GE_AR_2002 : BOARD AND GOVERNANCE


	Guide

	Downloads

	Feedback

	› Letter to Stakeholders
	› Breakthroughs
	› Our Businesses
	› Citizenship
	› Board & Governance
	› Corporate and Operating Management
	› Corporate Information

	› Table of Contents
	› Financial Responsibility
	› Independent Auditors’ Report
	› Management’s Discussion and Analysis
	› Consolidated Financial Statements
	› Notes to Consolidated Financial Statements
	› Our Businesses

BOARD AND GOVERNANCE

In 2002, our Board of Directors made changes in corporate governance designed to strengthen its oversight of management and to serve the long-term interests of share owners, employees and other stakeholders.

Some basic ideas helped shape these changes: we should communicate externally the way we run GE internally; we should satisfy the spirit, not just the letter, of the new requirements; we should act promptly to implement changes without waiting for formal effective dates that may be many months in the future.

At the core of corporate governance, of course, is the role of the board in overseeing how management serves the long-term interests of share owners and other stakeholders. An active, informed, independent and involved board is essential for ensuring GE’s integrity, transparency and long-term strength. As a result of the 2002 changes, 11 of GE’s 17 directors are “independent” under a strict definition, with a goal of two-thirds.

KEY GOVERNANCE ACTIONS TAKEN BY GE IN 2002 INCLUDE:


	GE’s test of “independence” for members of the Management Development and Compensation Committee and the Nominating and Corporate Governance Committee is stricter than required by new regulations.
	GE has appointed a presiding director who will lead independent meetings of non-employee directors at least three times a year.
	Each non-employee director will visit two of GE’s businesses each year without the presence of corporate management so that directors can have direct exchanges with operating leadership.
	The responsibilities of the Audit Committee will increase, and it will meet at least seven times per year.
	To help further align directors’ interests with those of share owners, the equity portion of directors’ pay will be in Deferred Stock Units (DSUs), replacing stock options. DSUs will be 60% of the annual director compensation and will not pay out until one year after a director leaves the board. When directors exercise existing stock options, they will be subject to the same one-year holding period that applies to GE senior management.

MEETINGS
The GE board held 13 meetings in 2002. In December, the board voted to increase GE’s quarterly dividend for the 27^th consecutive year. The Audit Committee, composed of outside directors, held seven meetings to review the activities and independence of GE’s external auditors and the activities of GE’s internal audit staff. It also reviewed GE’s financial reporting process, financial and disclosure controls, and compliance with key GE policies and applicable laws. The Management Development and Compensation Committee, composed of outside directors, reviewed in nine meetings all executive compensation plans, policies and practices, changes in executive assignments and responsibilities, and key succession plans. The Nominating and Corporate Governance Committee, in three meetings, developed and recommended for approval by the full board the governance principles that the board adopted, effective January 1, 2003. These principles, and related materials, are published in the Governance section of the GE Web site at www.ge.com. The committee also reviewed board candidates and recommended the structure and membership of board committees. Three new independent directors —A.G. Lafley, Ralph S. Larsen and Robert J. Swieringa — joined the board in 2002. The Public Responsibilities Committee, in one meeting, evaluated environmental compliance. The board determined that the functions of its Finance, Operations, and Technology and Science committees would be most effectively performed by the full board, and therefore dissolved the committees.

PAOLO FRESCO AND SCOTT MCNEALY
Paolo Fresco retired from the GE board in 2002 after more than 30 years with the company, including 12 years as director. Paolo’s vision and decisions, both as vice chairman and member of the board, were critical to GE’s growth as a global company. He has a true international view and is at home in cultures and with diverse people everywhere. His broad perspective, great judgment and worldly wisdom will be deeply missed by GE.

Scott McNealy also retired from the board in 2002. As a pioneer in information technology, Scott has helped guide the digital transformation of GE, bringing a fresh and passionate voice from his industry to our board and our business leaders. We will all miss Scott’s bluntness, irreverence, insight —and most of all, his vision.




	Sam Nunn Partner, King & Spalding, law firm, Atlanta, Ga. Director since 1997. - Public Responsibilities Committee
	View additional profile on GE.com




	Ralph S. Larsen Former Chairman and CEO, Johnson & Johnson, pharmaceutical, medical and consumer products, New Brunswick, N.J. Director since 2002. - Nominating and Corporate Governance Committee “Leadership is a way of life at GE, and that includes leadership in corporate governance. Management and the board moved quickly and decisively across a broad front in seeking to achieve that objective.”
	View additional profile on GE.com




	Andrea Jung Chairman of the Board and Chief Executive Officer, Avon Products, Inc., cosmetics, New York, N.Y. Director since 1998. - Management Development and Compensation Committee - Nominating and Corporate Governance Committee “The company’s approach to leadership in corporate governance this past year was executed in true GE fashion—with extraordinary vision, energy and commitment to lead rather than follow. It was a privilege to be a part of an unquestioned collective commitment to be the standard bearer in this area.”
	View additional profile on GE.com




	Roger S. Penske Chairman of the Board, Penske Corporation, Penske Truck Leasing Corporation and United Auto Group, Inc., transportation and automotive services, Detroit, Mich. Director since 1994. - Public Responsibilities Committee
	View additional profile on GE.com




	Claudio X. Gonzalez 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. - Audit Committee - Management Development and Compensation Committee - Nominating and Corporate Governance Committee
	View additional profile on GE.com




	James I. Cash, Jr. James E. Robison Professor of Business Administration, Harvard Graduate School of Business, Boston, Mass. Director since 1997. - Audit Committee - Public Responsibilities Committee “You cannot separate parts of a governance system; the component parts must reinforce each other. We sought to achieve internal consistency among the design of our compensation plans, selection of board members, definition of independence, attendance policy, guidelines for evaluation and automatic resignation, and waivers of board ethics policy (there will be none). It is this combination that defines the leading edge in corporate governance today.”
	View additional profile on GE.com




	Robert J. Swieringa Dean and Professor of Accounting, Johnson Graduate School of Management, Cornell University, Ithaca, N.Y. Director since 2002. - Audit Committee
	View additional profile on GE.com




	Andrew C. Sigler Retired Chairman of the Board and Chief Executive Officer, Champion International Corporation, paper and forest products, Stamford, Conn. Director since 1984. - Audit Committee - Management Development and Compensation Committee - Nominating and Corporate Governance Committee - Presiding Director
	View additional profile on GE.com




	Douglas A. Warner III Former Chairman of the Board, J.P. Morgan Chase & Co., The Chase Manhattan Bank, and Morgan Guaranty Trust Company of New York, New York, N.Y. Director since 1992. - Audit Committee - Management Development and Compensation Committee - Nominating and Corporate Governance Committee “The intensive review of our governance practices was the most thorough and engaging discussion we have had in my 10 years on the GE board. Every director actively participated and as a result shares ownership in the changes we have implemented.”
	View additional profile on GE.com




	Rochelle B. Lazarus Chairman and Chief Executive Officer, Ogilvy & Mather Worldwide, advertising, New York, N.Y. Director since 2000. - Nominating and Corporate Governance Committee - Public Responsibilities Committee
	View additional profile on GE.com




	Alan G. (A.G.) Lafley Chairman, President and Chief Executive, The Procter & Gamble Company, personal and household products, Cincinnati, Ohio. Director since 2002. - Nominating and Corporate Governance Committee
	View additional profile on GE.com




	Ann M. Fudge Former President, Kraft’s Beverages, Desserts & Post Divisions and former Group Vice President, Kraft Foods, Inc., packaged foods, Tarrytown, N.Y. Director since 1999. - Audit Committee - Public Responsibilities Committee
	View additional profile on GE.com




	Kenneth G. Langone Chairman, President and Chief Executive Officer, Invemed Associates, LLC, investment banking and brokerage, New York, N.Y. Director since 1999. - Audit Committee - Management Development and Compensation Committee - Nominating and Corporate Governance Committee
	View additional profile on GE.com

*This is an interactive electronic version of GE's 2002 Annual Report to Share Owners, and it is intended to be complete and accurate.
The contents of this version are qualified in their entirety by reference to the printed version. A reproduction of the printed version is
available in PDF format on this Web site.

	Guide

	Downloads

	Item to Download: Entire Annual Report (PDF 2.5MB)

	Download Now

	Feedback

	How useful is this section? Very Useful Useful Somewhat Useful Not Useful
	Submit

	A complete survey is accessible from the Feedback Page