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 GE.com - 2003 Annual Report |
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  Related ContentDownload Adobe® Reader®  Downloads2004 Proxy Statement (714K PDF)  |
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 Shareowner Proposal No. 9 Mr. Arthur A. Gavitt, P.O. Box 02-5261, Miami, FL 33102-5261, has notified us that he intends to submit the following proposal at this year’s meeting: “I am the owner of 300 common shares of General Electric Stock, and respectfully submit the following Share Owner Proposal. “While the rest of us were losing our shirts on GE Stock, Vickers reports, Jeffrey R. Immelt Chairman at GE made ‘wise’ investment decisions. On Sept. 9, 2003 he purchased 96,000 shares of his Company’s stock at $8.05 per share and sold 47,836 of these shares for $31.18 per share and made, or netted a profit of $1,106,447. Only two months before that Mr. Immelt lucked out again. On July 29, 2003 he purchased another 96,000 shares at that magic number, $8.05 per share, for a cost of $772,800. On the very same day, he sold the 96,000 shares at $28.43 per share for $2,729,280. Again, Mr. Immelt very wisely made a net profit of $1,956,480. September of 2003 was a lucky month for other Executives at General Electric Corporation. To mention a few Vickers reported that Michael A. Neal and Kathryn A. Cassidy were as fortunate as Mr. Immelt, as they bought thousands of GE Shares at $8.05 and sold thousands of GE shares between $30.79 per share and $31.11 per share on the same day. The 52 week low price of GE Stock as listed on the NYSE was $21.30. “My Proposal: The Board of Directors are requested to consider voting a cessation of all Executive Stock Option Programs, and Bonus Programs. Rewards via a bona fide salary program are a necessity. Salary increases to deserving Executives will reward only those who productively enhance the Company’s Business. Only if and when profit increases are published and compiled annually, and verified by a Certified Accounting Firm a realistic salary increase commensurate with the increase in the Company’s Business can be considered. Should there be no increase in the Company’s Business, or a decline in Corporate Business is published and compiled annually, and verified by a Certified Accounting Firm, no salary increase(s) will be forthcoming. Rewards via the above measurements will suffice, and remove the bonus and Executive Stock Option Program(s) permanently.” Our board of directors recommends a vote against this proposal. This proposal refers to Mr. Immelt’s exercise last year of SARs and stock options that were granted to him in 1993, and were about to expire. In 2003, Mr. Immelt acquired over 425,000 shares of GE stock, including over 293,000 shares he bought in the open market with his own funds or elected to receive in GE stock from a long-term award payout. He currently owns over 600,000 shares of GE stock, more than satisfying his stock ownership requirement. From 1993, the year that the awards discussed in this proposal were granted, to 2003, the year of their exercise, the market price of GE shares and GE’s annual net earnings more than tripled. The awards were granted to Mr. Immelt in 1993 to provide him with an incentive to increase the long-term value of the company for the shareholders. The price of GE stock was $8.05 when these awards were granted, as adjusted for subsequent stock splits. The price of GE stock when he exercised the awards was between about $28 and $31 — which is the type of increase in shareowner value that we were trying to achieve in granting the awards. The roughly $4.1 million pre-tax gain that Mr. Immelt realized when he exercised these awards is a minute fraction of the over $200 billion gain in value that GE shareowners received during this period. We believe that these figures clearly demonstrate the long-term benefit to our shareowners of granting SARs and stock options to our executives and, as discussed at page 25, granting performance share units to our CEO. We therefore recommend a vote against the proposal.
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