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

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Mark

Mr. Immelt,
This certainly goes a long way toward restoring my faith in GE’s leadership. I hope your example helps stir others to recognize that now more than ever we need to be a team. As the economy gets worse, I hope GE can lead with new approaches (other then layoffs)to solving its money problems. For example, why not an across the board salary cut (i.e.10%). It seems to me this might help cut expenses significantly, keep vital resources in place and thereby help to stimulate morale and teamwork across a larger population.
Rachid Bouftila

Mr. Immelt tells the world what’s the leadership at GE stands for? …It’s an action not only a reaction.
Thank you.
Frank

Nice jesture, but you and the exec staff have made more money than anyone can spend in 1000 lifetimes. Take the money, then buy my GE shares at $50 each, like I paid for them.
Pete

While it’s a great jester that Mr. Immett is willing to forgo his bonus I wonder what will happen to that money? I’m also concerned about all of the other bonuses. I can understand paying for good leadership but if you underpay the employees who make the product that generates the money that provides the bonuses there would not be any money. We have seen most management personnel receive income increases of 10+% while the production personnel are lucky to receive 3% or less. The company will also use the economy and it’s down turn this year in any contract negations between the company and its unions. I would like to see the money filter down to the production workforce so that in this economy they would be able to survive on a living wage.
Terry

It is awesome to see so much positive reaction to Jeff’s decision. I am hopeful that other executives will follow his leadership example. While I realize that the GE leadership has done a great job maintaining company stability during difficult times, there is more to come. We are already in a cost-cutting mode in February, which is much earlier than prior tight years. I am sure that executives foregoing a bonus will be much less painful for them and the company than people losing jobs. Please step up to the bar and continue to show the country (and world) what a great company GE is.
the defining moment

Jeff…salute to you, althought it is a samll loss of your fortune…but, this a defining moment of a new chapter that differentiate a global corp with a credential CEO’s that take social responsibility and stability into his heart…
Derin

A rare gesture…… which is what GE is all about. This proves that the leadership selection process in GE is a sound one. And to all, this is very encouraging.Mr Immelt,more grease to your elbows, the world is watching.
Tim Klassen

I’m not sure why there is so much positive reaction to this since the total compensation for Mr. Immelt was still $14M. That seems a bit high to me given the corporate-side cutbacks that are going on.
Jacob Duffy

Frankly, I expect nothing less of the Jeff and the leadership group. Why should they receive bonuses that equate to several ‘average joe’ salaries each in an environment where the company is showing negative growth? It would be refreshing to see his directs and the leader directly beneath them to also pass on the bonus this year. I doubt they will though.
Bud Bessenbacher

I appreciate the action Jeff is taking at this time, however, Mr. Barrera makes a good point and seeing the poor performance of GE stock, I think if the 500 top GE executives took a percentage cut in their bonuses equal to the percentage dropped by GE stock last year, they would still be generously rewarded. It’s a bonus, not a cut in salary.
Terry

Mr Immelt – I commend you for stepping up and not taking your bonus. In this time of "greed" that is a wonderful gesture. I only wish that the other execs would follow your lead and do the samething. I work at a unit that is down to almost 20% of the staff that we use to have. Our unit has seen people being laid off that have young children, children in college, some are middle aged employees that have worked many years at GE and have no chance of getting another job in today’s economy. They have no idea what they are going to do. Although I am so thankful for having a job for the meantime, I wish we would of had a choice of maybe taking a pay cut to save some of our co-worker’s jobs. Most of us worker bees live paycheck to paycheck but I am sure that we could of all came together and given up something to keep some co-workers employed. It is hardbreaking to see people leave. It seems, given that, that other execs could follow your lead and to think that they may be saving some jobs by giving up their bonus.
Thank you Mr. Immelt for thinking of someone other than yourself. We certainly need more people to do that during these times. Thank you.
HECH

Dear Mr Immelt,
I believe everyone can learn from your example – that no matter where we are at, there is someone less unfortunate and we can always forgo our luxury to make it better for the less unfortunate. I’m encouraged by your effort. You will reap the benefit!
Jurgen

Yet another example where Jeff leads by example…
Thanks Jeff.
Richard Schroeder

It is a great gesture, and appreciated, but Jeff Immelt deserves the 2008 bonus and long term incentive plan. The earnings progression from 2001 thru 2007 was phenomenal, and no amount of peering around corners could have predicted this economic nightmare. Jeff’s integrity as a leader is most apparent……if we could just have some comments from the GE populace on whether MSNBC content furthered NPS improvement and was not tarnishing the great Monogram?
Rakesh Ganjoo

Jeff,
I am just few months old in GE Group.I joined GE after spending long 18 years with other engineering company.You have shown a great character by foregoing your bonus in tough global economic crisis.Today i am very proud working for a company who has such a great leader.I am sure and very confident that GE will grow multifold under your leadership.
It is a great learning for the employees like me.I think all of us have to do our little bit to come out of these global financial crisis.
David

WOW – In such a tough environment, I couldnt imagine the difficulties and turmoils this man & his board have faced over the last 16 months, managing 300k people worldwide not to mention all the other facets of the role, I hope you’ve set a worldwide trend. – Bravo Jeff!!!
rob

Mr. Immelt,

As a rank and file employee, I do appreciate you declining your bonus and "taking-one-for-the-team" in light of current economic circumstances.

I do belief we are fortunate that you were choosen as CEO back in Year2001 instead of Bob Nardelli. The recent fortunes of both Home Depot and Chrysler validates the rightness of the boards’s decision of choosing you as CEO, rather than Mr. Nardelli.

Also, Kudos for the programming at MSNBC. MSNBC provides a counterweight to FOX. A counterweight that was previously lacking in the media marketplace.
Daniel González

We work in a strong company, we´re going to show why GE is one of the largets corporations in the world, the base: it people.
George

Once again people in the world see a great company like GE led by a great leader like Jeff. This is particularily important to raise people’s confidence in today’s global downturn time.
Roy Laninger

Jeff, while I see a lot of comments here lauding your decision to forgo that $12 mil. bonus, I can’t in all honesty share your pain. Having seen the train wreck of corporate greed firsthand, and seen American jobs go overseas so you and other execs. could reap higher profits at our expense, your "sacrifice" isn’t exactly admirable. Your annual salary dwarfs that of the President of our nation and is appalling to say the least. Unless you somehow have managed to right all the wrongs in this world as if you were God Himself, no human rates that many million $$$ in their paycheck. I challenge you and all the other CEO’s to try living on what you hand out to those who actually do the work and make the products that garner you such acclaim and award. While some here may feel the need to pat you on the back for a job well done, I’m one on the other end trying to make ends meet on less than $30,000.00 in this economy. Let’s see you do it. Rank is what you wear, respect you have to earn, and I’m not impressed.
Guodong Zhou

Hi, Jeff

It is our great honor to have a leader like you. Very appreciate your decision and courage to work with all GE employee during this hard times.

I have one question, GE is very aggresive on revenue, cash flow, cost saving, but what’s the social value GE contribute to? What is the GE value as it exist? I remember once we have slogan as "We bring good things to life" but now we didnot have such kind of value that announced to motivate employees. What do you think of it? What support you to work in GE for these years?

Thank you.
Sandeep Dey

Hi Jeff,

During this tough time it is certainly a very good decision. It makes me proud that I am working for such an good orgainzation.

Thank You.
Elmz

So impressive, LEADERSHIP at its summit. I am very pleased to work with GE under your leadership.
Gary Sieving

Jeff,
It would be hard to pass on $12m, but this proves you are the leader GE needs in these difficult times.
Zhan Xiao Song

Hi, Jeff

Thank you for standing together with ordinary Employees and share the same feeling at this tough time. I’m proud to be working in this great company. As General Electric,do we have plan to innovate the electic engine and cells for Auto industry? May be we can save GM by this green Innovation.
Thanks Jeff.
Mallikarjun

Jeff,
Hats off for making such a remarkable decision.You lead by example to other top leaders of the company make their contribution in their bonus and to save the company in such a bad recession.
Thank you
Noor

This is the best illustration of top-down approach that I have ever seen. Jeff, your leadership style is very inspirational indeed.
Ramesh C

Greatness yield from Generousness. Real happiness lies in making others happy.
Dear Sir ! its you and only you who could make these 2 great philosophies happen.
Wish to be led on and on………………
S. Rajesh Kanna

I am pretty young blood in GE(two years). There are very few companies people would love to stick on from a long term perspective and I strongly beleive that GE is definitely one among them. These are because of the the culture, leadership, decision making, committment and the focus the company gives on Integrity. I wish the company to cross even the vertical limits. We are very proud to have a person like you leading us.
Kevin Fletcher

I was just wondering out loud the other day about when, the virtues that our parents taught us, had become liabilities as opposed to assets. I believe it started when the president of the U.S.A. went on national television and lied to all of the people that he was elected to represent and made the infamous "I am not a crook" statement.Thank you for showing me that the virtues that my parents and yours held dear are still assets and not liabilities
wayne

$112 Million for the top seven GE Executives.Good Lord is anyone out there …. anybody at all. Jeff Immelt says that the bonuses paid, reflect their contibution to GE.Tens of thousands of GE Internal jobs lost,industries around the world that GE aquired are now in turmoil as GE retreats.manufacturing that is vital to the U.S exiting recession are now offshore.GE were and are the champions of Globilization and now the U.S is on the road to bankrupcy.Immelt misses the point,Wall St misses the point.No Executive contributes to any Company in the greatest of times to these obscene levels.If Immelt and others do not take this opportunity to correct such obvious extremes,I fear for the world.Immelt inheirited from Welch a flawed pyramid model relying on avaricious growth making it a certainty that current events would take place inevitably at some time.If GE is going to survive over time it will take a Leadership that perhaps the world has not seen.This has gone way beyond shareholder value.These guys are not the best and the brightest….they are just the caretakers of a flawed model that borders on evil.$112 million bonuses based on contribution to GE. If Jeff really believes that,well, then he is really is stupid.More likely he is too weak to change the internal culture than will ensure GE’s demise.It’s just sad that the world and the US will pay the price.
Rajiv Pandey

Hi Jeff,
You have touched my heart! This is a greatest gesture and example you have put in front of us. It reminds me once you said, “With great power come great responsibilities”. You are the greatest leader I have ever seen/read so far. Thanks a ton for leading us in difficult time with flare.

With warm Regards
Rajiv Pandey
Ali Badreddine

Jeff is a true Leader, he is leading by example.I am really proud to work for GE.One can only learn true leadership from only true leaders and thats what we have here in GE, God bless Jeff and GE.
Amulya Panda

Waiving 12M is a gesture, of highest order, unheard of so far. Leaders from GE are known for high standards of integrity. Jeff’s generosity adds a new dimension to "WHAT IT MEANS TO BE A LEADER" and a new feather in GE’s cap.
12M is minor issue…

This is a copy from the MarketWatch blog on 2/18/2009…one of the author stated that "GE is leveraged 140:1. He should be fired for allowing that to happen"…
I thought that is a vicious and toxic intent to mislead the market…the 12M bonus seems to be very minor and is not the essential core issue, the real question is who is capable to lead GE camp to defeat such sabotage intent to bring down the GE market…
Fair & Reasonable?

“Fair” and “reasonable” are the optimum words here. Our top executives are given very decent salaries. Given the current financial environment, a good salary is, in fact, what is fair and reasonable, period. Millions of dollars in bonuses should be eliminated in the face of this financial crisis. GE employees of 30+ years (myself included), who have saved each and every week by putting money into their GE 401K, cannot retire. Thus, it is disheartening, to put in mildly, to read about $100M of bonus money being paid out to our top executives. Thank you, Mr. Immelt, for this noble gesture. It should be applauded but shouldn’t we encourage the same level of integrity from each and every GE employee?
Bassiouni

As a GE employee, I believe that Jeff’s decision to forgo his bonus of about $12 Million this year sets an excellent example for all of us to exert all out efforts to reduce our operating costs and increase productivity in 2009 and beyond. As a GE Employee, I recommend all other executives to follow Jeff’s foot steps… “Fair” and “reasonable” are the optimum words here…
Chris

Been a big GE supporter for a while on this and a couple other forums. However, great leadership is more than just gestures of not taking a bonus (esp. when your salary is what it is).

At some point, you have to fight back and preserve shareholder equity. If you’re sitting on $50 billion in cash, and you say that the company is sound, but yet you have a single digit stock, then that’s not right.

You have the power to change that Mr. Immelt (you too BOD). About time something is done to shore that aspect up as well.
John

$112 million for the executives?? As a manager I am asked to layoff employees that work for me at $14.00/hr and are super great employees.

Greed got us into this mess. Let’s see in a couple of years what the executives really get/got when we circle back.
A much poore stock holder

Leasership, you must be joking. A 75 percent decline in stock price since becoming CEO does not a leader make. Immelt should give back every bonus he has received since 2001 and take a cut in pay. If he and the G.E. Capital management group he indirectly heads had been more alert and/or less greedy perhaps they would have foreseen what was happening in the subprime market and could have headed it off. Not losing as much as others have lost is not something worth bragging about.
Isaac

I used to work for GE a few years back but somehow I just can’t get over the days in GE. I constantly keep in touch to find out whats happening and learn how leadership works in GE.Jeff’s act is true leadership personified,I wish all other companies had leaders like you.The economy would be a much better place to do business.GE keep up the good works.
Vijay Chari

I am a new comer to GE and just amazed by the stunning leadership we have here. Some where I read " A true Leader should be an example". I get to see that in Jeff.

Thank you Sir.
Gerardo Flores

I am so glad to know that there still exist people in this world that are driven by principle, and not by money. I am thankful to be led by such a strong leader as Jeff Immelt. I commend him for his strong character and moral values. I feel honored to work for such a company as GE. It inspires me to continue to do my best in my job.
Joe Aster

CEO Jeff
Do something now to save your Company before it is too late!
Take the 15 Billion that you got back in Oct and put a floor underneath this stock by standing on the buy button. Failure to do so and this stock will probably be at $7.50 before Apr earnings and then what if you miss? $4?
Before this nightmare ends
and I have to think it will go on for at least 1 more year
GE will bottom at?
$7.5
$4
$2
This Company is going BANKRUPT?

Bear Markets are devastating but enough is enough!
15 Bullion buys 1,612,903,226 shares of this stock at $9.30 there is no better use for the money.
Don’t stand there like a dummy, do something NOW!
Tomorrow will be too late.
GEpumper™
Margaret Milburn

Mr.Immelt,

May God continue to bless you with His wisdom as you lead this company. Keep up the good work!

Take care,

Margaret Jo Milburn
Daily Hire Television Engineer-NBC 5 Chicago
Menes Rafael

Commonly we sees prominents positions but not capables to develop a solid leadesrhip through theirs Biz Accumen without title authority. Jeff you are the one to shift out paradigms. Thanks for such a great lesson.

DBA abd Menes Rafael
Travis Beeson

Mr. Immelt,
I was on the fence to double down on my stock purchases of GE. Your actions have swayed me to believe that the stock price is not a complete reflection of GE’s management and that GE is a strong long term buy.
I appreciate this ‘fear driven’ market to find great companies on the cheap.
Continue to set the pace.
Shajit Titus

Jeff, I am not part of GE family, but I know the history of GE. Your command reflects the leadership with humility. I have no comments on how much you usually get paid, because you have invested in your career and worked for it, and so you deserve it. During an interview for a graduate programme, a professor told me a frightening and meaningful statement – “being part of this school, you are going to deal with the life of people.” This decision of yours in a difficult time does give life for people and does help the corporate to emerge out stronger.
Jerry M.

In delicate times as today, with all the news of fear with the frontal attack on GE from analyst’s focused on the short side on investing. Immelt MUST focus on the best GE has to offer, still making money, 50 billion in cash, new business opportunities headed GE’s way not to leave out when this is past, GE comes out of this debacle far ahead of it’d competitors. He must accentuate the best in GE
Su-Ju Lee

Mr. Immelt,
While your action of not accepting bonus is commentable, it does nothing to ease the pain for share holders like my family who lost over 80% of life long savings held in GE stocks. I believe 12 millions are just drops in the bucket for you. GE shares had not performed at all since you took over as CEO, either in good or bad stock market environment. If you feel for the GE share holders, please show some true leadership in actions to support the GE share price. Your continued silence is simply taken by Wall Street that all the fears about GE is true. Our lifelong loyalty and trust to GE management appear to have been misplaced. It is a real shame. May be I should dump my shares too.