GE imagination at work
GE.com | GE 2006 Annual Report

Potential Payments Upon Termination

As described in the CD&A, the named executives do not have employment, severance or change of control agreements with the company. The information below describes and quantifies certain compensation that would become payable under existing plans and arrangements if the named executive’s employment had terminated on December 31, 2006, given the named executive’s compensation and service levels as of such date and, if applicable, based on the company’s closing stock price on that date. These benefits are in addition to benefits available generally to salaried employees who joined the company prior to 2005, such as distributions under the GE 401(k) Plan, subsidized retiree medical benefits, disability benefits and accrued vacation pay. Because it is unlikely that any of the named executives would be affected by a plant closing, disposition or layoff, this presentation does not reflect benefits that may be available in such situations under company plans and arrangements.

Due to the number of factors that affect the nature and amount of any benefits provided upon the events discussed below, any actual amounts paid or distributed may be different. Factors that could affect these amounts include the timing during the year of any such event, the company’s stock price and the executive’s age. Mr. Wright is the only named executive who was eligible to receive immediate retirement benefits as of December 31, 2006, which benefits are described and quantified below.

Equity awards. If one of the named executives were to die or become disabled, any unexercisable stock options granted a year or more before the date of that event would become exercisable, and remain exercisable until the later of two years from the date of death or the expiration date of the grant. Remaining restrictions on awards of RSUs that were awarded at least a year prior to the event may lapse immediately in some cases, depending on the terms of the particular award. Awards of PSUs are cancelled upon events of death or disability.

For these purposes, “disability” generally means total disability, resulting in the grantee being unable to perform his job. The following table provides the intrinsic value (that is, the value based upon the company’s stock price, and in the case of options minus the exercise price) of equity awards that would become exercisable or vested if the named executive had died or become disabled as of December 31, 2006.

 
 
 
 
 
Name of Executive Upon Death Upon Disability
Stock Options   RSUs   Stock Options   RSUs  
Immelt  
$ 2,032,000
   
$ 11,888,595
   
$ 2,032,000
   
$ 2,232,600
 
Sherin   3,198,460     15,364,679     2,398,460     5,705,558  
Neal   2,619,780     23,798,958     1,819,780     4,465,237  
Rice   3,198,460     25,039,279     2,398,460     5,705,558  
Wright   4,435,320     44,652,074     N/A     N/A  

In addition, if Mr. Wright had retired on December 31, 2006, the intrinsic value of unvested stock options that would have become exercisable is $3,635,320, and the intrinsic value of RSUs that would have vested is $55,170,076.

Deferred compensation. The named executives participate in deferred compensation plans that permit the deferral of salary, bonus, and at certain intervals, long term performance awards. The last column of the Nonqualified Deferred Compensation Table on page 30 reports each named executive’s aggregate balance at December 31, 2006, under each plan. The named executives are entitled to receive the amount in their deferred compensation account in the event of termination of employment, except that under the 2003 and 2006 deferred salary plans, certain named executives would forfeit the unvested interest income as indicated in note 4 of the Nonqualified Deferred Compensation Table upon a termination for reasons other than death or disability. The account balances continue to be credited with increases or decreases reflecting changes in the value of the GE Stock Units or S&P 500 Index Units and to accrue interest income or dividend payments, as applicable, between the termination event and the date distributions are made, and therefore amounts received by the named executives will differ from those shown in the Nonqualified Deferred Compensation Table. See the narrative accompanying that table for information on available types of distribution under each deferral plan.

Pension benefits. The Pension Benefits Table on page 28 describes the general terms of each pension plan in which the named executives participate, the years of credited service and the present value of each named executive’s accumulated pension benefit assuming payment begins at age 60 or, for Mr. Wright, age 63. The table below provides the pension benefits under the three plans that would have become payable if the named executives had died, become disabled or voluntarily terminated as of December 31, 2006.

  • In the event of death before retirement, the surviving spouse may elect to receive a benefit based upon the accrued pension benefits either (1) in the form of an annuity as if the executive retired and elected the spousal 50% joint and survivor annuity option prior to death or (2) as an immediate lump sum payment based on five years of pension distributions. The amount payable depends on several factors, including employee contributions and the ages of the executive and the surviving spouse. The survivors of each of the named executives who are at least age 50 as of December 31, 2006, with the appropriate years of service, would be entitled to receive annuity distributions promptly following death.
  • In the event a disability occurs before retirement, the executive may elect an annuity payment of accrued pension benefits, payable immediately and reduced for commencement before age 60. The amount of disability payment will also vary depending on a variety of factors.

The table below shows the annual annuity payment payable (a) for the life of the surviving spouse in the case of the named executive’s death, (b) for the named executives other than Mr. Wright, as a 50% joint and survivor annuity to the executive in the case of disability and (c) for the named executives other than Mr. Wright, as a 50% joint and survivor annuity to the executive payable after age 60 under the GE Pension Plan upon voluntary termination. Payments are made on a monthly basis. As stated in the discussion of Pension Benefits Table on page 28, the named executive’s benefits under the GE Supplementary Pension Plan are generally forfeitable if their employment terminated before age 60 for reasons other than death or disability.

 
 
 
 
Name of Executive Annual annuity
upon death
  Annual annuity
upon disability
  Annual annuity payable
at age 60 after voluntary
termination at 12/31/06
Immelt  
$ 1,384,564
   
$ 2,701,546
   
$ 80,629
 
Sherin   681,273     1,236,661     73,907  
Neal   895,629     1,592,104     88,012  
Rice   800,183     1,405,913     78,914  
Wright   2,462,787     N/A     N/A  

As he was retirement-eligible as of December 31, 2006, Mr. Wright would be eligible to receive retirement benefits instead of the disability pension. If Mr. Wright had retired on December 31, 2006, the annual annuity payment payable as a 50% joint and survivor annuity under his pension benefits would be $4,915,265.

2006-2008 Long-term performance awards. At the discretion of the MDCC, in the event of death, disability or retirement at December 31, 2006, the executive could have received a portion of the 2006-2008 LTPA based on the number of months worked during the performance period. The executive’s eligibility and award amount would be determined at the conclusion of the performance period. Depending on the achievement of the established performance criteria, the amount payable would range from zero to one-third of the maximum estimated future payouts shown in the Estimated Future Payouts Under Non-Equity Incentive Plan Awards column of the Grants of Plan-Based Awards Table on page 23. See also the CD&A for a description of the 2006-2008 LTPA.

Life insurance benefits. For a description of the supplemental life insurance plans that provide coverage to the named executives, see the All Other Compensation Table on page 22. If the named executives had died on December 31, 2006, the survivors of Messrs. Immelt, Sherin, Neal, Rice and Wright would have received $22,490,400, $10,368,600, $12,050,000, $10,800,000 and $23,561,155, respectively, under this arrangement. The company would continue to pay the premiums in the event of a disability until such time as the policy is fully funded.

Back to top

Previous  Next