Share Owner Proposal No. 6
The Communications Workers of America Pension Fund, 501 Third Street, N.W., Washington, D.C. 20001-2797 has notified GE that it intends to submit the following proposal at this year's meeting:

"Resolved that the stockholders request that the Board of Directors take the steps necessary to adopt a policy that future executive compensation will be determined without regard to any pension fund income, so that the compensation of senior executives will be more closely linked to their performance in managing the business.

"Supporting Statement: Accounting rules require the Company to include gains on the assets in its pension fund in calculations of income, even though no money is transferred to the Company. This distorts the principle of pay for performance because the Company relies on net earnings and earnings growth in determining the compensation of executives.

"GE reported $1.7 billion in pension income in 2000. According to a recent study by Credit Suisse First Boston (CSFB), this is the second largest amount reported of all companies in the S&P 500. This pension income amounted to 9.4% of GE's reported pre-tax income for the year.

"While the impact of earnings calculations may vary, GE's top five executives were given cash bonus awards of $23.7 million in 2000. They were given restricted stock units worth $89 million. They were given long-term incentive awards contingent on financial performance over a three year period, and were paid $58 million pursuant to the contingent awards that were made in 1997. In addition, they were given options with a potentially realizable value of $422 million if future earnings permit GE stock to appreciate at an annual rate of 10 percent over the option term.

"Executive compensation ought to be based on performance. It should not be distorted by 'pension income,' because that item of income does not represent money the Company has actually received, and does not reflect the operational performance of either the Company or its executives.

"As Business Week reported on August 13, 2001, when companies 'are inflating earnings with income from pension plan assets, … their [reported] results look better than what's really happening with their business.' For this reason, a Morgan Stanley Dean Witter report declares that 'net gains from pension assets do not deserve the same valuation … as true operating income.'

"A related concern, according to The Wall Street Journal (June 25, 2001), is the possibility 'that companies can use pension accounting to manage their earnings by changing assumptions to boost the amount of pension income that can be factored into operating income.' According to Business Week, 'Companies can not only play around with the expected rate of return on assets but also with the value of the assets themselves.' They can also boost pension income at the expense of employees and retirees by reducing anticipated benefits or withholding improved benefits.

"CSFB identifies several companies that 'increased their expected rates of return on plan assets in 2000 even though their actual returns on plan assets declined.' While such increases may well be an appropriate exercise of discretion, the proposed policy would reduce any temptation that senior executives may have to 'use pension accounting to manage earnings' for the purpose of increasing their own compensation."

Your Board of Directors recommends a vote AGAINST this proposal.
This proposal requests the Board to make future executive compensation determinations without regard to reported pension fund income, purportedly to link more closely executive compensation to business performance. As discussed in the Compensation Committee Report at pages 16-19 (Compensation Committee Report), executive compensation is already closely linked to the performance of internal business units and to the appreciation of GE stock - which in turn is linked to GE's overall business performance. Because your Board believes that senior executive compensation is already closely linked to business performance, and therefore to the long-term interests of the share owners, your Board believes this proposal is unnecessary and recommends a vote against the proposal.