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The table below provides information on the non-qualified deferred compensation of the named executives in 2006, including:
- Deferral of bonus. Executive-band and above employees, including the named executives, are able to defer all or a portion of their bonus payments in either (1) GE stock (GE Stock Units); (2) an index based on the S&P 500 (the S&P 500 Index Units) or (3) cash units. The participants may change their election among these options four times a year. If a participant elects either to defer bonus payments in GE Stock Units or the S&P 500 Index Units, the company credits a number of such units to the participant’s Deferred Incentive Compensation account based on the respective average price of GE stock and the S&P 500 Index for the 20 trading days preceding the date the Board approves the company’s total bonus allotment.
Deferred cash units earn interest income on the daily outstanding balance in the account based on the prior calendar month’s average yield for U.S. Treasury Notes and Bonds issued with maturities of 10 and 20 years. The interest income does not constitute an “above-market interest rate” as defined by the SEC, and is credited to the participant’s account monthly. Deferred GE Stock Units and S&P 500 Index Units earn dividend income on such units held as of the start of trading on the NYSE ex-dividend date equal to (1) for GE Stock Units, the quarterly dividend declared by the GE Board, or (2) for S&P 500 Index Units, the quarterly dividend as declared by Standard & Poor’s for the S&P 500 Index for the preceding calendar quarter. Contributions made prior to 2005 permit participants to receive their deferred compensation balance upon termination of employment either through a lump sum payment or in annual installments over 10 to 20 years. Contributions made in or after 2005 permit either a lump sum payment or 10, 15 or 20 annual installments.
In addition, the company awards a special discretionary credit to the executive’s account, as a result of the limitations imposed by U.S. income tax regulations on the amount of compensation that an employee may save under the company’s 401(K) savings plan, and consequently the amount of matching contributions the company can make under that plan. The amount of the discretionary credit is calculated by multiplying 3.5% to an amount determined from the executive’s non-deferred base salary, plus the lesser of half the bonus amount or non-deferred bonus amount, and subtracting the maximum compensation permitted to be saved under the 401(k) savings plan, which was $220,000 in 2006. Contributions made after 2004 are paid in ten annual installments following terminations of employment.
- Deferral of salary. Executive-band and above employees are able to defer their salary payments under salary deferral plans. These salary deferral plans pay accrued interest, including an above-market interest rate as defined by the SEC, ranging from 8.5% to 14%, compounded annually. Under the 2006 employee deferral salary plan, participants may defer between 10% and 50% of their current salary as of the end of the prior year in which the plan begins. Interest income will not be earned, or vest, unless the executive remains with the company for a period of five years from election. Early termination before the vesting date will result in an immediate payout of the deferred salary amount with no interest income paid, with exceptions for retirement, death, disability, layoff, plant closing and dispositions. With respect to distributions, participants may only elect to receive either a lump sum payment or 10 to 20 annual installments.
In addition, the company credits each participant’s deferred salary account with an amount equal to 3.5% of the deferred salary amount, which is based on the maximum matching contribution rate the company provides to employees in connection with the company’s 401(k) savings plan. As described in the CD&A, certain executives no longer participate in the salary deferral plans.
- Deferral of long-term performance awards. The long-term performance awards for the 1994 to 1996 performance period, which was paid out in 1997, permitted the participating executives to defer some or all of portion of the payout they received in GE Stock Units. The terms of this deferral with respect to credits earned and dividend income are similar to the bonus deferral described above. Of the named executives, only Messrs. Neal and Wright participated in this deferral.
The named executives cannot withdraw any amounts from their deferred compensation balances until they either leave or retire from the company. No withdrawals or distributions were made in 2006.
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| Name of Executive |
Type of Deferred Compensation Plan |
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Executive Contributions in Last Fiscal Year1 |
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Registrant Contributions in Last Fiscal Year2 |
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Aggregate Earnings in Last Fiscal Year3 |
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Aggregate Balance at Last Fiscal Year End4 |
| Immelt |
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Deferred bonus plans |
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Deferred salary plans |
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0 |
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0 |
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216,429 |
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2,025,492 |
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| Sherin |
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Deferred bonus plans |
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Deferred salary plans |
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550,000 |
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19,250 |
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135,523 |
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1,681,052 |
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| Neal |
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Deferred bonus plans |
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Deferred salary plans |
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0 |
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0 |
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192,891 |
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1,816,274 |
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Deferred LTPA |
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0 |
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0 |
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265,718 |
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3,108,776 |
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| Rice |
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Deferred bonus plans |
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Deferred salary plans |
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700,000 |
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24,500 |
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228,692 |
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2,711,487 |
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| Wright |
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Deferred bonus plans |
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Deferred salary plans |
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0 |
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0 |
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1,536,020 |
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14,244,109 |
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Deferred LTPA |
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0 |
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0 |
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329,916 |
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3,859,865 |
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