Jeff Immelt on 2008 compensation

February 18, 2009

In a tough environment in 2008, we set a record for revenue and had our third-highest earnings year ever. Our earnings declined 19% versus a decline in S&P 500 earnings of 30%. That’s not the kind of outperformance we like, but it was still better than the broader market. During the year, we continued to execute in areas that give GE solid competitive advantage over the long-term: generating strong cash flow, leading in environmentally sound products and services, expanding in global markets, and investing in innovation, technology and leaders even in tough times.

However, earnings came in below where we expected. The broad equity markets, and GE’s stock price, declined significantly in 2008.

In these circumstances, I recommended to GE’s Board of Directors that I would not receive a bonus for 2008. In addition, I participated in a 2006-08 Long-Term Incentive Plan, along with 500 other GE executives. This results in a payout every three years based on the company’s performance against specific targets in earnings, growth, cash flow, and returns. GE met or exceeded three of the four operating goals set by the Board for this three-year period. But given the circumstances, I recommended to the Board that I not receive this payout. The Board agreed with my recommendations.

At the same time, it is important that the Board and I have the freedom to compensate our senior executives in a fair and reasonable way, consistent with performance against specific goals in 2008 and over the last three years. We believe that our senior executives’ compensation in 2008 reflects their contribution to GE.

These compensation decisions, which are addressed in our 2009 proxy statement, are consistent with GE’s performance culture as well as our commitment to developing strong global business leaders.

* Financial Times: Immelt waives $12m GE bonus

This entry was posted in Financial Markets, Investors, Jeff Immelt, Other and tagged Jeff Immelt. Bookmark the permalink.

Jerry M.

In response to Su-Ju-Lee,

Given the cold shoulder Mr. Immelt addressed the negative commentary, or better accusations from the Deutsche Bank and others; as shareholders our only recourse is to effect a change of management and board. With the next proxy and shareholder meeting in Orlando, Florida April. our displeasure with management will be up front and LOUD
EC

To the Board,
I have great respect for Mr. Immelt. However, forgive the analogy to The Godfather, but it’s time to bring back a CEO who is a proven "wartime consigliere". It’s time to bring Jack back.
Jerry M.

Immelt, time is not in your favor
Ruben

I commend Mr. Immelt for forgoing his bonus. It shows great leadership and integrity. However this is lost on his underlings who accepted their bonuses. Shame on them. Hopefully you’ll learn from Mr. Immelt.A person making $50K a year has to work more than 20 yrs. to make what you make in one yr. in bonuses alone. Just thought I’d add that in to put things in perspective.
Ruben

Correction—A person making $50K a year for over 40 years will still have made less than what your bonus is for one year.
Chuck Roast

You’re still a screwup.
Aditya

Dear Jeff

It is a huge personal commitment to forgo your ’08 bonus, We are living in turbulant times ….the shareholder’s stick is whipping GE stock price and performance as a diversified, out of focus entity …GE has to look at alternatives ie , look at Nokia’s example and it seems that GE stocks will continue to slide from its present value by this financial year if we do not act fast and isolate the hemmorage in cash flows from our financial services unit .
Wish You and the senior management all the best in making the transition less painful and smooth for all stakeholders in the financial services unit of this great Company
Efendi P. Napitupulu

I think not many executives today who are really willing to release a $12M for what they have done for the whole year. Like someone says "hard work" has to be paid off, but Mr. Jeff is kind of a leader who proves himself different than others, as Prime Minister Gordon Brown says, "In extraordinary time requires extraordinary action. I am so proud of you Jeff
donald bailey

Dear Mr. Emmelt your decision not to accept compensation for 2008, makes me proud to say that I work for a leader of integrity an moral conviction and wholeads by example. THANKYOU
Mark Mixell

The current leadership is just an extension of Jack and he built this house of cards largely on Capital. Do any of these guys really think they earned these bonuses based on their leadership??

An interesting read is "Who Killed Westinghouse?" – not to conclude that GE will follow that example but the comparison is hard to ignore. – MEM
Jeff

Hey Jurgen – How is Jeff leading by example if no one else is giving up the bonuses?
I

jeff don’t listen to the hatrz! they are so short-sighted. i wish all ceos were as forward-thinking, honest, and intelligent as you!!! as long as you’re around i’ll always be a ge fan! xoxo
Eugene Hersh

I have spent 40 years working for this Company and contributed to my pension and my 401K each month.
I was beliving that the GE stock and Elfun funds are in good hands and that the payment to the company leaders was justefied and presently I can not belive that we got to the point that there is not much left. We have 148 VP,s and that is way beyond what I feel it takes to manage the leftovers. Lets turn back to the description of General Electric.
Jeff P

Mr. Immelt made the correct choice in surrendering his bonus based on the condition of this company and the impact to its shareholders. Especially for those who are nearing retirement or have just retired. But what about the rest of the Executives? Nothing like making a stand to go into battle and have the rest of the inner circle run the other way. I mean we are talking about giving up bonuses, not salary. I am also alarmed to see that the head of GE Money had the largest compensation package. Maybe I’m missing something, but I was under the impression our Financial Arm is over extended and one of the main reasons our stock has gone from 40 to 10. (Plus or minus a couple of dollars, but at this point who is really counting.) At least we still collect a nice dividend for all the shares we have in our 401K!

For those of you who feel you are on a first name basis with “Jeff” and think they are competing for a piece of Mr. Immelt’s forfeited bonus, please keep up the writing. It is very entertaining and nice to see all the…well you know…that work for this company.
J Fernandez

A noble gesture on Mr. Immelts part, it would be great to see other high-level execs within the GE organization following his example.
Noble Toney

Leadership in ending all bonus pay is what is needed when GE stock declines 70 plus percent. It looks bad to outsiders and the Capital is needed by the company.
It is give back time.
David

Having read all of the above commentary, one thing stands out above all. Lack of attention to detail. The plethora of misspellings grammatical genocide is apalling. It’s no wonder GE is in such horrible financial condition and our leadership is bankrolling themselves while abusing the workers who put them there. Wake up and smell the toast burning people. So our great Jeff Immelt passes on his $12 million bonus. Whoopie!! I’d gladly settle for .01% of his worth. While some of you herald him as a hero he goes on his merry way oblivious to what the day-to-day hourly folks try to live on. You want to impress me? Decree that NO bonuses will be paid out until and unless common sense management once again rules at GE. All the hype about integrity and honesty is just so much window dressing and hold no more sincerity than a Saturday morning cartoon.
GEpumper™

Once again the CEO of this Company has been caught in another lie.
He guaranteed us the dividend was safe through 2009 and we are only 2 months into it!
Whats next?
Resign now!
jbm

Way to go Jeff ! Once again you’ve proved you’re a liar. Resign now and take your BOD with you. You have ZERO credibility.
Robert Strom

Yet another surprise. Once again company management promises one thing then delivers another. How can a compnay survive when management is so out of touch with reality?
lfmjr

I read in the 2009 proxy statement that unlike Jeff I., Keith Sherrin and Mike Neal have been awarded and accepted a $2MM cash bonus each and Mr. Neal a base salary raise of $250K (1.5MM to 1.75MM). Using the phrases/rationale for cutting shareowner dividends by 68%, certainly a case can be made for canceling their bonuses and keeping Mr. Neal’s salary the same as a “precautionary action” and a “prudent measure” to assist in “achieving capital and liquidity goals” for 2009, while maintaining top executive salaries at a “competitive level”–who’s going to pay them more after their leader blows a 1st qtr. 2008 earnings forecast 2 weeks before the qtr. ends, and then backpedals on maintaining the dividend in 2009 by 68% while awarding them each a bonus and Mr. Neal with a 17% raise ??? Understanding salary action happened in June,2008, shareholders should expect the MDCC to make appropriate adjustments this coming June as an independent representative body for all shareowners. Who authors the MDCC section on compensation? Corporate staff or an MDCC member?
doug wilson

does ge plan on restoring dividends after finacial crises for long term holders of ge a 68% drop in dividends is a big loss for long time shareholders is the day of buying and holding a stock work anymore will ge board take a 68% cut in pay stock price down 70% its ok the widows and orphans who depend on the dividends can handle it theyll probably give their $300 stimulus check(bonus money) to charity the poorest aways seem to give the most SHOULD I SELL AT A LOSS?
Dick

I’d just like to know the goals were which allowed Immelt to "earn" 12 million dollars in bonuses? He so "graciously" turned down something that was not warranted in the first place.

I’m sorry but I think changes need to be made at the top including the BOD.
Lawrence Hall

I retired in March 2005 after GE sold the fan motor business to Regal Beloit. If total GE management wants to support GE Retirees they should for go their bonuses and give long time investors some confidence in their abilities to run the Company in the worst environment I have ever seen.
Jim Turek

As a 36.5 yr employee of GE and being retired for just over a year,—I am shocked and dismayed of the stock price—the dividend cut and the piss poor performance of the CEO. board and any higher management of GE. I depend on the dividend money to pay car insurance, taxes and fund my lifestyle–the lifestyle I can cut back—no one will bail out my taxes or car and home insurance. I put my trust in GE SSP and left all my holdings in stock—how dumb of me not to pull out when I retired. Take anyone in GE’s rank’s that make over 200.000 and cut their pay to 100,000 and I mean everyone that should bring GE back around–if you can not perform any better than you have — maybe McDonald’s is hiring —???? But then stand in line, us long term stock holders need the jobs first to supplement our income.
Alan

I am a 35 year retired employee and I was quite surprised to receive a letter from the Chairman and CEO dated 2/20/2009 stating "GE’s Board has voted to pay the dividend at the current level through the first half of the year" on the same day I read in the paper that the dividend was being cut 68%.

It is no wonder the company is in so much trouble if we can’t plan at least a week in advance. To say I am disappointed is a total understatement. In my working days, people would have been fired for less.
John

Under your leadership Mr. Immelt, I have watched my retirement evaporate. While I was with the company, I was strongly advised to invest my retirement funds in GE stock.

I have seen the stock sore to pre Jack Welch retirement to $159.00 per share, then came the big split. Shortly after the split, Mr. Slick Jack retired and you took the helm. Since then the stock has continued to decline in value, and thousands of hopes of retirement have vanished.

Good going Mr. Immelt. Keep up the good work and continue to draw your outrageous salary.
Agnes

The reality is hard decisions had to be made to keep GE workers employed. No disrepect to Mr Immelt but he’s no hero for not accepting a bonus, it would have looked really bad to accept a $12 million dollar bonus while hundreds of GE workers world wide lose their jobs. Haruka Nishimatsu, CEO of Japan Airlines, is a true hero he ‘walks the talk’, perhaps the current executives and senior management need to take lessons from him.
jean cooper

Dear Mr. Immelt and fellow shareholders:
In I believe 2004, I spoke to you at the shareholder’s convention in Louisville, KY, concerning the outsourcing of GE to foreign countries. At the time, few seemed concerned that our manufacturing plants were leaving our nation’s shores. I look back on the time now and wonder if you or anybody that was in attendance have ever thought that maybe the lack of "Made in USA" could be the root of our nations problems. When our Jonesboro,Arkansas motors plant was moved to China, I still left most of my savings in GE stock. Now just a few years later, that too has dwindled to nothing. Feel free to call me if you ever would like to admit that I might have been just a little right. I am sure you still have my personal info on file.
mildred busch

JEFF: THE REASON YOU DID NOT TAKE A BONUS IS CAUSE YOU ARE AFRAID OF GETTING THROWN OUT OF YOUR EASY JOB. STOCK HOLDERS SHOULD THROW YOU ALL OUT AND START ANEW. MILDRED BUSCH
Walt Duda

I feel the monies saved on the dividend cut should be used for stock buyback, in the end we would all gain from such a move.The more support we show, the stronger we get. Think long term, liste to Warren Buffet, he didn’t accomplish what he did with a cut and run philposophy.Stop following the Judas goats and think for yourselves.
Sam McLane

GE took TARP money, all of GE employees including scum and liar jeff Immelt should follow the same rule as the employees of banks that took TARP. No 3.3 million salary either.
Megan Parker

Sam,
Megan from GE- GE has not participated in the Troubled Assets Relief Program (TARP).

Please read: http://www.gereports.com/safety-first-for-our-investors/
Tired and Hungry

I think those are really harsh words for GE’s CEO – I think that he has done one thing that no other CEO of any company around the world has done, he’s sacrificed his bonus and taken a pay cut, hey Merril Lynch mob rewarded themselves $1.6Billion just before signing off, and I dont see a blog site they’ve set up for us shareholders to rip into em, actually can you tell me another company thats set up a site where all of us can chip these board members or have our say, no most of em are cowards, the type of leaders that if you were in the front lines these guys would be 1000 miles behind ya. I commend Mr Immelt, and I certainly wouldnt want to be in his position, running GE would be like running a country but much more difficult, as you done make the rules. I do call on Mr Sherin to Give up his 2008 $2.5m, if anyone could have predicted a bad period you’d think the CFO would have, I also call on Mr Neal to forgo his $2.8m bonus, Mr Rice his $2.7m, Mr Denniston his $1.8m, Mr Nissen and Mr Wright if you’d come out of retirement and give back your $1.3m & $2.7m respectively then this would say you gentlemen have done your bit for your/our company in these trying times.
Mary N. Field

I can’t believe that any one person is worth even $12,000,000. I am truly amazed that "former" employees are worth $22,000,000!!!! I obviously did not negotiate my retirement very well.
A.S.Hurst

What is wrong with this picture? Shares are going South and CEO’s still get theit millions of dollars!
Reports are still glowing on how well GE is doing. Then why are stocks in free-fall? I still can’t believe my entire life savings have gone down the tube but I always thought GE was safe.
Jones

12 milion dollar! these bonusrates are from outher space!
They are the cause of the economic crisis.
I hope that Barack Obahma will strike these guys who think they can fill there pockets!
Imad

Simplistically the so called, free enterprise systems, as practiced in the American economic domains today are nothing but a ‘modernized’ mirror image of the ancient ‘FEUDAL SYSTEM’
THEN: No government, (elected or other wise)protecting the serfs, working and investing people.
NOW: The big Corporations, dysfunctional government etc. (Still no investor protection from irrational or incompetent corporate management.
Kermit Walsh

It appears that this site is for employees who want to post something hopeing it may save their job in a pull back. I am NOT an employee but am a stockholder. I retired recently from one of the largest off Wall Street brokerage houses in the country, so I have seen and been around "Money".
So, one declined his $12 million BONUS. Really, how much money is Obscene? That’s not even his salary.
WAKE UP! The interest on 12 million at 2.75% (which is what most large CD’s are paying now) is $330,000. INTEREST ALONE. That is not his salary! It’s his bonus! If you perform poorly, and say you didn’t perform as poorly as your conpetitor, does that save your job?
How much money does one person need? How much can he spend, when most of his needs are paid for by the employer. I see this needs to be "approved by the site owner so I am sure it will not appear.
Ruth Wilson

I believe the bonuses are far too disproportionate to value given. Unfortunately I was forced to sell some of my GE investments, because the returns last year were exceedingly lower than expected. Not enough to cover my bills at the time. I have always had high regard for GE and for that reason have held onto the small amount of stock that I have, even though it dropped its dividend to a near useless $.10 per share. I am hoping that this coming year brings returns that are meaningful to the small investor.
karen erenler

can i put all of this on twitter and every other web site. I just want to say my bill in may of 2007 was 2,500.00 and its 2010 and its 1,142.09 and would like to know why. Because as far as i know I would think (jkust my opinion) this is the biggest scam ever. unless the interest was like 80%. It seems you got paid quadruple the amount. According to this money i am sending you every month, it never slows down. Do u make quite a profit on all. What kind of business is this. How much interest did you start out with and end up with. I shouldn;t owe u a dime. I think everyone on every web site should know . The ceo of ge is jeff Immett????? cc: Pres Obama
cc: Senator Menendez

I also informed your company i was unemployed.
karen erenler

mr. Jeff Immett have been paying since 2007 2500.00 and now paying 1,500.00 .. Where is my money going.cc: Pres Obama cc: Senator Menendez

and why are u not accepting this comment and the one before. Because people should be aware
sam motsko

FIRE JEFF IMMELTT. I WORKED FOR GE 42 YEARS MY IRA IS IN GE STOCK .NOW THERE IS NOT MUCH LEFT. THANK YOU JEFF .
SAM