options granted in 1996 would equal
less than two-hundredths of one percent (i.e., 0.019%) of the potential gain to
all share owners resulting from the assumed future stock price increases.
The second table on the opposite page provides information on Stock
Appreciation Rights (SARs) exercised by the five most highly compensated
executive officers during 1996, as well as information on their SAR and stock
option holdings at the end of 1996. SARs expire ten years after the date of
grant, and permit the executive officer to receive an amount of cash, before
tax, equal to the difference between the grant price of the SAR (which is equal
to the closing price of the Company's common stock on the date of grant) and the
highest closing price of the Company's common stock during a ten-business-day
period, beginning on the third business day following the public release of the
Company's quarterly summary statement of sales and earnings, in which the SAR is
exercised. As shown in the second table, Mr. Welch received an actual pre-tax
gain of $6,215,625 from SARs exercised in 1996. This gain was based solely upon
increases in GE's stock price between the date of grant and the date of exercise
of these SARs.
27
STOCK OPTIONS GRANTED IN 1996
INDIVIDUAL GRANTS
- --------------------------------------------------------------------------------
% OF TOTAL
OPTIONS EXERCISE
NUMBER GRANTED OR BASE EXPIRA-
NAME OF OF OPTIONS TO ALL PRICE PER TION
EXECUTIVE/GROUP GRANTED EMPLOYEES SHARE DATE
- --------------------------------------------------------------------------------
JOHN F. WELCH, JR. 320,000 3.4% $88.375 9/13/06
PAOLO FRESCO 160,000 1.7% $88.375 9/13/06
JOHN D. OPIE 100,000 1.1% $88.375 9/13/06
DENNIS D. DAMMERMAN 85,000 0.9% $88.375 9/13/06
BENJAMIN W. HEINEMAN, JR. 45,000 0.5% $88.375 9/13/06
________________________
ALL SHARE OWNERS NA NA NA NA
ALL OPTIONEES - 9,486,825 100% $84.80 <F1>
% OF TOTAL NA NA NA NA
SHARE OWNERS' VALUE
- --------------------------------------------------------------------------------
POTENTIAL REALIZABLE VALUE OF ASSUMED ANNUAL RATES OF STOCK PRICE
APPRECIATION FOR TEN-YEAR GRANT TERM
- --------------------------------------------------------------------------------
AT 0% AT 5% AT 10%
NUMBER ANNUAL ANNUAL ANNUAL
OF OPTIONS GROWTH GROWTH GROWTH
GRANTED RATE RATE RATE
- --------------------------------------------------------------------------------
JOHN F. WELCH, JR. 0 $ 17,818,000 $ 44,966,000
PAOLO FRESCO 0 $ 8,909,000 $ 22,483,000
JOHN D. OPIE 0 $ 5,568,000 $ 14,052,000
DENNIS D. DAMMERMAN 0 $ 4,733,000 $ 11,944,000
BENJAMIN W. HEINEMAN, JR. 0 $ 2,506,000 $ 6,323,000
________________________
ALL SHARE OWNERS 0 $91,568,000,000<F2> $231,091,000,000<F2>
ALL OPTIONEES - 0 $ 506,786,000 $ 1,279,109,000
% OF TOTAL NA 0.6% 0.6%
SHARE OWNERS' VALUE
- -------------------------------------------------------------------------------
<FN>
<F1> Options expire on various dates during the year 2006. Exercise price
shown is an average of all grants.
<F2> Based on the number of shares outstanding at December 31, 1996.
- ---------------------------------------------------------------------------------------------------------------------
AGGREGATED SARs EXERCISED IN 1996, AND
DECEMBER 31, 1996 STOCK OPTION AND SAR VALUE
EXERCISED IN 1996 UNEXERCISED AT DECEMBER 31, 1996
- ------------------------------------------------------ -----------------------------------------------------------
NUMBER OF SARs/OPTIONS VALUE OF SARs/OPTIONS<F1>
--------------------------- ---------------------------
NAME OF NUMBER $ VALUE UNEXER- UNEXER-
EXECUTIVE OF SARs REALIZED EXERCISABLE CISABLE EXERCISABLE CISABLE
- ---------------------------------------------------------------------------------------------------------------------
JOHN F. WELCH, JR. 100,000 $ 6,215,625 1,080,000 1,160,000 $67,317,500 $39,992,500
PAOLO FRESCO 56,000 $ 3,545,500 240,000 580,000 $13,298,750 $19,996,250
JOHN D. OPIE 33,000 $ 1,940,063 163,000 290,000 $ 9,764,813 $ 9,159,375
DENNIS D. DAMMERMAN 39,000 $ 1,782,250 160,000 310,000 $ 8,660,625 $10,728,125
BENJAMIN W. HEINEMAN, JR. 64,000 $ 3,942,000 200,000 165,000 $12,307,625 $ 5,718,750
- ---------------------------------------------------------------------------------------------------------------------
<FN>
<F1> SAR and option values are based upon the difference between the grant
prices of all SARs and options awarded in 1996 and prior years and the December
31, 1996, closing price for the Company's stock of $98.875 per share.
28
CONTINGENT 1997-1999 LONG-TERM PERFORMANCE INCENTIVE AWARDS
In 1997, the Management Development and Compensation Committee of the Board
approved contingent long-term financial performance incentive awards for senior
operating managers and key executives to provide additional emphasis on the
attainment of specific Company-wide financial performance measurements (earnings
per share, return on total capital, cash flow and operating margin rate) and,
where appropriate, specific business unit financial performance measurements,
all measured on a cumulative basis from 1997 through 1999 and adjusted to remove
the effect of unusual events. The Committee considers these financial
performance measurements to be important to the continued growth in long-term
share owner value. These awards are contingent upon share owner approval of the
performance measurements and maximum allowable payments, as proposed beginning
on page 32, and will be subject to forfeiture if the executive's employment
terminates before December 31, 1999 for any reason other than disability, death
or retirement.
The following table shows the percentage of the named executives' aggregate
salary and annual bonuses for January 1, 1997 through December 31, 1999 that
would be payable in the year 2000 under these awards if the Company precisely
attained the threshold, or target, or maximum goals set by the Committee for all
of the applicable performance measurements.
- --------------------------------------------------------------------------------
POTENTIAL PAYMENTS IN YEAR 2000
AS A PERCENTAGE OF AGGREGATE
SALARY AND ANNUAL BONUSES FOR 1997-1999
---------------------------------------
NAME OF PERFORMANCE THRESHOLD TARGET MAXIMUM
EXECUTIVE PERIOD PAYMENT (%) PAYMENT(%) PAYMENT (%)
- --------------------------------------------------------------------------------
JOHN F. WELCH, JR. 1/97-12/99 33% 67% 100%
PAOLO FRESCO 1/97-12/99 33% 67% 100%
JOHN D. OPIE 1/97-12/99 33% 67% 100%
DENNIS D. DAMMERMAN 1/97-12/99 33% 67% 100%
BENJAMIN W. HEINEMAN, JR. 1/97-12/99 17% 33% 67%
- --------------------------------------------------------------------------------
In approving the awards, the Committee established different potential
payment rates for the participants based upon its judgment of the participants'
abilities to contribute to the financial performance measurements. Each
measurement is weighted equally, and payments will be made for the attainment of
any of the three goals for any of the four Company-wide measurements, and, where
appropriate, the specific business unit goals. Also, payments will be prorated
for performance that falls between goals.
29
RETIREMENT BENEFITS
Employees are generally eligible to retire with unreduced benefits under Company
retirement plans at age 60 or later, and with social security benefits at age 62
or later. The approximate annual retirement benefits provided under Company
retirement plans and social security for GE employees in higher salary
classifications retiring directly from the Company at age 62 or later are shown
in the table below.
- --------------------------------------------------------------------------------
ESTIMATED TOTAL ANNUAL RETIREMENT BENEFITS UNDER THE GE PENSION PLAN, THE
GE SUPPLEMENTARY PENSION PLAN, THE GE EXCESS BENEFIT PLAN AND SOCIAL SECURITY
YEARS OF SERVICE AT RETIREMENT
EARNINGS CREDITED FOR ----------------------------------------------------------
RETIREMENT BENEFIT 20 25 30 35 40
- --------------------------------------------------------------------------------
$1,000,000 $ 358,717 $ 445,345 $ 531,974 $ 600,000 $ 600,000
1,500,000 533,717 664,095 794,474 900,000 900,000
2,000,000 708,717 882,845 1,056,974 1,200,000 1,200,000
2,500,000 883,717 1,101,595 1,319,474 1,500,000 1,500,000
3,000,000 1,058,717 1,320,345 1,581,974 1,800,000 1,800,000
3,500,000 1,233,717 1,539,095 1,844,474 2,100,000 2,100,000
4,000,000 1,408,717 1,757,845 2,106,974 2,400,000 2,400,000
4,500,000 1,583,717 1,976,595 2,369,474 2,700,000 2,700,000
5,000,000 1,758,717 2,195,345 2,631,974 3,000,000 3,000,000
5,500,000 1,933,717 2,414,095 2,894,474 3,300,000 3,300,000
6,000,000 2,108,717 2,632,845 3,156,974 3,600,000 3,600,000
6,500,000 2,283,717 2,851,595 3,419,474 3,900,000 3,900,000
- --------------------------------------------------------------------------------
NOTE: THE AMOUNTS SHOWN ABOVE ARE APPLICABLE TO EMPLOYEES RETIRING IN 1997 AT
AGE 62.
- --------------------------------------------------------------------------------
Amounts shown as "earnings credited for retirement benefits" in this table
represent the average annual covered compensation (as defined in the GE
Supplementary Pension Plan) paid for the highest 36 consecutive months out of
the last 120 months prior to retirement. For 1996, covered compensation for the
executive officers named in the table on page 22 is the same as the total of
their salary and bonus amounts shown in that table. As of February 7, 1997,
those executive officers had the following years of credited service with GE:
Mr. Welch, 36 years; Mr. Fresco, 35 years; Mr. Opie, 35 years; Mr. Dammerman, 29
years; and Mr. Heineman, 9 years. The approximate annual retirement benefits
provided under Company retirement plans are payable in fixed monthly payments
for life, with a guaranteed minimum term of five years.
30
APPOINTMENT OF INDEPENDENT AUDITORS
KPMG Peat Marwick LLP have been recommended by the Audit Committee of the Board
for reappointment as the Independent Auditors for the Company. KPMG Peat Marwick
LLP were the Independent Auditors for the Company for the year ended December
31, 1996. The Firm is a member of the SEC Practice Section of the American
Institute of Certified Public Accountants. Subject to share owner approval, the
Board of Directors has appointed this Firm as the Company's Independent Auditors
for the year 1997.
Representatives of the Firm are expected to attend the 1997 Annual Meeting.
They will have an opportunity to make a statement if they desire to do so and
will be available to respond to appropriate share owner questions.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSAL:
Resolved that the appointment by the Board of Directors of the Firm of KPMG Peat
Marwick LLP, Stamford Square, Stamford, Connecticut, as Independent Auditors for
the Company for the year 1997 is hereby approved.
- --------------------------------------------------------------------------------
PROPOSAL FOR 2-FOR-1 STOCK SPLIT AND INCREASE IN NUMBER OF AUTHORIZED SHARES
The Board of Directors proposes that the share owners authorize the amendment of
the Company's Certificate of Incorporation to increase the number of authorized
shares of common stock from 2,200,000,000 shares with a par value of $0.32 per
share to 4,400,000,000 shares with a par value of $0.16 per share, and thereby
effectuate a 2-for-1 split of the issued and unissued shares of the Company's
common stock, including shares held by the Company or its affiliates as treasury
stock.
As of February 14, 1997, there were 1,857,012,837 shares of issued common
stock, of which 217,056,279 were treasury shares. None of the authorized shares
of Company preferred stock has been issued. Neither the common stock nor the
preferred stock provides preemptive rights to purchase newly issued shares.
The Board believes that the proposed 2-for-1 split in the issued common stock
would result in a market price that should be more attractive to a broader
spectrum of investors and therefore should benefit both the Company and its
share owners. The stock split will not result in a change in the stated capital
or surplus accounts of the Company.
The increase in the authorized common shares will not affect the present
ratio of authorized but unissued stock to issued stock, thus maintaining the
same relative degree of flexibility for the Company in meeting future stock
needs. Based on figures as of February 14, 1997, of the 4,400,000,000 common
31
shares which would be authorized, 3,714,025,674 shares would be issued as of the
effectiveness of the stock split. In addition, as a result of the stock split,
the number of shares issuable under certain benefit and compensation programs
and the dividend reinvestment plans will also be adjusted accordingly.
No other uses of the remaining shares are planned at the present time. Such
shares could be used for general corporate purposes, including future financings
or acquisitions. Unless deemed advisable by the Board, no further share owner
authorization would be sought for the issuance of such shares.
The stock split would be accomplished by mailing to each share owner of
record a certificate representing one additional share for each share held as of
the close of business on the effective date of the split. With respect to shares
participating in the Company's Dividend Reinvestment and Share Purchase Plan,
however, it is anticipated that, rather than mailing certificates, the Company
will mail account statements crediting the additional shares resulting from the
split.
PRESENT CERTIFICATES WILL CONTINUE TO REPRESENT THE NUMBER OF SHARES
EVIDENCED THEREBY. PRESENT CERTIFICATES WILL NOT BE EXCHANGED FOR NEW
CERTIFICATES. CERTIFICATES SHOULD NOT BE RETURNED TO THE COMPANY OR TO ITS
TRANSFER AGENT.
If the proposed amendment is approved by the share owners, the Company will
apply to the New York and Boston Stock Exchanges, as well as various foreign
exchanges on which the Company's common stock is listed, for the continued
listing of the stock on a split basis. The split will become effective on the
date on which the amendment to the Company's Certificate of Incorporation is
accepted for filing by the Secretary of State of New York. This date is
presently expected to be April 28, 1997. Share owners of record at the close of
business on that date will be entitled to receive one additional share for each
share then held. The Company further expects to mail the certificates for the
additional shares on May 9, 1997, or as soon thereafter as practicable.
The Company has been advised by its Tax Counsel that, under U.S. federal
income tax laws: the receipt of additional shares of common stock in the stock
split will not constitute taxable income to the share owners; the cost or other
tax basis to a share owner of each old share held immediately prior to the split
will be divided equally between the corresponding two shares held immediately
after the split; and the holding period for each of the two shares will include
the period for which the corresponding old share was held. The laws of
jurisdictions other than the United States may impose income taxes on the
receipt by a share owner of additional shares of common stock resulting from the
split; share owners are urged to consult their tax advisors.
Assuming transactions of an equivalent dollar amount, brokerage commissions
on purchases and sales of the common stock after the split and transfer taxes,
if any, may be somewhat higher than before the split, depending on the specific
number of shares involved.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSAL:
Resolved that the Company's Certificate of Incorporation, as heretofore amended,
is hereby authorized to be further amended by:
32
Amending Section 3.A thereof to read in its entirety as follows:
"A. General Authorization
The aggregate number of shares which the corporation is authorized to
issue is 4,450,000,000 shares, consisting of:(1) 4,400,000,000 shares
of common stock having a par value of $0.16 per share; and (2)
50,000,000 shares of preferred stock having a par value of $1 per
share."; and
providing that the shares of the Company's common stock, par value $0.32 per
share, both issued and unissued, be split on a 2-for-1 basis as of the close of
business on the effective date of the aforesaid amendment of Section 3.A, but so
that the par value of the split shares is $0.16 per share.
- --------------------------------------------------------------------------------
PROPOSAL TO APPROVE EXECUTIVE OFFICER PERFORMANCE GOALS
Section 162(m) of the Internal Revenue Code of 1986 generally does not allow
publicly held companies to obtain tax deductions for compensation of more than
$1 million paid in any year to their chief executive officers, or any of their
other four most highly compensated executive officers, unless such payments are
"performance-based" in accordance with conditions specified in that law. One of
those conditions requires the Company to obtain share owner approval of the
material terms of the performance goals set by a committee of outside directors
for certain compensation awards or payments made after the 1997 Annual Meeting.
The Management Development and Compensation Committee (the Committee) of the
Board believes it is in the best interests of the share owners to maintain an
executive compensation program that allows the Company to attract, retain, and
provide appropriate performance incentives for the most qualified and capable
executives possible, while also permitting the Company to continue to obtain tax
deductions for performance-based compensation paid or awarded to them.
The Committee has therefore established, and in this proposal the Board is
requesting share owner approval of the material terms of, performance goals for
the following three forms of performance-based compensation to be awarded or
paid to the Company's executive officers following the 1997 Annual Meeting:
payments of annual bonuses under the GE Incentive Compensation Plan (the IC
Plan); awards of Restricted Stock Units (RSUs) granted under the 1990 GE
Long-Term Incentive Plan (the 1990 Plan); and payments under long-term
performance awards granted under the 1990 Plan, including the 1997-1999
contingent long-term performance awards described on page 28.
The material terms of the performance goals that must be approved by share
owners under Section 162(m) include the employees eligible to receive the
performance-based compensation (here, all executive officers of the Company), a
description of the business criteria on which each performance goal is based,
and either the formula used to calculate the performance-based compensation, or,
33
alternatively, the maximum amount of such compensation that could be awarded or
paid to any individual executive officer if the applicable performance goal is
met. In accordance with these requirements, the Board is therefore recommending
that the share owners approve the business measurements on which each of the
performance goals is based and the maximum amount payable to any executive
officer under each performance goal. If approved by the share owners, and if the
applicable performance goals are met, this proposal would enable the Company to
pay or award the three specified forms of performance-based compensation to
executive officers of the Company, during a five-year period ending with the
date of the annual meeting of share owners in the year 2002, and to continue to
obtain tax deductions for such payments and awards.
THE PERFORMANCE GOALS. The performance goals set by the Committee are based
upon the following business measurements: (i) the performance goal for annual
bonuses under the IC Plan is based upon the Company's annual net earnings as
determined under generally accepted accounting principles (GAAP), adjusted to
remove the effect under GAAP of unusual events (adjusted net earnings); (ii) the
performance goal for awards of RSUs granted under the 1990 Plan is also based
upon the Company's annual adjusted net earnings; and (iii) the performance goal
for the payment of long-term performance awards granted under the 1990 Plan,
including the 1997-1999 awards described on page 28, would be based upon one or
more of the following business measurements: the Company's earnings per share,
return on total capital, cash flow, and operating margin rate, and, in the case
of executive officers assigned to a specific business unit, the earnings growth,
operating margin rate, working capital turnover, and inventory or receivable
turnover of that unit for the performance period, except in the case of GE
Capital Services, where the goal would be based upon that unit's return on
equity and net earnings growth during the period, all as adjusted to remove the
effect of unusual events.
If adopted by share owners, this proposal would, for the five-year period
described above, approve those measurements and also impose the following
limitations on the award or payment of the three specified forms of
performance-based compensation to any individual executive officer of the
Company: (a) the amount of any annual bonus paid to any executive officer under
the IC Plan for any year could not exceed one-tenth of one percent of the
Company's adjusted net earnings for such year; (b) awards for no more than
400,000 RSUs, as adjusted under Section 4(b) of the 1990 Plan (e.g., this number
would be doubled if the share owners approve the 2-for-1 stock split in the
preceding proposal), could be granted under the 1990 Plan to any executive
officer during any three-year period; and (c) the maximum fair market value of
payments to any executive officer under long-term performance awards granted
under the 1990 Plan could not, during any three-year period, exceed five times
the total salary and annual bonus paid to the Company's Chief Executive Officer
for 1996 as shown in the Summary Compensation Table on page 22. The Committee
has the discretion to reduce the amount of compensation actually paid when a
34
performance goal is met. The Committee has established goals and maximum amounts
that it considers to be appropriate in light of foreseeable contingencies and
future business conditions, and the Board believes it is in the best interests
of the share owners to allow the Committee to have this amount of flexibility.
If approved by the share owners, this proposal would not limit the Company's
right to award or pay other forms of compensation (including, but not limited
to, salary, or other stock-based awards under the 1990 Plan) to the Company's
executive officers, whether or not the performance goals for annual bonuses,
RSUs, or long-term performance awards in this proposal are achieved in any
future year, and whether or not payment of such other forms of compensation
would be deductible, if the Committee determines that the award or payment of
such other forms of compensation is in the best interests of the share owners.
The material terms of the three forms of performance-based compensation
covered in this proposal, and the plans under which they are paid or awarded,
are described below, and, where noted below, in the next proposal.
ANNUAL BONUSES. Annual bonuses for members of management and other key
employees of the Company and its affiliates, other than GE Capital Services
which maintains separate bonus plans appropriate to its business, are determined
and paid under the IC Plan. This plan authorizes the Board to appropriate to an
incentive compensation reserve (the Reserve) each year up to 10% of the amount
by which the Company's consolidated net earnings exceeds 5% of the Company's
average consolidated capital investment, each as defined in the IC Plan. Any
amount in the Reserve not allotted to participants in respect of a given year
may be carried forward and allotted in subsequent years. The IC Plan is
administered by the Committee. The Committee selects employees eligible to
participate in the IC Plan, provided that at least one-half of one percent of
the aggregate number of employees in the consolidated group (as defined) must be
designated to participate each year. Currently, approximately 2,500 employees
are eligible for such selection. A total of 2,358 employees received allotments
under the IC Plan for 1996.
The Committee also determines the specific amount that may be potentially
allotted from the Reserve to each officer of the Company as incentive
compensation for a given year. In the case of executive officers, that amount
has been, and, if this proposal is approved, would continue to be, a percentage
of annual net earnings, subject to certain adjustments, specified by the
Committee in writing. If this proposal is approved, an executive officer's
allotment would be subject to a maximum annual limit, as discussed above. The
Committee determines the amount of the Reserve and the total amount to be
allotted to participants. Allotments are paid as soon as practicable following
these determinations, except that the Committee may require deferral of, or may
permit a participant to elect to defer, all or part of his or her allotment. The
Committee currently requires all officers to defer a specified amount of
cumulative payments under the IC Plan to be accounted for as stock units (i.e.,
as if they were shares of common stock), with respect to which dividend
35
equivalents are credited and deemed reinvested in additional stock units. The
Committee may pay out deferred allotments in cash or in such other manner as the
Committee may specify, including in shares. In recent years, all payouts of
deferred amounts, including those relating to stock units, have been in cash.
Non-deferred payments may be made in cash, shares of Company common stock
(valued at their then fair market value), or other securities.
The Board may amend, suspend, or terminate the IC Plan, including amending
the Plan in a way that might increase the Company's costs, provided that share
owner approval must be obtained for an amendment that would increase the amount
which may be appropriated to the Reserve. Stock units under the IC Plan are
subject to adjustment in the event of a stock split (including the 2-for-1 stock
split recommended in the preceding proposal), stock dividend, or other
extraordinary corporate event. The amounts to be allotted to IC Plan
participants for 1997 if the performance goal is approved cannot presently be
determined. The amounts allotted to the named executive officers for 1996 under
the IC Plan are disclosed in the column labeled Bonus in the Summary
Compensation Table on page 22. For 1996, all executive officers as a group and
all employees other than executive officers as a group were allotted a total of
$16,205,000 and $108,560,384, respectively, under the IC Plan.
RSUs. The proposed performance goals also relate to RSUs to be awarded under
the 1990 Plan. The general terms of the 1990 Plan, as presently in effect and
proposed to be amended, are described below on pages 37 to 41. Under the 1990
Plan, an RSU represents a right to receive a share of Common Stock, or an
equivalent cash payment as the Committee may determine, together with dividend
equivalent payments in cash or as additional shares if specified by the
Committee, at the end of a specified period. The last sales price of the
Company's common stock on February 14, 1997 was $106.375 as reported on the
Consolidated Tape of New York Stock Exchange Listed Securities. RSUs are
non-transferable and subject to a risk of forfeiture upon certain kinds of
employment terminations, as determined by the Committee, during a restricted
period specified by the Committee. After lapse of these restrictions, settlement
of RSUs may be further deferred.
If this proposal is approved, RSUs would be awarded based upon achievement of
a pre-established performance goal for adjusted net earnings, as discussed
above. Although the Committee would have discretion to vary the forfeiture
conditions of RSUs granted upon achievement of the performance goal, RSUs
previously granted by the Committee generally provide for forfeiture if the
executive officer is terminated by the Company or voluntarily leaves the Company
before retirement, with this risk of forfeiture lapsing as to 25% of RSUs three
years after grant, as to an additional 25% seven years after grant, and as to
the remaining 50% at retirement. The number of RSUs to be awarded following the
1997 Annual Meeting under the 1990 Plan if the performance goals are approved
cannot be determined.
36
LONG-TERM PERFORMANCE AWARDS. The proposed performance goals also relate to
long-term performance awards to be made under the 1990 Plan. These long-term
performance awards generally represent rights valued as determined by the
Committee and payable to a participant upon achievement of specified performance
goals during a specified performance period of greater than one year established
by the Committee. If this proposal is approved, the three-year 1997-1999
contingent long-term performance awards would represent a contingent right to
receive a payment, the amount of which would be a percentage of the salary and
annual bonuses paid to the participant with respect to the three years in the
applicable period. The percentage, if any, of such compensation to be used to
determine the amount payable under the performance award would be contingent
upon the extent of achievement of the pre-established performance goals during
the three-year period.
Under a long-term performance award, the Committee will determine, after the
end of the performance period, whether a participant has become entitled to a
settlement of his or her performance award, and whether that settlement will be
paid in cash, a distribution of shares of common stock, or crediting of stock
units, provided that the Committee may permit the participant to elect the form
of settlement for all or a portion of the award. Stock units will be settled in
cash or shares, as determined by the Committee. If the proposal is approved,
then in addition to the 1997-1999 contingent long-term performance awards, the
Committee would also be able to grant other long-term performance awards based
on the performance goals discussed above.
The amount payable in settlement of long-term performance awards that may be
granted under the 1990 Plan if the performance goals are approved cannot be
determined. The grants of 1997-1999 contingent long-term performance awards
described on page 28 were made subject to share owner approval of this proposal
and those grants will be rescinded if this proposal is not approved by the share
owners at the 1997 Annual Meeting.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE EXECUTIVE
OFFICER PERFORMANCE GOALS.
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PROPOSAL TO AMEND AND EXTEND THE GE 1990 LONG-TERM INCENTIVE PLAN
Since the share owners approved the GE 1990 Long-Term Incentive Plan (the 1990
Plan) at the 1990 Annual Meeting, certain legal, regulatory, and other
developments have made it appropriate to amend and restate the 1990 Plan. For
example, Section 162(m) of the Internal Revenue Code, described in the preceding
proposal, requires share owner approval of an express limitation on the number
37
of stock options and stock appreciation rights (SARs) that may be awarded to any
individual during a specified period in order to permit the Company to continue
to obtain tax deductions for payments under such awards to its chief executive
officer and other four most highly compensated executive officers. In this
proposal, the Board is therefore seeking share owner approval of, among other
things, an amendment to the 1990 Plan to include such a limit. The Board has
also concluded that the 1990 Plan is achieving its objectives of providing
appropriate incentives and rewards to key employees who are contributing to the
Company's future success and prosperity, thus enhancing the value of the Company
for the benefit of its share owners, and enabling the Company to attract and
retain exceptionally qualified individuals upon whom, in large measure, the
continued progress, growth, and profitability of the Company depend. In light of
these developments, and the Board's judgment regarding the benefits to the share
owners of continuing the 1990 Plan, the Board seeks share owner approval to
extend the effectiveness of the 1990 Plan from May 1, 2000 to May 1, 2007.
The following summary describes the 1990 Plan as proposed to be amended and
restated (the Restated Plan), noting parenthetically the specific changes being
approved. As noted, the key changes are: (1) establishing a maximum limit of
1,500,000 stock options and SARs (subject to adjustment as discussed below) that
may be granted to any individual during any three-year period, and (2) extending
the term of the plan. This summary is qualified in its entirety by reference to
the full text of the Restated Plan, which is attached to this Proxy Statement as
Exhibit A.
The Restated Plan authorizes the granting of awards until May 1, 2007 (May 1,
2000, prior to the amendment) to the approximately 126,000 salaried employees of
the Company and its subsidiaries and affiliates in which the Company has a
significant equity interest. Awards have been granted to a total of
approximately 22,000 participants under the 1990 Plan in recent years. The
Committee has no current plan to significantly change the number of employees
receiving grants under the Restated Plan.
The Restated Plan permits the granting of: (1) stock options, including
incentive stock options entitling the optionee to favorable tax treatment under
Section 422 of the Internal Revenue Code of 1986 (ISOs), (2) SARs, (3)
restricted stock and restricted stock units (RSUs), (4) performance awards, (5)
dividend equivalents, and (6) other awards valued in whole or in part by
reference to or otherwise based on Company common stock (other stock-based
awards). Awards generally are granted for no cash consideration, and are
generally non-transferable except upon the death of a participant.
The Restated Plan will be administered by a committee (the Plan Committee) of
the Board consisting exclusively of three or more non-employee directors (the
current plan requires Committee members to be "disinterested persons" as defined
under SEC Rule 16b-3, which rule has been amended to delete references to
disinterested persons). The Plan Committee may select eligible employees to whom
awards are granted; determine the types of awards to be granted and the number
38
of shares covered by such awards; set the terms and conditions of such awards;
and cancel, suspend, and amend awards. The Plan Committee's determinations and
interpretations under the Restated Plan will be binding on all interested
parties. The Plan Committee is empowered to act through a subcommittee it may
designate, consisting of at least three directors, or with members of the Plan
Committee abstaining or recusing themselves, and the full Board may exercise any
authority of the Plan Committee under the Restated Plan (these enabling
provisions are being added by the amendment, as permitted by new SEC Rule 16b-3
and other regulations). The Board may amend, alter, or discontinue the Restated
Plan at any time, including amending it in ways that might increase the cost of
the Restated Plan to the Company, provided that share owner approval must
generally be obtained for an amendment that would increase the number of shares
available for awards or permit the granting of options, SARs, or other
stock-based awards encompassing rights to purchase shares at prices below fair
market value, other than as described below.
Awards may provide that upon exercise the participant will receive cash,
stock, other securities, other awards, other property, or any combination
thereof, as the Plan Committee shall determine. The exercise price per share of
stock purchasable under any stock option, the grant price of any SAR, and the
purchase price of any security which may be purchased under any other
stock-based award shall not be less than 100% of the fair market value of the
stock or other security on the date of the grant of such option, SAR, or right,
or, if the Plan Committee so determines, in the case of certain awards
retroactively granted in tandem with or in substitution for other awards under
the Restated Plan or for any outstanding awards granted under any other plan of
the Company, on the date of grant of such other awards. Any exercise or purchase
price may be paid in cash or, if permitted by the Plan Committee, by surrender
of shares.
A participant granted an option is entitled to purchase a specified number
of shares during a specified term at a fixed price, affording the participant an
opportunity to benefit from the appreciation in the market price of GE stock
from the date of grant. A participant granted a SAR will be entitled to receive
the excess of the fair market value (calculated as of the exercise date or, if
the Plan Committee shall so determine in the case of any SAR not related to an
ISO, as of any time during a specified period before or after the exercise date)
of a share of GE stock over the grant price of the SAR. Restricted stock and
RSUs are awards that are non-transferable and subject to a risk of forfeiture
upon certain kinds of employment terminations, as determined by the Plan
Committee, during a restricted period specified by the Plan Committee.
Restricted stock provides a participant with all of the rights of a share owner
of the Company, including the right to vote the shares and to receive dividends.
The terms of RSUs and performance awards are generally described above under the
caption Proposal to Approve Executive Officer Performance Goals. Dividend
equivalents granted to participants represent a right to receive payments
39
equivalent to dividends or interest with respect to a specified number of
shares. Other stock-based awards are awards for which the Plan Committee
establishes virtually all terms and conditions. The Plan Committee may also
require or permit award payments to be deferred and may authorize crediting of
dividends or interest or their equivalents in connection with any such deferral.
Subject to adjustment as described below, ninety-five one hundredths of one
percent (0.95%) of the issued shares of the Company's common stock (including
treasury shares) as of the first day of each calendar year (including any
partial year) during which the Restated Plan is in effect shall become available
for granting awards in such year. Based on the number of such shares issued on
January 1, 1997, 17,641,621 shares became available for awards in 1997 (the
amendment makes no change to the aggregate number of shares that annually become
available for use under the Restated Plan, but does add a provision limiting the
aggregate number of shares that may be used for awards of restricted stock,
RSUs, performance awards and other stock-based awards -- as these categories are
described on page 37 -- in any three-year period to 20% of the total number of
shares available for granting awards during such three-year period).
Under the Restated Plan, all shares available for granting awards in any year
that are not used will be available for use in subsequent years. If any shares
subject to any award under the Restated Plan, or under certain previous plans,
are forfeited, or if any such award terminates without the delivery of shares or
other consideration, the shares previously used or reserved for such awards will
be available for future awards under the Restated Plan. If another company is
acquired by the Company or an affiliate, any awards made and any of the
Company's shares delivered upon the assumption of or in substitution for
outstanding grants made by the acquired company may be deemed to be granted
under the Restated Plan but, with the exception of grants to certain persons who
become executive officers of the Company, would not decrease the number of
shares available for grant under the Restated Plan. In any event, the total
number of shares that may be delivered pursuant to ISOs granted under the
Restated Plan may not exceed 50,000,000 shares, subject to adjustment as
described below. In addition, the number of shares with respect to which options
and SARs may be granted under the Restated Plan to any individual executive
officer in any three-year period from April 23, 1997 through the end of the term
of the Restated Plan may not exceed 1,500,000 shares, subject to adjustment as
provided in section 4(b) of the Restated Plan (e.g., this number would be
doubled to 3,000,000 shares if the share owners approve the 1997 2-for-1 stock
split). The provision in the preceding sentence is being added by the amendment
so that compensation resulting from options and SARs can qualify as tax
deductible performance-based compensation under Section 162(m).
The Plan Committee may adjust the number and type of shares which may be made
the subject of new awards or are then subject to outstanding awards and other
award terms, and may provide for a cash payment to a participant relating to an
40
outstanding award, or may adjust the number and type of shares which may be
subject to ISOs and which constitute the three-year, per-person limitations on
options and SARs, in the event of a stock split (including the proposed 1997
stock split), stock dividend, or other extraordinary corporate event (the
amendment would add to the adjustment provision, the annual per-person
limitation). The Plan Committee is also authorized, for similar purposes, to
make adjustments in performance award criteria or in the terms and conditions of
other awards in recognition of unusual or nonrecurring events affecting the
Company or its financial statements or of changes in applicable laws,
regulations, or accounting principles. The awards that may be granted under the
Restated Plan after April 26, 1997 cannot presently be determined. In addition,
nothing contained in the Restated Plan prevents the Company or any affiliate
from adopting or continuing in effect other or additional compensation
arrangements.
The following is a general summary of the current Federal income tax
consequences relating to Plan awards. The grant of an option or SAR will create
no tax consequences for the participant or the Company. A participant will have
no taxable income upon exercise of an ISO, except that the alternative minimum
tax may apply. Upon exercise of an option other than an ISO, a participant
generally must recognize ordinary income equal to the fair market value of the
shares acquired minus the exercise price. Upon a disposition of shares acquired
by exercise of an ISO before the end of the applicable ISO holding periods, the
participant generally must recognize ordinary income equal to the lesser of (i)
the fair market value of the shares at the date of exercise minus the exercise
price or (ii) the amount realized upon the disposition of the ISO shares minus
the exercise price. Otherwise, a participant's disposition of shares acquired
upon the exercise of an option (including an ISO for which the ISO holding
periods are met) generally will result in only capital gain or loss. Other
awards under the Restated Plan, including non-qualified options and SARs,
generally will result in ordinary income to the participant at the later of the
time of delivery of cash, shares, or other property, or the time that either the
risk of forfeiture or restriction on transferability lapses on previously
delivered cash, shares, or other property. Except as discussed below, the
Company generally will be entitled to a tax deduction equal to the amount
recognized as ordinary income by the participant in connection with an option,
SAR, or other award, but will be entitled to no tax deduction relating to
amounts that represent a capital gain to a participant. Thus, the Company will
not be entitled to any tax deduction with respect to an ISO if the participant
holds the shares for the ISO holding periods.
As discussed above, Section 162(m) generally allows the Company to obtain tax
deductions without limit for performance-based compensation. The Company intends
that options and SARs, and, subject to share owner approval of the performance
goals described above, RSUs and contingent long-term performance awards, granted
under the Restated Plan will continue to qualify as performance-based
compensation not subject to Section 162(m)'s $1 million deductibility cap. A
41
number of requirements must be met in order for particular compensation to so
qualify, however, so there can be no assurance that such compensation under the
Restated Plan will be fully deductible under all circumstances. In addition,
other awards under the Restated Plan, such as restricted stock and other
stock-based awards, generally will not so qualify, so that compensation paid to
executive officers in connection with such awards may not be deductible.
The foregoing general tax discussion is intended for the information of share
owners considering how to vote with respect to this proposal and not as tax
guidance to participants in the Restated Plan. Different tax rules may apply to
specific participants and transactions under the Restated Plan.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO AMEND AND RESTATE
THE GE 1990 LONG-TERM INCENTIVE PLAN, AS SET FORTH IN ITS ENTIRETY IN EXHIBIT A,
PAGES 51 TO 62, EFFECTIVE APRIL 23, 1997.
42
SHARE OWNER PROPOSALS
Some of the following share owner proposals contain assertions about GE which,
in the judgment of the Board, are incorrect. Rather than refuting all these
inaccuracies, however, your Board has recommended a vote against these proposals
for broader policy reasons as set forth following each proposal. Share holdings
of the various share owner proponents and, where applicable, names and addresses
of filers and co-filers, will be supplied upon oral or written request to GE.
* SHARE OWNER PROPOSAL NO. 1
Evelyn Y. Davis, Watergate Office Building, 2600 Virginia Avenue, N.W., Suite
215, Washington, D.C. 20037, has notified GE that she intends to present the
following proposal at this year's meeting:
"Resolved: That the stockholders of General Electric recommend that the Board
take the necessary steps so that future outside directors shall not serve for
more than six years.
"Reasons: The President of the U.S.A. has a term limit, so do Governors of
many states. Newer directors may bring in fresh outlooks and different
approaches with benefits to all shareholders. No director should be able to feel
that his or her directorship is until retirement.
"If you agree, please mark your proxy FOR this resolution."
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
GE believes that requiring all outside directors to leave the Board after six
years of service would not be in the best interests of the Company or the share
owners. The experience, perspective and judgment of directors who have served
beyond the proposed six-year limit on the Board of a corporation as diverse and
complex as GE are invaluable benefits to the Company. Therefore, your Board
recommends a vote against this proposal.
* SHARE OWNER PROPOSAL NO. 2
GE Stockholders' Alliance, 5349 W. Bar X Street, Tucson, AZ 85713-6402, and
other filers have notified GE that they intend to present the following proposal
at this year's meeting:
"Whereas:
"The last viable U.S. nuclear power plant order was placed in October 1973;
all subsequent orders were canceled because nuclear power is acknowledged to be
dirty, dangerous and expensive;
"General Electric is actively seeking foreign markets for nuclear reactors;
"Nuclear fuel sales and reactor operation abroad provide material for
possible diversion to weapons programs, and in spite of customer countries
possibly being signatories of the Non-Proliferation Treaty, there is no
enforceable way to prevent this diversion;
43
"There is still no resolution for the safe isolation of radioactive wastes
that must be sequestered from the environment for thousands of years;
"The inordinate expense of nuclear power plants can threaten the fiscal
equilibrium of customer countries, and jeopardize payment to GE; and
"A serious accident at a GE reactor abroad could cause severe adverse
economic, legal and health repercussions that would adversely affect the
company;
"Therefore be it resolved that the shareholders request the Board of
Directors determine that GE will no longer seek new nuclear reactor and nuclear
fuel sales abroad, and instead, promote the sale of safer, lower-risk,
energy-efficient alternate generating systems to foreign markets.
"Supporting Statement: The Nuclear Regulatory Commission has no technical
specifications governing design or siting and no oversight on construction or
operations of reactors for export. Compared to the United States, most customer
countries have less stringent regulations, fewer trained personnel and less
operating experience. The technology is sufficiently complex and hazardous that
it is difficult to maintain an adequate level of safety even by our own
experienced technicians. The potential for serious accidents is very clear.
"Nuclear power is in great financial distress domestically in spite of
continuing heavy government subsidies. Expansion of nuclear power to additional
foreign markets, particularly developing countries, enlarges the pool of
possible economic distress. Even government subsides now in place for the export
of reactors may not be maintained.
"Nuclear power's bomb proliferation potential, the mounting evidence of
adverse biological effects of radiation, the unresolved problem of nuclear waste
disposal, and strong public opposition are additional reasons for the Company to
cease the promotion of this technology abroad.
"Exporting nuclear power, with its possible catastrophic consequences either
as power plants or weapons, could threaten the financial integrity of the
Company and is socially irresponsible."
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
Nuclear power makes a significant contribution to meeting the world's demand
for electricity. In 1996, approximately 17% of the world's electrical generating
capacity came from nuclear plants. The Nuclear Regulatory Commission in the
United States, and similar regulatory bodies in other countries, have the
ongoing responsibility to ensure that nuclear facilities operate safely.
The major focus of GE's profitable nuclear business today is to provide
nuclear fuel and plant support services with the aim of enhancing safe and
efficient utility operations. These products and services should be available to
utility customers throughout the world who need and want them. Your Board
believes it is also appropriate for GE to participate in the development of
advanced designs for nuclear generating plants for sale to utility customers in
areas of the world where a mix of technologies will be necessary to supply a
growing need for electrical generating capacity. Therefore, your Board
recommends a vote against this proposal.
44
* Share Owner Proposal No. 3
Ms. Patricia T. Birnie, 5349 W. Bar X Street, Tucson, AZ 85713-6402, and other
filers have notified GE that they intend to present the following proposal at
this year's meeting:
"Whereas: The Superfund Amendment and Reauthorization Act of 1986 has been in
effect for 10 years, requiring corporations to reduce production and increase
clean up of hazardous effluents, and report to the public on its efforts to
clean up hazardous effluents;
"GE has long expressed a commitment to protect the environment, and has a
comprehensive audit system to comply with regulations to protect workers, the
public and the environment;
"In July 1991, the U.S. Environmental Protection Agency identified GE as the
potentially responsible party at 62 Superfund sites, more than any other
company; and
"Environmental pollution is one of the world's most urgent problems,
affecting the future viability of life;
"Therefore be it resolved that the Board of Directors shall provide the
summary of an environmental report to shareholders in the next annual report,
and provide a copy of the full report to shareholders on request, to include:
"1. GE's progress in the remediation and its compliance with EPA cleanup
standards at each of the 62 Superfund sites and all other contaminated sites for
which the Company is responsible;
"2. GE's progress in making the workplace safer (as measured by the reduction of
OSHA violations and penalties), and progress in providing all employees with
adequate health insurance, domestic and foreign;
"3. GE's progress in making products more energy efficient and durable, and
manufacturing processes more energy efficient, domestic and foreign;
"4. GE's published policies with regard to its efforts to reduce the use of
toxic materials and effluents at all company operations, domestic and foreign;
and
"5. Status of law suits relating to the Company's involvement in environmental
issues, and report of fines from regulatory non-compliance.
"Supporting Statement: OUR STOLEN FUTURE by Theo Colborn, Dianne Dumanoski
and John Peterson Myers (1996 Dutton Publishing) relates compelling scientific
evidence that certain toxic chemicals act as endocrine disruptors in wildlife
and humans. These chemicals include dioxins and other chlorine-based organic
chemicals, components in herbicides, insecticides, plastics and other industrial
products and by-products. The presence of endocrine disruptors, even in minute
doses, can damage the endocrine, reproductive and immune systems of life forms,
not only in populated industrial areas, but in the most remote locations of the
earth. The authors maintain that quality of life and maybe even survival itself
are being adversely affected by indiscriminate use of these dangerous synthetic
chemicals. Reports in the June 7, 1996 SCIENCE journal indicate that the
synergistic effect of combinations of these chemicals can be even more damaging
than each alone.
"It is of the greatest importance that manufacturers and processors eliminate
the use of endocrine disruptors, and fully clean up old waste sites.
45
"GE should make these changes within Company operations, and cooperate with
other corporations and government agencies to initiate and implement an
international ban on the use of endocrine-disruptive synthetic chemicals."
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
GE has undertaken substantial efforts to remediate the effects of past waste
disposal, to comply with current standards of environmental protection and
worker safety, and to prevent future environmental harm. Moreover, GE is
accountable to many units and levels of government, both in the United States
and in other nations, for sound environmental practices. As part of this
accountability, GE complies with governmental reporting requirements regarding
environmental matters.
Under these circumstances -- a substantial Company program and regulatory
requirements of localities, states, the federal government and other nations --
your Board does not believe that creating the type of report requested by the
proponents would help the Company improve its environmental performance.
Therefore, your Board recommends a vote against this proposal.
* SHARE OWNER PROPOSAL NO. 4
Missionary Oblates of Mary Immaculate of Texas, 7711 Madonna Drive, San Antonio,
TX 78216-6696, and other filers have notified GE that they intend to present the
following proposal at this year's meeting:
"Whereas, we believe U.S. companies have the responsibility wherever they do
business to pay employees a living sustainable wage, enabling them to provide
for themselves and their families.
"The economic crisis in Mexico, precipitated by the peso devaluation in
December, 1994, has further undermined the purchasing power of maquiladora
workers. Prior to the crisis, the average pay of a maquiladora worker was $30 to
$50 for a 48-hour week. The 1995 inflation rate of over 50%, contributed to the
dramatic decline in workers' purchasing power. We believe that the modest wage
increases suggested by the Mexican government in 1995 and 1996 do not adequately
address the workers' loss of purchasing power.
"A 1994 market basket study, using First Quarter, 1994 figures prior to the
devaluation, reveals a maquiladora worker worked 69.0 minutes to purchase 5 lbs.
of rice, 113.2 minutes for cooking oil (48 oz.), 87.0 minutes for 1 lb. of
chicken, 142.9 minutes for a gallon of milk, and 69.8 minutes for one dozen eggs
(MARKET BASKET SURVEY, Ruth Rosenbaum, 1994).
"Pollution from the maquiladora industry is a bi-national problem which
threatens the health of citizens both in Mexico and the United States. Hazardous
waste pollutes rivers and aquifers and contaminates drinking water. Accidental
chemical leaks from plants or transportation vehicles carrying hazardous
materials impact both sides of the border.
46
"Resolved: The shareholders request the Board of Directors to initiate a
review of our company's maquiladora operations, including the adequacy of wage
levels and environmental standards and practices. A summary report of the review
and recommendations for changes in policies, programs and practices in light of
this review to be made available to shareholders within six months of the 1997
meeting.
"Supporting Statement: The proponents of this resolution firmly believe there
is a need for strict, enforceable standards of conduct for corporations
operating around the world, including Mexico. We believe corporations should
protect the environment and pay sustainable community wages which are
significantly higher than the marginal survival wages paid in the maquiladoras.
We define a sustainable community wage as one that allows a worker to meet basic
needs, set aside money for future purchases and earn enough discretionary income
to participate in support of the development of small businesses in a local
community (MARKET BASKET SURVEY).
"It is essential that our company regularly review its environmental
performance, as well as its wages and benefits policies, including average wages
paid to employees, how these compare to the local cost of living and poverty
level, and the level of profit sharing with employees (required by Mexican law).
We propose that the reviews utilize an ongoing Purchasing Power Index study to
determine a sustainable community level salary. Our company should consider
additional ways to support environmentally sound sustainable development in the
communities where it operates."
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
GE is committed to operating its maquiladora facilities in compliance with
all applicable Mexican laws and regulations and in accordance with GE's policies
and procedures. GE's maquiladora facilities benefit their employees because they
provide wages which are fair and competitive for the region. These facilities
also provide quality training, work and benefits.
GE reviews the working conditions and environmental performance of its
maquiladora facilities in light of applicable law and regulation and GE's
policies and procedures, in order to advance the Company's goals of providing
fair and competitive wages and following sound environmental practices.
Because it believes that the Company's review process is sufficient, your
Board recommends a vote against this proposal.
* SHARE OWNER PROPOSAL NO. 5
International Brotherhood of Teamsters, 25 Louisiana Avenue, N.W., Washington,
D.C. 20001, has notified GE that it intends to present the following proposal at
this year's meeting:
"That the shareholders of General Electric request that the Board of
Directors establish a policy that no executive will be compensated more than $1
million per year, regardless of when such compensation is paid, unless the
compensation is paid in accordance with a performance-based plan disclosed to
47
shareholders and approved by a majority of the vote in a separate shareholder
vote before the payment of the compensation. This policy shall be created in
such a manner that it applies only to future contracts and does not affect any
current contractual obligations.
"Supporting Statement: Recently the New York Times ran an investigative
series which focused on deferred compensation which can be a detriment to
shareholders in a number of ways.
"Deferred compensation can obscure the exact extent of compensation. The
TIMES reports that General Electric promised Mr. Welch `an interest rate of 14
percent when he deferred $1 million of his $2 million base salary last year. It
also gave him a $35,000 matching contribution, the same 3.5 percent rate that
the company gives other employees in their 401(k) savings.' As Christopher Drew
and David Cay Johnston point out in, TAX BREAKS FOR EXECUTIVES WHO EARN NOW, PAY
LATER:
'... the executive is able to build a much bigger nest egg than people
who have to pay taxes immediately, taking greater advantage of the
magical compounding power that makes all these plans so attractive.
Take John F. Welch Jr., chief executive at the General Electric
Company. By deferring taxes on $1 million last year, he stands to have
$263,000 more within five years than he otherwise would have had.'
"The TIMES calculation assumes that had Mr. Welch received the money in one
year, paid taxes, and invested the remainder, he would have found a secure
investment with the same 14% interest. If the interest rate he earned on private
investment was lower, the difference in the sum would be greater.
"Deferred compensation is being used as a method of avoiding shareholder
votes on compensation plans. Internal Revenue Code Section 162(m) generally
eliminated the business expense deduction for annual compensation of over $1
million, except when this compensation is paid out under a pay-for-performance
plan approved by shareholders.
"One loophole corporate lawyers have exploited to help companies avoid paying
taxes on excessive compensation, while at the same time to avoid seeking
shareholder approval, has been to put ever-increasing amounts in deferred
compensation. This seems to circumvent part of the intent of the IRS Code by
depriving shareholders of their prerogative to vote.
"Board members are closest to executive performance, and it is right that an
independent board make proposals on executive compensation. However, deferred
compensation should not be used as a way to obscure compensation figures or to
deprive shareholders of their right to make such decisions.
"For the above reasons we urge you to vote FOR the proposal."
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
GE's leaders are among its most valuable resources. In order to maintain GE's
ability to attract and retain the world's best business leaders, the Company
needs the flexibility to develop highly competitive and responsive individual
48
compensation plans. Requiring that all annual compensation over $1 million for
any executive be paid under a performance-based plan approved in advance by
share owners would adversely limit and delay the Company's ability to respond to
competitive needs in the market for executive talent and impair its ability to
attract and retain the world's best business leaders.
Because the Board believes that the Company's continued success depends upon
having the flexibility needed to hire and retain the best business leaders
available, your Board recommends a vote against this proposal.
* SHARE OWNER PROPOSAL NO. 6
The Sisters of Charity of the Incarnate Word, 6510 Lawndale, Houston, Texas
77223-0969, has notified GE that it intends to submit the following proposal at
this year's meeting:
"Whereas the proponents of this resolution believe that General Electric
should establish criteria to guide management in bidding for and executing
military contracts, we propose the following for Board and management study.
"Resolved: The shareholders request the Board of Directors to commission a
subcommittee to develop criteria for acceptance and execution of military
contracts and to report these criteria at the 1997 annual meeting. Proprietary
information may be omitted and cost limited to a reasonable amount.
"Statement of Support: The proponents of this resolution believe corporate
social responsibility in a successful free enterprise society demands that
business conduct be ethically correct, socially supportive and economically
useful as well as financially profitable. Therefore, we recommend the criteria
include:
- Basic canons of ethical business practice such that human rights and
fair labor standards are upheld
- Long-term environmental impact and waste management
- Stability of employment, including descriptions of conversion plans
and funding sources; strategies identifying community needs;
employees' ideas and market opportunities; membership in state and/or
local government economic conversion task forces
- Lobbying and marketing practices, including costs
- Limits on military contracts measured by a percentage of sales
- Competitive bidding
- Sale of weapons, weapons parts and dual-use technology to foreign
governments, other companies and individuals
- Sourcing and contracting which respects the culture of a foreign
country but does not, e.g., permit prison, forced or child labor and
corporal punishment
49
- Contracts for nuclear, biological and chemical weapons, parts and
technologies.
"Global security is not just security of territory, it is security of people.
It is not just security through weapons, it is security through jobs, human
development, environmental sustainability, improvement of conditions in the
community at large.
"A YES vote recommends these criteria for consideration by the Board.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
GE is committed to doing business in full compliance with all applicable laws
and in accordance with Company policies regarding such matters as business
standards; environment, health and safety; and fair treatment of employees.
These policies apply to all GE operations, including those involving military
contracts. Thus, GE's business leaders must determine that the Company's
government contracts activities meet applicable legal requirements, adhere to
the Company's ethics policies and satisfy standards of sound business judgment.
Because it believes that the Company's process for reviewing the types of
matters raised in the proposal is sufficient, your Board recommends a vote
against this proposal.
- --------------------------------------------------------------------------------
OTHER MATTERS
* SHARE OWNER PROPOSALS FOR 1998
Under the rules of the Securities and Exchange Commission, share owner proposals
submitted for next year's Proxy Statement must be received by GE no later than
the close of business on November 12, 1997, to be considered. Proposals should
be addressed to Benjamin W. Heineman, Jr., Secretary, General Electric Company,
Fairfield, Connecticut 06431.
* VOTING SECURITIES
Share owners of record at the close of business on March 6, 1997, will be
eligible to vote at the meeting. The voting securities of GE consist of its
$0.32 par value common stock, of which 1,639,956,558 shares were outstanding on
February 14, 1997. Each share outstanding on the record date will be entitled to
one vote. Treasury shares are not voted.
Individual votes of share owners are kept private, except as appropriate to
meet legal requirements. Access to proxies and other individual share owner
voting records is limited to the Independent Inspectors of Election (The
Corporation Trust Company) and certain employees of GE and its agents who must
acknowledge in writing their responsibility to comply with this policy of
confidentiality.
50
* VOTE REQUIRED FOR APPROVAL
The 14 nominees for director receiving a plurality of the votes cast at the
meeting in person or by proxy shall be elected. A favorable vote of the majority
of the outstanding shares entitled to vote is required for the approval of the
2-for-1 stock split and increase in the number of authorized shares and for the
amendment and extension of the GE 1990 Long-Term Incentive Plan. All other
matters require for approval the favorable vote of a majority of shares voted at
the meeting in person or by proxy. Abstentions and broker non-votes, if any,
will not be counted as votes for the proposed 2-for-1 stock split and increase
in authorized shares, nor for the amendment and extension of the GE 1990
Long-Term Incentive Plan. However, as they will not be treated as votes cast
under New York law, they will have no effect on the outcome of the other matters
to be voted on at the meeting.
* MANNER FOR VOTING PROXIES
The shares represented by all valid proxies received will be voted in the manner
specified on the proxies. Where specific choices are not indicated, the shares
represented by all valid proxies received will be voted: (1) for the nominees
for director named earlier in this Proxy Statement; (2) for approval of the
appointment of Independent Auditors; (3) for approval of the management
proposals relating to the stock split and increase of authorized shares,
executive officer performance goals, and the amendment and extension of the GE
1990 Long-Term Incentive Plan and (4) against the share owner proposals
described in this Proxy Statement.
Should any matter not described above be acted upon at the meeting, the
persons named in the proxy form will vote in accordance with their judgment.
Except for omitted share owner proposals, the Board knows of no other matters
which may be presented to the meeting.
* SOLICITATION OF PROXIES
Proxies will be solicited on behalf of the Board of Directors by mail,
telephone, other electronic means, or in person, and solicitation costs will be
paid by GE. Copies of proxy material and of the Annual Report for 1996 will be
supplied to brokers, dealers, banks and voting trustees, or their nominees, for
the purpose of soliciting proxies from beneficial owners, and GE will reimburse
such record holders for their reasonable expenses. Morrow & Co. has been
retained to assist in soliciting proxies at a fee of $20,000, plus distribution
costs and other costs and expenses.
March 12, 1997
51
EXHIBIT A
* PROPOSED GE 1990 LONG-TERM INCENTIVE PLAN, AS AMENDED AND RESTATED AS OF
APRIL 23, 1997
SECTION 1. PURPOSE
The purposes of this GE 1990 Long-Term Incentive Plan (the "Plan") are to
encourage selected salaried employees of General Electric Company (together with
any successor thereto, the "Company") and its Affiliates (as defined below) to
acquire a proprietary interest in the growth and performance of the Company, to
generate an increased incentive to contribute to the Company's future success
and prosperity, thus enhancing the value of the Company for the benefit of its
share owners, and to enhance the ability of the Company and its Affiliates to
attract and retain exceptionally qualified individuals upon whom, in large
measure, the sustained progress, growth and profitability of the Company depend.
SECTION 2. DEFINITIONS
As used in the Plan, the following terms shall have the meanings set forth
below:
(a) "Affiliate" shall mean (i) any entity that, directly or through one or
more intermediaries, is controlled by the Company and (ii) any entity in
which the Company has a significant equity interest, as determined by the
Committee.
(b) "Award" shall mean any Option, Stock Appreciation Right, Restricted Stock,
Restricted Stock Unit, Performance Award, Dividend Equivalent, or Other
Stock-Based Award granted under the Plan.
(c) "Award Agreement" shall mean any written agreement, contract, or other
instrument or document evidencing any Award granted under the Plan.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(e) "Committee" shall mean a committee of the Board of Directors of the
Company, acting in accordance with the provisions of Section 3, designated
by the Board to administer the Plan and composed of not less than three
directors, each of whom is not an employee of the Company or an Affiliate.
(f) "Dividend Equivalent" shall mean any right granted under Section 6(e) of
the Plan.
(g) "Fair Market Value" shall mean, with respect to any property (including,
without limitation, any Shares or other securities), the fair market value
of such property determined by such methods or procedures as shall be
established from time to time by the Committee.
52
(h) "Incentive Stock Option" shall mean an option granted under Section 6(a) of
the Plan that is intended to meet the requirements of Section 422 of the
Code, or any successor provision thereto.
(i) "1983 Plan" shall mean the Company's 1983 Stock Option-Performance Unit
Plan.
(j) "Non-Qualified Stock Option" shall mean an option granted under Section
6(a) of the Plan that is not intended to be an Incentive Stock Option.
(k) "Option" shall mean an Incentive Stock Option or a Non-Qualified Stock
Option.
(l) "Other Stock-Based Award" shall mean any right granted under Section 6(f)
of the Plan.
(m) "Participant" shall mean a Salaried Employee designated to be granted an
Award under the Plan.
(n) "Performance Award" shall mean any right granted under Section 6(d) of the
Plan.
(o) "Person" shall mean any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization, or government or
political subdivision thereof.
(p) "Released Securities" shall mean securities that were Restricted Securities
with respect to which all applicable restrictions have expired, lapsed, or
been waived.
(q) "Restricted Securities" shall mean Awards of Restricted Stock or other
Awards under which issued and outstanding Shares are held subject to
certain restrictions.
(r) "Restricted Stock" shall mean any Share granted under Section 6(c) of the
Plan.
(s) "Restricted Stock Unit" shall mean any right granted under Section 6(c) of
the Plan that is denominated in Shares.
(t) "Salaried Employee" shall mean any salaried employee of the Company or of
any Affiliate.
(u) "Shares" shall mean the common shares of the Company, $0.32 par value, and
such other securities or property as may become the subject of Awards, or
become subject to Awards, pursuant to an adjustment made under Section 4(b)
of the Plan.
(v) "Stock Appreciation Right" shall mean any right granted under Section 6(b)
of the Plan.
SECTION 3. ADMINISTRATION
Except as otherwise provided herein, the Plan shall be administered by the
Committee. Subject to the terms of the Plan and applicable law, the Committee
shall have full power and authority to: (i) designate Participants; (ii)
determine the type or types of Awards to be granted to each Participant under
the Plan; (iii) determine the number of Shares to be covered by (or with respect
53
to which payments, rights, or other matters are to be calculated in connection
with) Awards; (iv) determine the terms and conditions of any Award; (v)
determine whether, to what extent, and under what circumstances Awards may be
settled or exercised in cash, Shares, other securities, other Awards, or other
property, or canceled, forfeited, or suspended, and the method or methods by
which Awards may be settled, exercised, canceled, forfeited, or suspended; (vi)
determine whether, to what extent, and under what circumstances cash, Shares,
other securities, other Awards, other property, and other amounts payable with
respect to an Award under the Plan shall be deferred either automatically or at
the election of the holder thereof or of the committee; (vii) interpret and
administer the Plan and any instrument or agreement relating to, or Award made
under, the Plan; (viii) establish, amend, suspend, or waive such rules and
regulations and appoint such agents as it shall deem appropriate for the proper
administration of the Plan; and (ix) make any other determination and take any
other action that the Committee deems necessary or desirable for the
administration of the Plan. Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations, and other decisions under or with
respect to the Plan or any Award shall be within the sole discretion of the
Committee, may be made at any time, and shall be final, conclusive, and binding
upon all Persons, including the Company, any Affiliate, any Participant, any
holder or beneficiary of any Award, any share owner, and any employee of the
Company or of any Affiliate. Actions of the Committee may be taken either (i) by
a subcommittee, designated by the Committee, composed of three or more members,
or (ii) by the Committee but with one or more members abstaining or recusing
himself or herself from acting on the matter, so long as two or more members
remain to act on the matter. Such action, authorized by such a subcommittee or
by the Committee upon the abstention or recusal of such members, shall be the
action of the Committee for purposes of the Plan.
SECTION 4. SHARES AVAILABLE FOR AWARDS
(a) SHARES AVAILABLE. Subject to adjustment as provided in Section 4(b):
(i) CALCULATION OF NUMBER OF SHARES AVAILABLE. The number of Shares
available for granting Awards under the Plan in each calendar year or,
in the case of the years 1990 and 2007, part thereof shall be
ninety-five one-hundredths of one percent (0.95%) of the issued Shares
(including, without limitation, treasury Shares) as of the first day
of such year; provided, however, that the number of Shares available
for granting Awards in any calendar year shall be increased in any
such year by the number of Shares available under the Plan in previous
years but not covered by Awards granted under the Plan in such years.
Further, if, after the effective date of the Plan, any Shares covered
by an Award granted under the Plan or by an award granted under the
1983 Plan, or to which such an Award or award relates, are forfeited,
54
or if an Award or award otherwise terminates without the delivery of
Shares or of other consideration, then the Shares covered by such
Award or award, or to which such Award or award relates, or the number
of Shares otherwise counted against the aggregate number of Shares
available under the Plan with respect to such Award or award, to the
extent of any such forfeiture or termination, shall again be, or shall
become, available for granting Awards under the Plan. Notwithstanding
the foregoing but subject to adjustment as provided in Section 4(b),
no more than fifty million (50,000,000) Shares shall be cumulatively
available for delivery pursuant to the exercise of Incentive Stock
Options.
(ii) ACCOUNTING FOR AWARDS. For purposes of this Section 4,
(A) if an Award (other than a Dividend Equivalent) is denominated
in Shares, the number of Shares covered by such Award, or to
which such Award relates, shall be counted on the date of grant
of such Award against the aggregate number of Shares available
for granting Awards under the Plan; and
(B) Dividend Equivalents and Awards not denominated in Shares shall
be counted against the aggregate number of Shares available for
granting Awards under the Plan in such amount and at such time
as the Committee shall determine under procedures adopted by
the committee consistent with the purposes of the Plan;
PROVIDED, HOWEVER, that Awards that operate in tandem with (whether
granted simultaneously with or at a different time from), or that are
substituted for, other Awards or awards granted under the 1983 Plan
may be counted or not counted under procedures adopted by the
Committee in order to avoid double counting. Any Shares that are
delivered by the Company, and any Awards that are granted by, or
become obligations of, the Company through the assumption by the
Company or an Affiliate of, or in substitution for, outstanding awards
previously granted by an acquired company, shall not be counted
against the Shares available for granting Awards under the Plan.
(iii)SOURCES OF SHARES DELIVERABLE UNDER AWARDS. Any Shares delivered
pursuant to an Award may consist, in whole or in part, of authorized
and unissued Shares or of treasury Shares.
(b) ADJUSTMENTS. In the event that the Committee shall determine that any
dividend or other distribution (whether in the form of cash, Shares, other
securities, or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, or exchange of Shares or other securities of the
Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company, or other similar corporate transaction or event
affects the Shares such that an adjustment is determined by the Committee to
be appropriate in order to prevent dilution or enlargement of the benefits
or potential benefits intended to be made available under the Plan, then the
55
Committee shall, in such manner as it may deem equitable, adjust any or all
of (i) the number and type of Shares (or other securities or property) which
thereafter may be made the subject of Awards, (ii) the number and type of
Shares (or other securities or property) subject to outstanding Awards,
(iii) the number and type of Shares (or other securities or property)
specified as the annual per-participant limitation under Section 6(g)(vi),
and (iv) the grant, purchase, or exercise price with respect to any Award,
or, if deemed appropriate, make provision for a cash payment to the holder
of an outstanding Award; provided, however, in each case, that with respect
to Awards of Incentive Stock Options no such adjustment shall be authorized
to the extent that such authority would cause the Plan to violate Section
422(b)(1) of the Code or any successor provision thereto; and PROVIDED
FURTHER, HOWEVER, that the number of Shares subject to any Award denominated
in Shares shall always be a whole number.
SECTION 5. ELIGIBILITY
Any Salaried Employee, including any officer or employee-director of the Company
or of any Affiliate, who is not a member of the Committee shall be eligible to
be designated a Participant.
SECTION 6. AWARDS
(a) OPTIONS. The Committee is hereby authorized to grant Options to Participants
with the following terms and conditions and with such additional terms and
conditions, in either case not inconsistent with the provisions of the Plan,
as the Committee shall determine:
(i) EXERCISE PRICE. The purchase price per Share purchasable under an
Option shall be determined by the Committee; provided, however, that
such purchase price shall not be less than the Fair Market Value of a
Share on the date of grant of such Option (or, if the Committee so
determines, in the case of any Option retroactively granted in tandem
with or in substitution for another Award or any outstanding award
granted under any other plan of the Company, on the date of grant of
such other Award or award).
(ii) OPTION TERM. The term of each Option shall be fixed by the Committee.
(iii)TIME AND METHOD OF EXERCISE. The Committee shall determine the time or
times at which an Option may be exercised in whole or in part, and the
method or methods by which, and the form or forms, including, without
limitation, cash, Shares, other Awards, or other property, or any
combination thereof, having a Fair Market Value on the exercise date
equal to the relevant exercise price, in which, payment of the
exercise price with respect thereto may be made or deemed to have been
made.
56
(iv) INCENTIVE STOCK OPTIONS. The terms of any Incentive Stock Option
granted under the Plan shall comply in all respects with the
provisions of Section 422 of the Code, or any successor provision
thereto, and any regulations promulgated thereunder.
(b) STOCK APPRECIATION RIGHTS. The Committee is hereby authorized to grant Stock
Appreciation Rights to Participants. Subject to the terms of the Plan and
any applicable Award Agreement, a Stock Appreciation Right granted under the
Plan shall confer on the holder thereof a right to receive, upon exercise
thereof, the excess of (i) the Fair Market Value of one Share on the date of
exercise or, if the Committee shall so determine in the case of any such
right other than one related to any Incentive Stock Option, at any time
during a specified period before or after the date of exercise over (ii) the
grant price of the right as specified by the Committee, which shall not be
less than the Fair Market Value of one Share on the date of grant of the
Stock Appreciation Right (or, if the Committee so determines, in the case of
any Stock Appreciation Right retroactively granted in tandem with or in
substitution for another Award or any outstanding award granted under any
other plan of the Company, on the date of grant of such other Award or
award). Subject to the terms of the Plan and any applicable Award Agreement,
the grant price, term, methods of exercise, methods of settlement, and any
other terms and conditions of any Stock Appreciation Right shall be as
determined by the Committee. The Committee may impose such conditions or
restrictions on the exercise of any Stock Appreciation Right as it may deem
appropriate.
(c) RESTRICTED STOCK AND RESTRICTED STOCK UNITS.
(i) ISSUANCE. The Committee is hereby authorized to grant Awards of
Restricted Stock and Restricted Stock Units to Participants.
(ii) RESTRICTIONS. Shares of Restricted Stock and Restricted Stock Units
shall be subject to such restrictions as the Committee may impose
(including, without limitation, any limitation on the right to vote a
Share of Restricted Stock or the right to receive any dividend or
other right or property), which restrictions may lapse separately or
in combination at such time or times, in such installments or
otherwise, as the Committee may deem appropriate.
(iii)REGISTRATION. Any Restricted Stock granted under the Plan may be
evidenced in such manner as the Committee may deem appropriate,
including, without limitation, book-entry registration or issuance of
a stock certificate or certificates. In the event any stock
certificate is issued in respect of Shares of Restricted Stock granted
under the Plan, such certificate shall be registered in the name of
the Participant and shall bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such Restricted
Stock.
(iv) FORFEITURE. Except as otherwise determined by the Committee, upon
termination of employment (as determined under criteria established by
the Committee) for any reason during the applicable restriction
57
period, all Shares of Restricted Stock and all Restricted Stock Units
still, in either case, subject to restriction shall be forfeited and
reacquired by the Company; provided, however, that the Committee may,
when it finds that a waiver would be in the best interests of the
Company, waive in whole or in part any or all remaining restrictions
with respect to Shares of Restricted Stock or Restricted Stock Units.
Unrestricted Shares, evidenced in such manner as the Committee shall
deem appropriate, shall be delivered to the holder of Restricted Stock
promptly after such Restricted Stock shall become Released Securities.
(d) PERFORMANCE AWARDS. The Committee is hereby authorized to grant Performance
Awards to Participants. Subject to the terms of the Plan and any applicable
Award Agreement, a Performance Award granted under the Plan (i) may be
denominated or payable in cash, Shares (including, without limitation,
Restricted Stock), other securities, other Awards, or other property and
(ii) shall confer on the holder thereof rights valued as determined by the
Committee and payable to, or exercisable by, the holder of the Performance
Award, in whole or in part, upon the achievement of such performance goals
during such performance periods as the Committee shall establish. Subject to
the terms of the Plan and any applicable Awards Agreement, the performance
goals to be achieved during any performance period, the length of any
performance period, the amount of any Performance Award granted, and the
amount of any payment or transfer to be made pursuant to any Performance
Award shall be determined by the Committee.
(e) DIVIDEND EQUIVALENTS. The Committee is hereby authorized to grant to
Participants Awards under which the holders thereof shall be entitled to
receive payments equivalent to dividends or interest with respect to a
number of Shares determined by the Committee, and the Committee may provide
that such amounts (if any) shall be deemed to have been reinvested in
additional Shares or otherwise reinvested. Subject to the terms of the Plan
and any applicable Award Agreement, such Awards may have such terms and
conditions as the Committee shall determine.
(f) OTHER STOCK-BASED AWARDS. The Committee is hereby authorized to grant to
Participants such other Awards that are denominated or payable in, valued in
whole or in part by reference to, or otherwise based on or related to,
Shares (including, without limitation, securities convertible into Shares),
as are deemed by the Committee to be consistent with the purposes of the
Plan, provided, however, that such grants must comply with applicable law.
Subject to the terms of the Plan and any applicable Award Agreement, the
Committee shall determine the terms and conditions of such Awards. Shares or
other securities delivered pursuant to a purchase right granted under this
Section 6(f) shall be purchased for such consideration, which may be paid by
such method or methods and in such form or forms, including, without
limitation, cash, Shares, other securities, other Awards, or other property,
or any combination thereof, as the Committee shall determine, the value of
58
which consideration, as established by the Committee, shall not be less than
the Fair Market Value of such Shares or other securities as of the date such
purchase right is granted (or, if the Committee so determines, in the case
of any such purchase right retroactively granted in tandem with or in
substitution for another Award or any outstanding award granted under any
other plan of the Company, on the date of grant of such other Award or
award).
(g) GENERAL.
(i) NO CASH CONSIDERATION FOR AWARDS. Awards shall be granted for no cash
consideration or for such minimal cash consideration as may be
required by applicable law.
(ii) AWARDS MAY BE GRANTED SEPARATELY OR TOGETHER. Awards may, in the
discretion of the Committee, be granted either alone or in addition
to, in tandem with, or in substitution for any other Award or any
award granted under any other plan of the Company or any Affiliate.
Awards granted in addition to or in tandem with other Awards, or in
addition to or in tandem with awards granted under any other plan of
the Company or any Affiliate, may be granted either at the same time
as or at a different time from the grant of such other Awards or
awards.
(iii)FORMS OF PAYMENT UNDER AWARDS. Subject to the terms of the Plan and
of any applicable Award Agreement, payments or transfers to be made by
the Company or an Affiliate upon the grant, exercise, or payment of an
Award may be made in such form or forms as the Committee shall
determine, including, without limitation, cash, Shares, other
securities, other Awards, or other property, or any combination
thereof, and may be made in a single payment or transfer, in
installments, or on a deferred basis, in each case in accordance with
rules and procedures established by the Committee. Such rules and
procedures may include, without limitation, provisions for the payment
or crediting of reasonable interest on installment or deferred
payments or the grant or crediting of Dividend Equivalents in respect
of installment or deferred payments.
(iv) LIMITS ON TRANSFER OF AWARDS. No Award (other than Released
Securities), and no right under any such Award, shall be assignable,
alienable, saleable, or transferable by a Participant otherwise than
by will or by the laws of descent and distribution (or, in the case of
an Award of Restricted Securities, to the Company); provided, however,
that, if so determined by the Committee, a Participant may, in the
manner established by the Committee, designate a beneficiary or
beneficiaries to exercise the rights of the Participant, and to
receive any property distributable, with respect to any Award upon the
death of the Participant. Each Award, and each right under any Award,
shall be exercisable, during the Participant's lifetime, only by the
Participant or, if permissible under applicable law, by the
59
Participant's guardian or legal representative. No Award (other than
Released Securities), and no right under any such Award, may be
pledged, alienated, attached, or otherwise encumbered, and any
purported pledge, alienation, attachment, or encumbrance thereof shall
be void and unenforceable against the Company or any Affiliate.
(v) TERM OF AWARDS. The term of each Award shall be for such period as may
be determined by the Committee; PROVIDED, HOWEVER, that in no event
shall the term of any Incentive Stock Option exceed a period of ten
years from the date of its grant.
(vi) PER-PERSON LIMITATION ON OPTIONS AND SARs. The number of Shares with
respect to which Options and SARs may be granted under the Plan to an
individual Participant in any three-year period from April 23, 1997
through the end of the term of the Plan shall not exceed 1,500,000
Shares, subject to adjustment as provided in Section 4(b).
(vii)AGGREGATE LIMITATION ON CERTAIN AWARDS. The number of Shares with
respect to which Restricted Stock, Restricted Stock Units, Performance
Awards and Other Stock-Based Awards may be granted under the Plan to
all Participants in any three-year period from April 23, 1997 through
the end of the term of the Plan shall not in the aggregate exceed 20%
of the total number of Shares available for granting Awards during
such three-year period.
(viii)SHARE CERTIFICATES. All certificates for Shares or other securities
delivered under the Plan pursuant to any Award or the exercise thereof
shall be subject to such stop transfer orders and other restrictions
as the Committee may deem advisable under the Plan or the rules,
regulations, and other requirements of the Securities and Exchange
Commission, any stock exchange upon which such Shares or other
securities are then listed, and any applicable Federal or state
securities laws, and the Committee may cause a legend or legends to be
put on any such certificates to make appropriate reference to such
restrictions.
SECTION 7. AMENDMENT AND TERMINATION
Except to the extent prohibited by applicable law and unless otherwise expressly
provided in an Award Agreement or in the Plan:
(a) AMENDMENTS TO THE PLAN. The Board of Directors of the Company may amend,
alter, suspend, discontinue, or terminate the Plan, including, without
limitation, any amendment, alteration, suspension, discontinuation, or
termination that would impair the rights of any Participant, or any other
holder or beneficiary of any Award theretofore granted, without the consent
of any share owner, Participant, other holder or beneficiary of an Award, or
other Person; PROVIDED, HOWEVER, that, notwithstanding any other provision
of the Plan or any Award Agreement, without the approval of the share owners
of the Company no such amendment, alteration, suspension, discontinuation,
or termination shall be made that would:
60
(i) increase the total number of Shares available for Awards under the
Plan, except as provided in Section 4 hereof; or
(ii) permit Options, Stock Appreciation Rights, or other Stock-Based Awards
encompassing rights to purchase Shares to be granted with per Share
grant, purchase, or exercise prices of less than the Fair Market Value
of a Share on the date of grant thereof, except to the extent
permitted under Sections 6(a), 6(b), or 6(f) hereof.
(b) AMENDMENTS TO AWARDS. The Committee may waive any conditions or rights
under, amend any terms of, or amend, alter, suspend, discontinue, or
terminate, any Awards theretofore granted, prospectively or retroactively,
without the consent of any relevant Participant or holder or beneficiary of
an Award.
(c) ADJUSTMENTS OF AWARDS UPON CERTAIN ACQUISITIONS. In the event the Company or
any Affiliate shall assume outstanding employee awards or the right or
obligation to make future such awards in connection with the acquisition of
another business or another corporation or business entity, the Committee
may make such adjustments, not inconsistent with the terms of the Plan, in
the terms of Awards as it shall deem appropriate in order to achieve
reasonable comparability or other equitable relationship between the assumed
awards and the Awards granted under the Plan as so adjusted.
(d) ADJUSTMENTS OF AWARDS UPON THE OCCURRENCE OF CERTAIN UNUSUAL OR NONRECURRING
EVENTS. The Committee shall be authorized to make adjustments in the terms
and conditions of, and the criteria included in, Awards in recognition of
unusual or nonrecurring events (including, without limitation, the events
described in Section 4 (b) hereof) affecting the Company, any Affiliate, or
the financial statements of the Company or any Affiliate, or of changes in
applicable laws, regulations, or accounting principles, whenever the
Committee determines that such adjustments are appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits to be
made available under the Plan.
(e) CORRECTION OF DEFECTS, OMISSIONS, AND INCONSISTENCIES. The Committee may
correct any defect, supply any omission, or reconcile any inconsistency in
the Plan or any Award in the manner and to the extent it shall deem
desirable to carry the Plan into effect.
SECTION 8. GENERAL PROVISIONS
(a) NO RIGHTS TO AWARDS. No Salaried Employee, Participant or other Person shall
have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Salaried Employees, Participants,
or holders or beneficiaries of Awards under the Plan. The terms and
conditions of Awards need not be the same with respect to each recipient.
(b) DELEGATION. The Committee may delegate to one or more officers or managers
of the Company or any Affiliate, or a committee of such officers or
managers, the authority, subject to such terms and limitations as the
Committee shall determine, to grant Awards to, or to cancel, modify, waive
61
rights with respect to, alter, discontinue, suspend, or terminate Awards
held by, Salaried Employees who are not officers or directors of the Company
for purposes of Section 16 of the Securities Exchange Act of 1934, as
amended.
(c) WITHHOLDING. The Company or any Affiliate shall be authorized to withhold
from any Award granted or any payment due or transfer made under any Award
or under the Plan the amount (in cash, Shares, other securities, other
Awards, or other property) of withholding taxes due in respect of an Award,
its exercise, or any payment or transfer under such Award or under the Plan
and to take such other action as may be necessary in the opinion of the
Company or Affiliate to satisfy all obligations for the payment of such
taxes.
(d) NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS. Nothing contained in the Plan
shall prevent the Company or any Affiliate from adopting or continuing in
effect other or additional compensation arrangements, and such arrangements
may be either generally applicable or applicable only in specific cases.
(e) NO RIGHT TO EMPLOYMENT. The grant of an Award shall not be construed as
giving a Participant the right to be retained in the employ of the Company
or any Affiliate. Further, the Company or an Affiliate may at any time
dismiss a Participant from employment, free from any liability, or any claim
under the Plan, unless otherwise expressly provided in the Plan or in any
Award Agreement.
(f) GOVERNING LAW. The validity, construction, and effect of the Plan and any
rules and regulations relating to the Plan shall be determined in accordance
with the laws of the State of New York and applicable Federal law.
(g) SEVERABILITY. If any provision of the Plan or any Award is or becomes or is
deemed to be invalid, illegal, or unenforceable in any jurisdiction, or as
to any Person or Award, or would disqualify the Plan or any Award under any
law deemed applicable by the Committee, such provision shall be construed or
deemed amended to conform to applicable laws, or if it cannot be so
construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan or the Award, such provision
shall be stricken as to such jurisdiction, Person, or Award, and the
remainder of the Plan and any such Award shall remain in full force and
effect.
(h) NO TRUST OR FUND CREATED. Neither the Plan nor any Award shall create or be
construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant or any
other Person. To the extent that any Person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any unsecured general creditor of the
Company or any Affiliate.
(i) NO FRACTIONAL SHARES. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award, and the Committee shall determine whether
cash, other securities, or other property shall be paid or transferred in
lieu of any fractional Shares, or whether such fractional Shares or any
rights thereto shall be canceled, terminated, or otherwise eliminated.
62
(j) HEADINGS. Headings are given to the Sections and subsections of the Plan
solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation
of the Plan or any provision thereof.
SECTION 9. EFFECTIVE DATE OF THE PLAN
The Plan shall be effective as of the date of its approval by the share owners
of the Company.
SECTION 10. TERM OF THE PLAN
No Award shall be granted under the Plan after May 1, 2007. However, unless
otherwise expressly provided in the plan or in an applicable Award Agreement,
any Award theretofore granted may extend beyond such date, and the authority of
the Committee to amend, alter, adjust, suspend, discontinue, or terminate any
such Award, or to waive any conditions or rights under any such Award, and the
authority of the Board of Directors of the Company to amend the Plan, shall
extend beyond such date.
64
1997 ANNUAL MEETING OF SHARE OWNERS
10:00 a.m., EDT, April 23, 1997
Charlotte Convention Center
501 South College Street
Charlotte, North Carolina 28202
CUT OFF AT DOTTED LINE
- --------------------------------------------------------------------------------
ADVANCE REGISTRATION FORM
Send your completed and signed proxy form in the enclosed envelope. Include this
Advance Registration Form in the envelope if you plan to attend or send a
representative to the Annual Meeting.
Attendance at the Annual Meeting is limited to GE share owners, members of their
immediate family or their named representative. We reserve the right to limit
the number of guests or representatives who may attend the meeting.
(PLEASE PRINT)
Share Owner's Name _____________________________________________________________
Address ________________________________________________________________________
________________________________________________________________________________
_____________________________________________________ Zip ____________________
Name(s) of
Family Member(s)
Who Will Also Attend ______________________________
I am a GE Share Owner. My Representative at the Annual Meeting will be:
________________________________________________________________________________
(Admission card will be returned c/o the share owner's address)
________________________________________________________________________________
Share Owner's Signature
[GE Logo] PROXY FORM
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHARE OWNERS, APRIL 23, 1997
The share owner(s) whose signature(s) appear(s) on the reverse side of this
Proxy Form hereby appoint(s) John F. Welch, Jr., Gertrude G. Michelson and
Benjamin W. Heineman, Jr. or any of them, each with full power of substitution,
as proxies, to vote all stock in General Electric Company which the share
owner(s) would be entitled to vote on all matters which may come before the 1997
Annual Meeting of Share Owners and any adjournments thereof. THE PROXIES SHALL
VOTE SUBJECT TO THE DIRECTIONS INDICATED ON THE REVERSE SIDE OF THIS CARD AND
PROXIES ARE AUTHORIZED TO VOTE IN THEIR DISCRETION UPON OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.
THE PROXIES WILL VOTE AS THE BOARD OF DIRECTORS RECOMMENDS WHERE A CHOICE IS NOT
SPECIFIED.
The nominees for Director are: D. Wayne Calloway, Silas S.
Cathcart, Dennis D. Dammerman, Paolo Fresco, Claudio X.
Gonzalez, Gertrude G. Michelson, Sam Nunn, John D. Opie, Roger
S. Penske, Barbara Scott Preiskel, Frank H. T. Rhodes, Andrew C.
Sigler, Douglas A. Warner III, and John F. Welch, Jr.
FOR PARTICIPANTS IN GE'S SAVINGS AND SECURITY PROGRAM (S&SP):
IN ACCORDANCE WITH THE TERMS OF THE SAVINGS AND SECURITY PROGRAM (S&SP), ANY
SHARES HELD IN THE SHARE OWNER'S S&SP ACCOUNT ON THE RECORD DATE WILL BE VOTED
BY THE TRUSTEES OF THE S&SP TRUST IN ACCORDANCE WITH THE INSTRUCTIONS INDICATED
ON THE REVERSE, AND IN ACCORDANCE WITH THE JUDGMENT OF THE TRUSTEES UPON OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENTS OR
POSTPONEMENTS THEREOF. IF NO INSTRUCTIONS ARE PROVIDED OR IF THIS CARD IS NOT
RECEIVED ON OR BEFORE APRIL 21, 1997, SHARES HELD IN THE SHARE OWNER'S S&SP
ACCOUNT WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF GE'S BOARD OF
DIRECTORS.
INSPECTORS OF ELECTION
P.O. BOX 20190
NEWARK, NJ 07101-9759
[GE Logo] PROXY FORM
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS A, B AND C, D and E.
A. Election of Directors
For Withhold
All [ ] for All [ ] Exceptions [ ]
Exceptions _______________________________________________
INSTRUCTIONS: To withhold authority to vote for any
individual nominee(s), mark the exception box and write the
person(s) name(s) on the space provided above.
B. KPMG Peat Marwick LLP as Independent Auditors.
For [ ] Against [ ] Abstain [ ]
C. Proposal for 2-for-1 Stock Split and Increase in Number of
Authorized Shares
For [ ] Against [ ] Abstain [ ]
D. Proposal to Approve Executive Officer Performance Goals
For [ ] Against [ ] Abstain [ ]
E. Proposal to Amend and Extend the GE 1990 Long-Term Incentive
Plan
For [ ] Against [ ] Abstain [ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THE SHARE OWNER PROPOSALS 1
THROUGH 6.
1. Term Limit for Outside Directors
For [ ] Against [ ] Abstain [ ]
2. GE's Nuclear Power Business
For [ ] Against [ ] Abstain [ ]
3. Environmental Report
For [ ] Against [ ] Abstain [ ]
4. Maquiladoras Report
For [ ] Against [ ] Abstain [ ]
5. Executive Compensation Limits
For [ ] Against [ ] Abstain [ ]
6. Military Contracts Standards
For [ ] Against [ ] Abstain [ ]
If you do not wish to receive an
Annual Report for this account, please
mark this box. [ ]
To include any comments please mark
this box and use reverse side. [ ]
To change your address please mark
this box and correct at left. [ ]
(When signing as attorney, executor, administrator, trustee or
guardian, give full title. If more than one trustee, all should
sign.)
Dated: ____________________________, 1997
_________________________________________
Signature of Share Owner
_________________________________________
Signature of Share Owner
PLEASE DATE, SIGN AND RETURN PROMPTLY IN THE ACCOMPANYING
ENVELOPE.
VOTE MUST BE INDICATED [X] IN BLACK OR BLUE INK.
[GE Logo]
General Electric Company
3135 Easton Turnpike,
Fairfield, CT 06431
April 9, 1997
Dear Share Owner:
We have not, as yet, received your proxy for GE's Annual Meeting
of Share Owners to be held on April 23.
I sincerely believe that as a share owner you will want to have
your shares represented and voted the way you wish at the meeting.
Accordingly, we are enclosing a duplicate proxy statement and proxy form.
If you've just recently mailed back your original proxy, you needn't send
another. If, however, that is not the case, please complete, sign and mail
this form as soon as possible. By doing so, you can be sure your shares
will be represented at the meeting whether or not you plan to attend.
Cordially,
/s/ John F. Welch, Jr.
Chairman of the Board