Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
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Table of Contents
2023
NOTICE OF
ANNUAL MEETING
AND PROXY
STATEMENT
Table of Contents
Table of Contents
On behalf of our Board of Directors, we are making these
materials available to you (beginning on or about March 22, 2023) in connection with GE’s solicitation of proxies for our
2023 Annual Meeting.
General Electric Company Executive Offices
5 Necco Street,
Boston, MA 02210
| Index of Frequently Requested Information |
| 63 |
Audit Fees |
| 14 |
Board Leadership Structure |
| 15 |
Board Self-Evaluation |
| 58 |
CEO Pay Ratio |
| 56 |
Clawback Policy |
| 20 |
Director Attendance |
| 21 |
Director Independence |
| 7 |
Director Qualifications |
| 7 |
Director Tenure and Term Limits |
| 8 |
Nominee Biographies |
| 20 |
Overboarding Policy |
| 30 |
Peer Group |
| 56 |
Policies on Compensation Consultant |
| 22 |
Related Person Transactions |
| 18 |
Risk Oversight |
| 5 |
Shareholder Engagement |
| 25 |
Stock Ownership for Executives and Directors |
| 57 |
Stock Ownership Requirements |
| 18 |
Sustainability Oversight |
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| Also see Acronyms Used on page 77 for a guide to the acronyms used throughout this proxy statement. |
Table of Contents
Letter from the Lead Director
Fellow Shareholders,
The past year has been one of historic transformation
for GE as it has been executing its strategic plan to form three industry-leading, global public companies: GE HealthCare, GE
Vernova and GE Aerospace. We reached a major milestone in January 2023, with the successful spin-off of GE HealthCare as the first
of the three planned independent companies. Today the GE team remains focused on continuing to strengthen and improve the operations
of our remaining businesses, as we simultaneously work to be ready for the remaining planned spin-off of GE Vernova, our portfolio
of energy businesses. With the success of the GE HealthCare separation as early evidence, the Board continues to believe executing
on this plan will best position GE’s businesses to deliver long-term growth and create value for all our stakeholders. In
this letter, as I have for the past several years, I would like to offer some additional perspective about the Board’s efforts
on your behalf.
Evolving the Board of Directors
As lead director and a member of our Governance &
Public Affairs Committee, I have had the opportunity to focus on our recruitment of directors who will bring deep domain expertise
and dedicated oversight for each of the three independent companies. This has also entailed careful planning for the evolution
of the GE Board: we recognize the importance of maintaining an engaged and well-balanced GE Board during this transition period
as some of our existing directors move from GE to the new spin-off companies, and as we also add new directors in anticipation
of the planned separations. In September, we announced the board of directors for GE HealthCare, and that board serves as a model
of how we plan to mix industry-relevant experience and diversity of skills, expertise and perspectives as we look ahead to the
planned boards for GE Vernova and GE Aerospace. We wish several departing directors farewell: Risa Lavizzo-Mourey and Tom Mihaljevic,
who joined the GE HealthCare board in January, and Frank D’Souza and Leslie Seidman, who are not standing for reelection
when their current terms end in May. We also continue to miss our friend and colleague former U.S. Secretary of Defense Ash Carter,
who sadly passed away in October. With these departures, though the individual directors cannot be replaced, we look ahead to
the needs of GE Vernova and GE Aerospace in our recruitment efforts. We are pleased to be nominating Darren McDew and Jessica
Uhl as new directors in this proxy, who will bring valuable perspectives that are well aligned with the two future companies.
Executing on Our Strategic Priorities
The steady performance and execution by the GE team
over the past several years have laid the foundation for the path ahead. GE’s portfolio actions have made it a simpler,
stronger, technology-driven industrial company than it was just a few years ago. In 2022, GE retired $11 billion of debt, bringing
total debt reduction since 2018 to over $100 billion. As we remain focused on our objective to create two more investment-grade
standalone companies, the Board has been regularly reviewing the company’s financial and capital allocation plans with management.
This has involved considering a widening range of options to deploy surplus capital, which has already translated into the commencement
of a common stock repurchase program in 2022 and the partial redemption of $3 billion of preferred stock this month. The Board
will continue to have an active dialogue with management about capital allocation priorities as we move forward. We also have
seen most of GE’s businesses deliver solid operational and financial performances for 2022 in the context of significant
global challenges that included supply chain constraints, inflation, the Russian invasion of Ukraine and enduring effects of the
COVID-19 pandemic. The Board commends the GE leadership and teams for their sustained and ongoing achievements.
Delivering for Shareholders
We remain committed to regular, robust engagement with
our shareholders on governance matters. The past year was no exception, as we met with shareholders representing nearly half of
all outstanding shares, which was nearly 75% of the shares held by institutional investors. I participated in a number of these
calls and always appreciate the opportunity to speak directly with our large shareholders, answer their questions and hear their
feedback. Our governance engagements covered a range of topics, including the Board’s activities, executive compensation
matters and GE’s sustainability priorities and reporting. The overarching and most-common theme, however, was a keen interest
in how GE and the Board are navigating these areas of corporate governance with the planned separations in view. Informed by those
shareholder discussions, we have added specific highlights throughout this year’s proxy where there is key information related
to the strategic plan and GE’s path forward.
We look forward to 2023 and beyond for continued performance
by the GE businesses to deliver for our customers, shareholders and other stakeholders. These businesses all have important missions
and are working to solve global challenges: GE Aerospace is creating a smarter and more efficient future of flight; the GE Vernova
businesses are driving electrification and decarbonization through the energy transition; and GE HealthCare, now operating as
a standalone company, is driving precision care. On behalf of the GE Board, thank you for your continued support of GE.
THOMAS W. HORTON
Lead Director
GE 2023 PROXY STATEMENT 1
Table of Contents
GE: A New Era Begins
2022 was a year that propelled GE forward. We successfully
completed the spin-off of GE HealthCare in January 2023, distributing approximately 80.1% of its common stock to GE shareholders
and retaining an approximately 19.9% stake in the company. We are making good progress on our plans to launch GE Aerospace and
GE Vernova as industry-leading, global, investment-grade public companies that will unlock greater value for our customers and shareholders.
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As independently run companies, GE
Aerospace and GE Vernova will be better positioned to create long-term value as we shape the future of flight and lead the energy
transition.
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Solid Foundation
Strong financial position
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We delivered strong full-year
results across most of GE’s businesses in 2022, with total company revenue growth, margin expansion, and $4.8 billion
of free cash flow.* Our four reporting segments in 2022 are listed below. |
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We strengthened our foundation, retiring an additional $11
billion of debt, bringing total debt reduction to over $100 billion since 2018. |
Improved business and operating performance
We ran our operations better, further embedding lean
and decentralization in our businesses.
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Lean transformation:
Drove sustainable, impactful improvements in safety, quality, delivery, cost and cash management. We are making progress
embedding lean practices and tools deeply into how we work, creating a problem-solving culture where problems are embraced,
owned, analyzed and fixed. |
| ● |
Decentralization: Moved the decision-making center of gravity
closer to the customer, resulting in greater accountability, more transparency and better results for our customers. |
Our progress on these priorities has laid the foundation
to launch three companies. More than a year after the announcement to form three independent companies from GE’s businesses,
the logic behind—and our conviction in—our historic transformation has only strengthened. Along the way, the feedback
from our customers, investors, employees and other stakeholders has been overwhelmingly positive.
| AEROSPACE |
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HEALTHCARE |
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MISSION
Providing customers
with engines, components, avionics and systems for commercial, military and business &
general aviation aircraft and a global service network to support these offerings
UNITS
Commercial Engines and Services, Military, Systems & Other
INSTALLED BASE
~40,900 commercial aircraft engines** and ~26,100 military aircraft engines
CEO
H. Lawrence Culp, Jr.
EMPLOYEES ~45,000
2022 REVENUES
$26.0 billion
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MISSION
Building a healthier
future and creating a world where healthcare has no limits
UNITS
Healthcare Systems, Pharmaceutical Diagnostics
INSTALLED BASE
4M+ installations; 2B+ patient exams per year
CEO
Peter Arduini
EMPLOYEES ~49,000
2022 REVENUES
$18.5 billion
Note: GE HealthCare refers to our reporting segment prior to the spin-off in January 2023, and thereafter refers to GE HealthCare Technologies Inc.
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| RENEWABLE
ENERGY |
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POWER |
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MISSION
Making renewable power
sources more affordable, reliable and accessible for the benefit of people everywhere
UNITS
Onshore Wind, Offshore Wind, Grid Solutions Equipment and Services, Hydro Solutions, Hybrids Solutions
INSTALLED BASE
400+ GW of renewable energy equipment
CEO
Scott Strazik
EMPLOYEES ~36,000
2022 REVENUES
$13.0 billion
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MISSION
Powering lives and
making electricity more affordable, reliable, accessible, and more sustainable
UNITS
Gas Power, Steam Power, Power Conversion, Nuclear & Other
INSTALLED BASE
~7,000 gas turbines
CEO
Scott Strazik
EMPLOYEES ~32,000
2022 REVENUES
$16.3 billion
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| * |
Non-GAAP Financial Measure. For information on
how these metrics are calculated, see Explanation of Non-GAAP Financial Measures and Performance Metrics on page 75. |
| ** |
Including GE and its joint venture partners. |
2 GE 2023 PROXY STATEMENT
Table of Contents
Creating Value Today and Tomorrow
With the separation of GE HealthCare already completed,
we believe the remaining GE businesses are positioned to continue to lead in two critical growth sectors: creating a smarter and more efficient
future of flight and driving decarbonization through the energy transition.
Future
of Flight
Centered around
our mission to create a smarter and more
efficient future of flight
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Energy
Transition
Positioned to
lead the energy transition, helping the energy sector
solve for sustainability, reliability and affordability
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● In
2022, nearly three billion people flew with our engine technology under wing.
We have nearly 41,000 commercial engines at work in more than 70% of global
airlines, and a diverse portfolio of more than 26,000 military engines.
We take that responsibility seriously, living our purpose to invent the
future of flight, lift people up and bring them home safely.
● GE
Aerospace is leveraging its best-in-class technology portfolio to develop next generation programs.
● We
are continuing our efforts to support the use of sustainable aviation fuel, or SAF, which is vital to enabling the airline
industry to meet its decarbonization goals. The RISE program with CFM International (our 50-50 joint venture with Safran)
aims to reduce fuel consumption and CO2 emissions by more than 20% compared with today’s most efficient engines.
● We
are also developing a new flight test program for a hydrogen combustion engine and an open fan flight test demonstration,
both with Airbus, as well as working with NASA and Boeing to develop hybrid electric engines.
● The
quality of our technology and product development plans, the energy and collaboration of our team and our unique positioning
as the industry’s largest and youngest fleet give us confidence that this business will generate significant value
for decades to come. |
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● GE’s
portfolio of energy businesses, which we call GE Vernova, is helping the
energy sector solve for sustainability, reliability and affordability.
With approximately 54,000 wind turbines and 7,000 gas turbines installed
worldwide, GE Vernova helps generate 30% of the world’s electricity
and has a meaningful role to play in the energy transition.
● The
planned spin-off of GE Vernova comes as the world faces a 50% increase in electricity demand over the next two decades.
Against this backdrop, the strategic imperative to electrify and decarbonize the world is a challenge that GE Vernova
was made to meet.
● For
our Power business, global gas generation and utilization continues to grow, with strength in Europe and the U.S. Gas
remains a fuel of choice on dispatch curves globally to meet growing electricity demand. Our gas turbines have already
accumulated more than eight million hours running on blends of hydrogen and similar fuels.
● For
our Renewable Energy business, the U.S. Inflation Reduction Act is game-changing. It provides the certainty and stability
our customers need to make long-term investments, especially in Onshore Wind.
● While
we work on breakthrough technologies for tomorrow, we continue to build and deliver state-of-the-art equipment the world
needs today to decarbonize the energy sector while building resilience in more than 170 countries around the world. |
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GE 2023 PROXY STATEMENT 3
Table of Contents
Notice
of 2023 Annual Meeting
Logistics
DATE AND TIME
May 3, 2023, at 10:00 a.m.
Eastern Time
LOCATION
Live Webcast at:
www.virtualshareholdermeeting
.com/GE2023
RECORD DATE
Shareholders of record at the close
of business on March 7, 2023, are entitled to attend and vote at the Annual Meeting. On that date, there were 1,090,282,930 shares of common
stock of General Electric Company (GE) outstanding and entitled vote.
You are invited to participate in
GE’s 2023 Annual Meeting. If you were a GE shareholder at the close of business on March 7, 2023, you are entitled to vote
at the Annual Meeting. Even if you plan to attend the live webcast, we encourage you to submit your vote as soon as possible through
one of the methods available to you.
Cordially,
MICHAEL HOLSTON,
SECRETARY
| Agenda |
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Elect the 10 director nominees named in the proxy for the coming year |
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FOR each director nominee |
Page 7 |
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See page 1 for a Letter from the Lead Director
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Advisory approval of our named executives’ compensation (Say-on-Pay) |
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FOR |
Page 26 |
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See page 26 for a Letter from the Management Development & Compensation Committee
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Advisory vote on the frequency of future advisory votes on our named executives’ compensation (Say-on-Frequency) |
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ONE YEAR |
Page 61 |
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Ratify the
selection of Deloitte as independent auditor for 2023 |
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FOR |
Page 62 |
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Vote on the shareholder proposals included in the proxy, if properly presented
at the meeting |
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AGAINST each proposal |
Page 64 |
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HOW YOU CAN VOTE |
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Via
the internet
at www.proxyvote.com, or at the website indicated on the materials
provided to you by your broker |
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By Telephone
Call the telephone number on your proxy card or voting instruction form |
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By Mail
Sign, date and return your proxy card or voting instruction form |
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If you are a beneficial owner and received a voting instruction form, please follow the instructions provided by your bank or broker to vote your shares. |
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We have created an Annual Meeting website at https://www.ge.com/annualmeeting
to make it easy to access our 2023 Annual Meeting materials. At the Annual Meeting website you can find an overview of the
items to be voted, the proxy statement and the annual report to read online or to download, as well as a link to vote your shares.
WHERE CAN YOU FIND MORE INFORMATION?
Where can I find out more information?
See Voting and Meeting Information on page 71.
4 GE 2023 PROXY STATEMENT
Table of Contents
Shareholder Engagement in 2022
We have ongoing and robust engagement with our shareholders that includes
governance-focused engagement meetings throughout each year. We value being close to our shareholders and hearing their feedback
directly, as we seek to continuously improve GE’s performance, programs and reporting. The governance engagements highlighted
below are in addition to the regular discussions that our senior leadership and Investor Relations teams have with many institutional
and retail shareholders, which often include governance, sustainability and similar matters as well.
| Who
We Met With |
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| 74% |
Engaged with shareholders representing approximately 74% of outstanding shares held by institutional investors |
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53% |
Represents approximately 53% of total outstanding shares |
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| Regular
Outreach to Engage with Shareholders |
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| Taking
Actions Informed by Shareholder Feedback |
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| STRATEGY |
See Page 18  |
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BOARD OF DIRECTORS |
See Page 7 |
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● Executing
on plan to launch three independent companies. In January, we completed the separation of our HealthCare business with the
spin-off of GE HealthCare. We continue to work towards our second planned spin-off for GE Vernova, our portfolio of energy
businesses.
● Our
Path Forward. Based on shareholders’ interest, we have highlighted sections in this year’s proxy statement detailing key
progress, actions and expectations related to the spin-offs with call-out boxes labeled “Our Path Forward.”
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● Named two new directors with industry and operating expertise to the GE Board aligned with our strategic transformation. We are continuing ongoing director recruitment so that the planned future GE Vernova and GE Aerospace companies will both have dedicated boards with deep domain expertise, as with GE HealthCare.
● Committee leadership refreshment. The Board appointed new chairs for both the Management Development & Compensation Committee and the Governance & Public Affairs Committee during the past year.
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| EXECUTIVE COMPENSATION |
See Pages 26 & 27 |
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SUSTAINABILITY |
See Page 18 |
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● Compensation decisions for NEOs. Again this year, annual bonuses for our named executives were formulaic and based only on predetermined performance targets for our businesses.
● New
design for PSU awards. In response to shareholder feedback, we modified the design of the 2023 PSU awards to measure performance based
on the average of three consecutive one-year performance periods, modified by a three-year relative TSR.
● Enhanced disclosure. In addition to executive compensation highlights related to the spin-offs, this year’s proxy statement features a variety of disclosure enhancements informed by shareholder feedback, including a redesigned Compensation Discussion & Analysis (CD&A) section.
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● Continued to strengthen reporting. We published our second annual Sustainability Report and Diversity Report; we also published an inaugural Human Rights Report, with increased detail about governance and due diligence processes related to human rights and our supply chain.
● Climate
reporting. We reported Scope 3 emissions for use of sold products for the first time for our Power and
Aerospace businesses in the Sustainability Report, with business-specific views of the technology roadmaps to make progress
toward net zero by 2050.
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GE 2023 PROXY STATEMENT 5
Table of Contents
6 GE 2023 PROXY STATEMENT
Table of Contents
Key Corporate Governance Practices
● 9 out of 10 director nominees are independent
● Annual election of all directors by majority
vote
● No supermajority vote provisions in governing documents
● Annual review of Board leadership structure
● Annual Board and committee self-evaluations
● Board-level oversight of ESG matters
● Strong lead director with clearly delineated
duties
● Dual-pronged
Board refreshment mechanisms (age & term limits)
● Regular executive sessions of independent directors
● Board and committees may hire outside advisors
independently of management
● Proactive year-round shareholder engagement
program
● Clawback policy that applies to all cash and
equity incentive awards
● Prohibition on hedging & pledging
● Strong stock ownership guidelines and retention
provisions
● “Overboarding” limits for directors
● No poison pill or dual-class shares
● Shareholder right to call special meetings
(at 10%)
● Proxy access by-law provisions on market terms
GE 2023 PROXY STATEMENT 7
Table of Contents
Nominee Biographies
| Board
Leadership |
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CHAIRMAN
H. Lawrence
Culp, Jr.
Director Since: 2018
Age: 59
Birthplace:
United States
Chairman and CEO, General Electric, Boston, MA
(since 2018) and CEO, GE Aerospace, Cincinnati, OH (since 2022)
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LEAD DIRECTOR
Thomas
Horton
Director Since: 2018
Age: 61
Birthplace:
United States
INDEPENDENT
Partner, Global Infrastructure Partners, an infrastructure
investment fund, New York, NY (since 2019) |
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PRIOR BUSINESS EXPERIENCE
● Senior Advisor,
Bain Capital Private Equity, a global private equity firm (2017–2018)
● Senior Lecturer,
Harvard Business School (2015–2018)
● Former CEO and
President, Danaher (2001–2014), a global science and technology company operating in the healthcare, environmental and applied-end
markets; joined Danaher subsidiary Veeder-Root in 1990, serving in a number of leadership positions within Danaher, including COO
and, following his retirement, Senior Advisor (2014–2016)
CURRENT PUBLIC COMPANY BOARDS
● General Electric
● GE HealthCare
PAST PUBLIC COMPANY BOARDS
● GlaxoSmithKline
● Danaher
● T. Rowe Price
Group
OTHER POSITIONS
● Member and former
Chairman, Board of Visitors & Governors, Washington College
● Member, Board
of Trustees, Wake Forest University
EDUCATION
● Washington College
● MBA, Harvard
Business School |
|
GE COMMITTEE MEMBERSHIP
● Governance
PRIOR BUSINESS EXPERIENCE
● Senior Advisor,
Warburg Pincus LLC, a private equity firm focused on growth investing (2015–2019)
● Chairman, American
Airlines Group, one of the largest global airlines (formed following the merger of AMR Corporation and US Airways) (2013–2014)
● Chairman and
CEO, American Airlines (2011–2014)
● Chairman and
CEO, AMR (parent company of American Airlines) (2010–2013)
● EVP and CFO,
AMR (2006–2010)
● Vice Chairman
and CFO, AT&T (2002–2006)
● SVP and CFO,
AMR (2000–2002); joined AMR in 1985, serving in various finance and management roles
CURRENT PUBLIC COMPANY BOARDS
● General Electric
● Walmart (lead
director)
PAST PUBLIC COMPANY BOARDS
● Qualcomm
● EnLink Midstream
OTHER POSITIONS
● Executive Board
Member, Cox School of Business, Southern Methodist University
EDUCATION
● Baylor University
● MBA, Southern
Methodist University |
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8 GE 2023 PROXY STATEMENT
Table of Contents
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Board
Leadership |
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CHAIR: Audit Committee*
Isabella
Goren
Director
Since: 2022
Age:
62
Birthplace:
Ukraine
INDEPENDENT
Former Chief Financial Officer of American
Airlines and AMR Corporation, a global airline, Fort Worth, TX (2010-2013)
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CHAIR: Compensation Committee
Stephen
Angel
Director
Since: 2022
Age:
67
Birthplace:
United States
INDEPENDENT
Chairman and Former CEO, Linde, a global industrial gases
and engineering company, Dublin, Ireland (since 2022)
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CHAIR: Governance & Public Affairs Committee
Paula Rosput
Reynolds
Director
Since: 2018
Age:
66
Birthplace:
United States
INDEPENDENT
President and CEO, PreferWest LLC, a business
advisory firm, Seattle, WA (since 2009)
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GE COMMITTEE MEMBERSHIP
● Audit (Chair)*
PRIOR BUSINESS EXPERIENCE
● CFO,
American Airlines and AMR Corporation (2010-2013)
● Senior
Vice President, Customer Relationship Marketing, American Airlines and AMR Corporation (2006-2010)
● Vice
President, American Airlines (1998-2006)
● President,
AMR Services (1996-1998)
● Previously
served in various management positions at American Airlines (1986-1996)
● Chemical
Engineer, Dupont (1983-1985)
CURRENT PUBLIC COMPANY BOARDS
● General
Electric
● Marriott
International
PAST PUBLIC COMPANY BOARDS
● Gap
● LyondellBasell
Industries
OTHER POSITIONS
● Director,
MassMutual
● Director,
National Association of Corporate Directors, North Texas
● Member
of the Advisory Board, The University of Texas at Austin, Cockrell School of Engineering
● Member
of the Executive Board, Lyle School of Engineering, Southern Methodist University
EDUCATION
● University
of Texas at Austin
● MBA,
Southern Methodist University
* Upon reelection to the Board, Ms. Goren will
become Chair of the Audit Committee
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GE COMMITTEE MEMBERSHIP
● Compensation
(Chair)
PRIOR BUSINESS EXPERIENCE
● CEO,
Linde (2018-2022)
● President &
CEO, Praxair (subsequently Linde) (2007-2018)
● President &
COO, Praxair (2006-2007)
● EVP,
North America, Europe and Asia, Praxair (2001-2006)
● Previously
held various roles at General Electric (1979-2001)
CURRENT PUBLIC COMPANY BOARDS
● General
Electric
● Linde
(Chair)
● PPG
Industries
PAST PUBLIC COMPANY BOARDS
● Praxair
(Chair)
EDUCATION
● North
Carolina State University
● MBA,
Loyola College
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GE COMMITTEE MEMBERSHIP
● Audit
● Governance (Chair)
PRIOR BUSINESS EXPERIENCE
● Vice Chairman and Chief Restructuring Officer, American International Group (2008–2009)
● Chairman, President and CEO, Safeco Insurance Company of America (2005–2008)
● Chairman and CEO, AGL Resources (1998–2005)
● CEO, Duke Energy Power Services, Duke Energy (1995–1998)
● Previously served in various leadership positions at Associated Power Services, Pacific Gas Transmission Co. and Pacific
Gas and Electric Company
CURRENT PUBLIC COMPANY BOARDS
● General Electric
● BP
● National Grid UK (Chair)
PAST PUBLIC COMPANY BOARDS
● Air Products & Chemicals
● Anadarko Petroleum
● BAE Systems
● CBRE Group
● Circuit City Stores
● Coca-Cola Enterprises
● Delta Air Lines
● TransCanada
EDUCATION
● Wellesley College
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GE 2023 PROXY STATEMENT 9
Table of Contents
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Sébastien
Bazin
Director
Since: 2016
Age:
61
Birthplace:
France
INDEPENDENT
Chairman and CEO, AccorHotels, a global
hotel company, Paris, France (since 2013)
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Edward
Garden
Director
Since: 2017
Age:
61
Birthplace:
United States
INDEPENDENT
Chief Investment Officer and Founding
Partner, Trian Fund Management, L.P., an investment management firm, New York, NY (since 2005)
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Catherine
Lesjak
Director
Since: 2019
Age:
64
Birthplace:
Canada
INDEPENDENT
Former Chief Financial Officer, HP, a
global technology company, and its predecessor, Hewlett-Packard, Palo Alto, CA (2007-2018)
|
GE COMMITTEE MEMBERSHIP
● Compensation
● Governance
PRIOR BUSINESS EXPERIENCE
● CEO,
Europe Colony Capital, a private investment firm (1997–2013)
● Group
Managing Director, CEO and General Manager, Immobilière Hôtelière (1992–1997)
● Began
career in 1985 in U.S. finance sector, becoming Vice President, M&A, PaineWebber
CURRENT PUBLIC COMPANY BOARDS
● General
Electric
● AccorHotels,
including Accor Acquisition Company (sponsored by Accor)
PAST PUBLIC COMPANY BOARDS
● Huazhu
Group
● Carrefour
● Banyan
Tree Holding
OTHER POSITIONS
● Vice
Chairman, Supervisory Board, Gustave Roussy Foundation, cancer research funding
● Chairman,
Safar Ventures
EDUCATION
● Sorbonne
University
● MA
(Economics), Sorbonne University
|
|
GE COMMITTEE MEMBERSHIP
● Compensation
PRIOR BUSINESS EXPERIENCE
● Vice
Chairman and Director, Triarc Companies (subsequently The Wendy’s Company and previously Wendy’s/Arby’s
Group) (2004–2007) and Executive Vice President (2003–2004)
● Managing
Director, Credit Suisse First Boston (1999–2003)
● Managing
Director, BT Alex Brown (1994–1999)
CURRENT PUBLIC COMPANY BOARDS
● General
Electric
● Janus
Henderson Group
PAST PUBLIC COMPANY BOARDS
● Invesco
● Legg
Mason
● The
Bank of New York Mellon
● The
Wendy’s Company
● Family
Dollar Stores
● Pentair
EDUCATION
● Harvard
College
|
|
GE COMMITTEE MEMBERSHIP
● Audit
● Governance
PRIOR BUSINESS EXPERIENCE
● Interim
Chief Operating Officer, HP (2018–2019)
● Interim
CEO, Hewlett Packard (2010)
● Senior
Vice President and Treasurer, HP (2003–2007)
● Previously
served in various leadership positions within the financial organization at HP and Hewlett Packard, including as Global
Controller, Software Solutions; Controller and Credit Manager for Commercial Customers; and as Manager, Financial Operations,
Enterprise Marketing and Solutions (joined Hewlett Packard in 1986)
CURRENT PUBLIC COMPANY BOARDS
● General
Electric
● PROS
Holdings
● GE
HealthCare
PAST PUBLIC COMPANY BOARDS
● SunPower (Chair, Audit Committee)
OTHER POSITIONS
● Board,
Haas School of Business, University of California, Berkeley
EDUCATION
● Stanford
University
● MBA,
University of California, Berkeley
|
10 GE 2023 PROXY STATEMENT
Table of Contents
| |
|
|
|
|
|
Darren
McDew
Director
Since: 2023
Age:
62
Birthplace:
United States
INDEPENDENT
Retired Four-Star General, United States
Air Force, and Former Commander of U.S. Transportation Command, Scott Air Force Base, Illinois (2015 - 2018)
|
|
Jessica Uhl
New Director Nominee
Age:
55
Birthplace:
United States
INDEPENDENT
Former Chief Financial Officer, Shell
plc, a global energy and petrochemical company, London, England (2017-2022)
|
|
|
GE COMMITTEE MEMBERSHIP
● Governance
PRIOR GOVERNMENT EXPERIENCE
● Four-star general who served for 36 years in the United States military before retiring in October 2018.
● Commander, U. S. Transportation Command, the single manager for global air, land and sea transportation for the U.S. Department
of Defense from 2015 to 2018.
● Held various leadership roles across the U. S. Military, including Vice Director for Strategic Plans and Policy for the
Joint Chiefs of Staff, Military Aide to the President, Director of Air Force Public Affairs, and Chief of Air Force Senate
Liaison Division
CURRENT PUBLIC COMPANY BOARDS
● General Electric
● Abbott Laboratories
● Parsons Corporation
OTHER POSITIONS
● Director, United Services Automobile Association (USAA)
● Director, Boys & Girls Club of America
● Advisor, U. S. Innovative Technology
EDUCATION
● Virginia Military Institute
● MS, Aviation Management, Embry-Riddle Aeronautical University
|
|
GE COMMITTEE MEMBERSHIP
● Audit*
PRIOR BUSINESS EXPERIENCE
● CFO, Shell plc (2017-2022)
● Executive Vice President, Finance, Integrated Gas, Shell plc (2016-2017)
● Executive Vice President, Finance, Upstream Americas, Shell plc (2014-2015)
● Vice President, Finance,
Unconventionals, Shell plc (2013-2014)
● Vice President, Controller, Upstream and Projects and Technology, Shell plc (2010-2012)
● Vice President, Finance, Shell Lubricants, Shell plc (2009-2010)
● Head of External Reporting, Shell plc (2007-2009)
● Vice President, Business Development, Shell Renewables, Hydrogen & C02, Shell plc (2005-2006)
● Finance Manager, Shell Solar, Shell plc (2004-2005)
CURRENT PUBLIC COMPANY BOARDS
● Goldman Sachs
PAST PUBLIC COMPANY BOARDS
● Shell plc
OTHER POSITIONS
● Vice Chair, Mission Possible Partnership
● Strategic Advisor, Breakthrough Energy
● Advisory Board, Columbia Center for Global Energy Policy
● Trustee, Rocky Mountain Institute
EDUCATION
● University of California, Berkeley
● MBA, INSEAD, France
* Upon election to the Board, Ms. Uhl will be
appointed to the Audit Committee
|
|
|
GE 2023 PROXY STATEMENT 11
Table of Contents
Board
Composition
The
Governance & Public Affairs Committee (Governance Committee) is charged with reviewing the composition of the Board and refreshing it as appropriate. With this in mind, the
Governance Committee continuously reviews potential candidates and recommends nominees to the Board for approval. The Board takes a thoughtful
approach to its composition to maintain alignment with the company’s evolving corporate strategy.
OUR
PATH
FORWARD |
In connection with the spin-off of GE HealthCare in January 2023, a new board of directors
assumed their roles at that company as it began operating independently. Current GE directors H. Lawrence Culp, Jr. and Catherine
Lesjak also serve on the GE HealthCare board, and former GE directors Risa Lavizzo-Mourey and Tomislav Mihaljevic transitioned from
the GE Board to the GE HealthCare board at the time of the spin-off. They were joined by GE HealthCare’s CEO Peter Arduini
and five new independent directors as GE HealthCare became a public company. The director recruitment efforts continue as we look
ahead to the planned separation of GE Vernova and GE Aerospace into independent companies. At the upcoming GE Annual Meeting, shareholders
will have the opportunity to elect for the first time two new directors who bring decades of experience relevant to the future companies:
Darren McDew and Jessica Uhl. They were recommended as directors by a search firm and by management, respectively. |
Director
Selection Process
Our
Governance Committee, together with the full Board, is responsible for establishing criteria, screening candidates and evaluating the
qualifications of persons who may be considered for service on our Board. The Governance Committee considers all shareholder recommendations
for director candidates. The following describes the Board’s selection process:
| 1 |
SUCCESSION
PLANNING |
|
| |
The Governance Committee prioritizes experiences and attributes to support the current and long-term needs of the company, within the context of the current Board structure, diversity, and mix of skills and experience. |
| 2 |
IDENTIFICATION
OF CANDIDATES |
|
| |
The Governance Committee engages in a search process to identify qualified director candidates, which process may include the use of an independent search firm, and assesses candidates’ skills, experience and background and their alignment with the company’s portfolio and strategy. |
| 3 |
INTERVIEWING CANDIDATES |
|
| |
Qualified director candidates are typically interviewed by the Chairman and CEO, Governance Committee chair, lead director and other members of the Governance Committee, as well as other members of the Board and management, as necessary. |
| 4 |
DECISION AND NOMINATION |
|
| |
After determining that the director candidates meet the priorities established by the Governance Committee and will serve in the best interests of the company and its shareholders, the Governance Committee recommends, and the full Board approves, director candidates for appointment to the Board and election by shareholders. |
| 5 |
ELECTION |
|
| |
The shareholders consider the nominees and elect directors by majority vote to serve one-year terms. |
| 6 |
ONGOING ASSESSMENT |
|
| |
The Governance Committee regularly assesses the composition of the Board to maintain alignment with the company’s strategy, and in connection with the Board’s nomination of a slate of directors the Governance Committee reviews considerations including past contributions by each director; the skills, experiences and diversity represented on the Board; and the results of previous shareholder votes. |
Director
Recruitment Priorities
RECRUITMENT
PRIORITIES GOING FORWARD
| |
● | Domain
expertise aligned with the planned spin-offs |
| |
| |
| |
● | Operational
experience |
| |
| |
| |
● | Capital
allocation / finance |
| |
| |
| |
● | Government / regulatory |
| |
| |
| |
● | Technology
/ digital |
| |
| |
| |
● | Diversity |
DIRECTOR
“MUST- HAVES”
| |
● | Leadership
experience |
| |
| |
| |
● | Highest
personal & professional ethics |
| |
| |
| |
● | Integrity &
values |
| |
| |
| |
● | A
passion for learning |
| |
| |
| |
● | Inquisitive &
objective perspective |
| |
| |
| |
● | A
sense of priorities & balance |
| |
| |
| |
● | Talent
development experience |
HOW
YOU CAN RECOMMEND A CANDIDATE
Write to the Governance
Committee, c/o Corporate Secretary, GE, at the address listed on the inside front cover of this proxy statement and include all information
that our by-laws require for director nominations.
HOW
WE REFRESH THE BOARD
| |
● | Board
evaluation. Each year, the Board assesses its effectiveness through a thorough evaluation
at the Board and committee levels to assess the effectiveness of the directors and their
ability to work as a team in the long-term interest of the company. See How
We Evaluate the Board’s Effectiveness on page 16. |
| |
| |
| |
● | Term
limits. The Board has a 15-year term limit for independent directors. |
| |
| |
| |
● | Age
limits. With limited exceptions, directors may not be renominated to the Board after
their 75th birthday. |
See
the Board’s Governance Principles (see Helpful Resources on page 77) for more information
on these policies.
12 GE
2023 PROXY STATEMENT
Table of Contents
Important
Factors in Assessing Board Composition
The Governance Committee
strives to maintain an independent Board with broad and diverse experience and judgment that is committed to representing the long-term
interests of our shareholders. The Governance Committee considers a wide range of factors when selecting and recruiting director candidates,
including:
Creating
an experienced, qualified Board with high personal integrity and character, and expertise in areas relevant to GE.
The Governance Committee
seeks directors who possess extraordinary leadership qualities and demonstrate a practical understanding of organizations, processes,
people, strategy, risk management and how to drive change and growth. Additionally, we believe directors should have experience in identifying
and developing talent, given the Board’s role in human capital management and succession planning. In addition to these threshold
qualities, we seek directors who bring to the Board specific types of experience relevant to GE and the company’s strategy.
Enhancing
the Board’s diversity of background.
For decades, GE has
been committed to building a cognitively diverse Board comprised of individuals from different backgrounds and with a range of experiences
and viewpoints. Specifically, under the Board’s diversity policy, the Governance Committee considers attributes such as race, ethnicity,
gender, cultural background and professional experience when reviewing candidates for the Board and in assessing the Board’s overall
composition. The Board is committed to using refreshment opportunities to strengthen its cognitive diversity. Additionally, the Governance
Committee is committed to considering the candidacy of women and racially and ethnically diverse candidates for future vacancies on the
Board. To accomplish this, the Governance Committee will continue to require that search firms engaged by GE include a robust selection
of women and racially and ethnically diverse candidates in all prospective director candidate pools. The Governance Committee reviews
its effectiveness in balancing these considerations when assessing the composition of the Board.
Complying
with regulatory requirements and the Board’s independence guidelines.
The Governance Committee
considers regulatory requirements affecting directors, including potential competitive restrictions. It also looks at other positions
the director has held or holds (including other board memberships), and the Board reviews director independence.
How
We Assess Board Size
The Governance Committee
takes a fresh look at Board size each year, consistent with the Board’s Governance Principles (see Helpful
Resources on page 77). Based on the Board’s recent self-evaluations, assessment of trends with peer companies, and taking
into account investor feedback, the Board anticipates it will continue to maintain approximately its current size. However,
the Board may add additional directors in connection with our planned spin-offs.
| |
Board Skills and
Experience |
9/10 |
INDUSTRY & OPERATIONS EXPERIENCE
We have sought directors with management and operational experience in the industries
in which we compete. For example, in the last two years we have added directors with power, aviation and technology expertise. |
|
9/10 |
FINANCE & ACCOUNTING EXPERIENCE
GE uses a broad set of financial metrics to measure its performance, and accurate financial
reporting and robust auditing are critical to our success. We have added a number of directors who qualify as audit committee financial
experts, and we expect all of our directors to have an understanding of finance and financial reporting processes. |
|
4/10 |
INVESTOR EXPERIENCE
To promote strong alignment with our investors, we have added directors who have experience
overseeing investments and investment decisions. We believe that these directors can help focus management and the Board on the most
critical value drivers for the company, including with respect to setting executive compensation targets and objectives. |
4/10 |
TECHNOLOGY EXPERIENCE
As a high-tech industrial company and leading innovator, we seek to add additional directors
with technology backgrounds because our success depends on developing and investing in new technologies and ideas. Technology experience
has become increasingly important as our products become more reliant on digital applications. |
10/10 |
RISK MANAGEMENT EXPERIENCE
In light of the Board’s role in overseeing risk management and understanding the
most significant risks facing the company, including strategic, operational, financial, legal and compliance and reputational risks,
we seek directors with experience in risk management and oversight. |
10/10 |
GLOBAL EXPERIENCE
We seek directors with global business experience because GE’s continued success
depends on continuing to grow our businesses outside the United States. For example, in 2022, 57% of our revenue was attributable
to activities outside the United States. |
GE
2023 PROXY STATEMENT 13
Table of Contents
Board
Leadership Structure
GE believes that independent board oversight
is an essential component of strong corporate performance. We also believe that the decision as to whether the positions of Chairman
and CEO should be combined or separated, and whether an executive or an independent director should serve as the Chairman should be based
upon the circumstances facing the company. Maintaining flexibility on this policy allows the Board to choose the leadership structure
that will best serve the interests of the company and its shareholders at any particular time.
WHY OUR BOARD LEADERSHIP
STRUCTURE IS APPROPRIATE FOR GE AT THIS TIME. The
Board continues to believe that its current leadership structure, which has a combined role of Chairman and CEO, counterbalanced by a
strong independent Board led by a lead director and independent directors chairing each of the Board committees, is in the best interests
of GE and its shareholders. In the Board’s view, this structure allows Mr. Culp, as Chairman and CEO, to drive strategy and agenda
setting at the Board level, while maintaining responsibility for executing on that strategy as CEO. At the same time, our lead director,
Thomas Horton, works with Mr. Culp to set the agenda for the Board and also exercises additional oversight on behalf of the independent
directors. In addition, the Board believes that combining the roles of Chairman and CEO is important to provide clarity on decision-making
and accountability as we execute on our strategic transformation into three independent companies, and any potential conflicts that might
result from combining the roles can be effectively mitigated through the duties of our lead director. The Board will continue to review
the appropriateness of this structure and consider shareholder feedback from our ongoing engagements.
HOW WE SELECT THE
LEAD DIRECTOR. The Governance Committee reviews potential candidates’ qualifications and attributes, including leadership and previous
public company experience, and considers feedback from the current lead director, other Board members and the Chairman. The Governance
Committee then makes a recommendation to the Board’s independent directors, who after review, elect the lead director. Thomas Horton,
former Chairman and CEO of American Airlines, was first elected as the lead director in September 2018.
The
Lead Director’s Role
The lead director has the following
responsibilities (and may also perform other functions at the Board’s request), as detailed in the Board’s Governance Principles:
| ● | Board
leadership — provides leadership to the Board in any situation where the Chairman’s
role may be perceived to be in conflict, and chairs Board meetings in the absence of the
Chairman |
| | |
| ● | Board
agenda, schedule & information — approves the agenda (with the ability
to add agenda items), schedule and information sent to directors and calls additional meetings
as needed |
| | |
| ● | Leadership
of independent director meetings — calls and leads independent director meetings,
which are regularly scheduled (in addition to the numerous informal sessions that occur throughout
the year) without any management directors or GE employees present |
| | |
| ● | Chairman-independent
director liaison — regularly meets with the Chairman and serves as liaison between
the Chairman and the independent directors (although every director has direct access to
the Chairman) |
| | |
| ● | Shareholder
communications — makes himself/herself available as the primary Board contact for
direct communication with our significant shareholders |
| | |
| ● | Board
governance processes — works with the Governance Committee to guide the Board’s
governance processes, including the annual Board self-evaluation and the annual Chairman’s
evaluation |
| | |
| ● | Board
leadership structure review — oversees the Board’s periodic review and evaluation
of its leadership structure |
| | |
| ● | Committee
chair selection — advises the Governance Committee in choosing committee chairs |
| |
 |
|
CHAIRMAN OF
THE BOARD & CEO |
| |
|
|
|
| |
 |
|
LEAD DIRECTOR
elected solely by
independent directors |
| |
|
|
|
| |
 |
|
CHAIRS
The chairs of our Audit,
Compensation and
Governance committees
are independent |
Considerations
in selecting current
lead director:
THOMAS HORTON |
|
 |
Mr.
Horton was first elected to our Board at the 2018 Annual Meeting. During his tenure on our Board, he has established strong working relationships
with his fellow directors and garnered their trust and respect. Furthermore, he has demonstrated strong leadership skills, independent
thinking and a deep understanding of our businesses and their industries.
The
independent directors’ decision to select Mr. Horton as lead director took into account the tenures and capabilities of each independent
director, along with a potential candidate’s willingness and ability to serve as lead director, understanding that the position
entails significant responsibility and time commitment. The Board considered that Mr. Horton also serves as lead independent director
for Walmart. However, in reviewing Mr. Horton’s time commitment at Walmart, the independent directors noted that Walmart has three
separate positions for CEO, chairman, and lead independent director, which mitigated concerns about Mr. Horton’s ability to dedicate
sufficient time to the role as GE’s lead director under the circumstances.
14 GE
2023 PROXY STATEMENT
Table of Contents
Board
Governance Practices
Our Board seeks to operate with the highest degree of effectiveness,
supporting a dynamic boardroom culture of independent thought and intelligent debate on critical matters. We take a comprehensive,
year-round view of corporate governance and our adoption of best practices impacts our leadership structure, Board composition
and recruitment, director engagement, and accountability to shareholders. Our Board and committee evaluation process allows for
annual assessment of our Board practices and the opportunity to identify areas for improvement.
| | How
We Evaluate the Board’s Effectiveness |
| | |
| | Annual
Evaluation Process |
| | |
| | The
Governance Committee oversees and approves the annual
formal Board evaluation process and determines whether
it is appropriate for the evaluations to
be conducted by the lead director or an independent
consultant each year. In 2022, the evaluation process
was conducted by Mr. Horton as lead director. |
| | |
| | |
| | | |
| | | |
| 1 | WRITTEN
QUESTIONNAIRES |
| | | Directors
completed written questionnaires, which are benchmarked and refreshed each year focusing on the
performance of the Board and each of its committees. |
| | | |
| | | |
| | | |
| | | |
| | | |
| 2 | INDIVIDUAL
INTERVIEWS |
| | | The
lead director conducted one-on-one interviews with each member of the Board focused on: |
| | | |
| ● | reviewing
the Board’s and its committees’ performance over the prior year; and |
| | | |
| ● | identifying
areas for potential enhancements of the Board’s and its committees’ processes
going forward. |
| | | |
| | | |
| | | |
| | | |
| 3 | DISCUSSION
OF RESULTS |
| | | The
lead director reviewed the written questionnaire and interview responses with the chairs
of each committee and then met with the full Board to discuss the findings from the evaluation. |
| | | |
| | | |
| | | |
| 4 | USE
OF FEEDBACK |
| | | The
Board and each of its committees developed plans to take actions based on the results,
as appropriate. |
GE
2023 PROXY STATEMENT 15
Table of Contents
Board Operations
| 2022 Areas of Focus |
|
|
● Long-term
strategy and business portfolio reviews, including oversight of our strategic transformation
● Strategy
for the energy transition and climate change
● Capital
structure and liquidity, particularly in connection with our plan to create three investment grade rated public companies
|
● Business
operating and performance reviews
● Sustainability,
including external reporting
● Management
succession planning
● Aviation
sector recovery, and current industry dynamics
● Enterprise
risk management
|
A Typical GE Board Meeting
During 2022, the Board held seven regularly scheduled
meetings, plus five special meetings. Five regularly scheduled meetings were held in-person and two regularly scheduled
meetings were held virtually, and the schedules were adjusted to accommodate director participation from different time
zones. All special meetings were held virtually.
| 1 |
BEFORE THE MEETING |
Board committee chairs:
prep meetings with management, auditors
and outside advisors
|
Management:
internal prep meetings
|
| 2 |
THURSDAY
(DAY 1) |
Daytime:
Board committee meetings & Board
meeting
|
Evening:
informal gathering with management & Board working
dinner
|
| 3 |
FRIDAY
(DAY 2) |
Early morning:
independent directors’ breakfast session
|
Daytime:
full Board meeting (including reports from each
committee chair) followed by an executive session
|
| 4 |
AFTER THE MEETING |
Management:
debrief
sessions
to discuss
& respond
to Board
follow-up
items
|
| |
|
|
|
|
| |
Full Board
12 meetings in 2022
|
|
| |
|
|
|
|
| |
Chairman
H. Lawrence
Culp, Jr.
|
|
Lead Director
Thomas Horton
|
|
| |
 |
|
 |
|
| |
|
|
|
|
| |
|
|
|
|
| |
Independent
Director Meetings
The independent directors meet regularly in executive
sessions at scheduled Board meetings. They may have other special meetings throughout the year. These executive sessions are designed
to promote candor and discussion of matters in a setting that is independent of the Chairman and CEO. The lead director chairs
each of these executive sessions.
|
|
| |
|
|
|
|
The GE Board in Action: 2022
Highlights
Our Board recognizes that its oversight of our strategic priorities
and responsibility to GE shareholders requires a personal and professional commitment that extends well beyond regularly scheduled
Board meetings. Ongoing and meaningful engagement with the business is critical to staying informed and provides the type of insight
that allows our directors to provide effective guidance to our leadership team and to engage in constructive dialogue with each
other.
|
ENGAGEMENT WITH SHAREHOLDERS
Governance Discussions
Engagement with shareholders included Thomas Horton
(lead director)
DIRECTOR EDUCATION
Ongoing Functional Deep Dives
Periodic sessions with insurance and legal teams
Kaizen Events
Participation in education sessions on Lean fundamentals and other lean events
New Director Orientation
Full orientation program for new directors
|
ENGAGEMENT WITH THE BUSINESSES
Regular Board Calls
Provide an opportunity for the CEO and the rest
of the Board to discuss company operations in real-time
Quarterly Senior Leadership Meetings
Director attendance and presentations
Business Visits and Functional Deep Dives
Provide opportunity for direct employee interaction
and better understanding of GE culture
|
 |
|
BUSINESS AND STRATEGY REVIEW SESSIONS
● Director
participation at strategy sessions for GE Aerospace (September)
● Director
participation at strategy reviews for GE Vernova (October)
SITE VISITS BY DIRECTORS
● GE Global Research Center in Niskayuna, NY
● GE
Gas Power in Schenectady, NY
● GE Gas Power in Greenville, SC
● GE Aerospace in Evendale, OH
● GE HealthCare in Waukesha, WI
GE LEADERSHIP MEETINGS
● Director participation in quarterly leadership meetings for top ~900 company executives
|
|
| |
|
|
| |
|
|
|
| |
|
|
Regular calls with CEO |
|
| |
|
|
|
|
16 GE 2023 PROXY STATEMENT
Table of Contents
Board Committees
| |
|
|
|
|
|
|
|
|
|
|
COMMITTEE COMPOSITION
Listed to the right are the current members of each committee.
Independence. All committee members satisfy the NYSE’s
and GE’s definitions of independence.
COMMITTEE OPERATIONS
Each committee meets periodically throughout the year, reports
its actions to the Board, receives reports from senior management, annually evaluates its performance and can retain outside advisors.
Formal meetings are typically supplemented with additional calls and sessions.
COMMITTEE RESPONSIBILITIES
The key responsibilities of each committee are listed to the right.
For more detail, see the Governance Principles and committee charters (see Helpful Resources on
page 77).
|
Audit |
|
Governance & Public Affairs |
|
Management Development & Compensation |
| 10 meetings in 2022 |
|
6 meetings in 2022 |
|
9 meetings in 2022 |
|
Chair
Leslie Seidman
Other Members
D’Souza, Goren,
Lesjak & Reynolds
|
 |
|
Chair
Paula Rosput Reynolds
Other Members
Bazin, Horton
& Lesjak
|
 |
|
Chair
Stephen Angel
Other Members
Bazin, D’Souza, &
Garden
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| Recent Activities
and Key Focus Areas |
|
● Overseeing
the simplification of the company’s financial reporting
● Overseeing
the independent auditor, including the detailed audit plan and budget
● Conducting
cross-functional reviews with internal audit staff, tax, cyber/IT and compliance
● Overseeing the enterprise risk management framework and risk assessment measures
● Overseeing
material litigation strategy and the compliance and cybersecurity programs
|
|
● Overseeing
the development of the company’s sustainability and environmental, social and governance (ESG) commitments and
strategies and enhancements to disclosure
● Reviewing
the Board’s leadership structure and committee composition
● Identifying
and recruiting new directors
● Overseeing
the company’s safety programs and performance
● Overseeing
management of environmental remediation efforts
|
|
● Reviewing
critical talent to support the needs of GE with focus on human capital management, succession planning, diversity and talent development
and retention
● Focusing
on increased alignment of pay and performance through effective short- and long-term incentive compensation design
● Engaging
with shareholders and reviewing feedback and external benchmarking of compensation practices
● Overseeing
cultural transformation for GE, prioritizing leadership behavior
|
| |
|
|
|
|
|
|
|
| Our Path Forward |
● Overseeing the carve-out audits for the spin-off companies, preparation of the Form 10 registration statements and
standalone readiness of the compliance, internal audit, digital technology, enterprise risk and other key functions in connection
with the spin-offs |
|
● Leading
the director recruitment efforts in connection with the planned formation of three independent public companies |
|
● Overseeing
talent recruitment, development and placement/ retention in connection with the planned business separations and transition
to three standalone companies |
| |
|
|
|
|
|
|
| Key Responsibilities and Areas of Risk Oversight |
| |
● Oversees
GE’s independent auditor, including the audit plan
and budget, and monitors independence and performance
● Oversees
the effectiveness of GE’s financial reporting processes and
systems
● Discusses
with auditor and management key reporting practices
(including non-GAAP measures), critical audit matters and new accounting
standards
● Monitors
the effectiveness of GE’s internal controls
● Reviews
and evaluates the scope and performance of the internal audit
staff and compliance program
● Oversees
the company’s enterprise risk management and cybersecurity
programs
● Monitors
GE’s significant litigation and investigations
● Oversees
external reporting on sustainability matters in coordination
with the Governance Committee
|
|
● Oversees
the Board’s governance processes, including all significant
governance policies and procedures
● Oversees
company policies and strategies related to climate change
management, political spending & lobbying, human rights,
and environment, health & safety
● Oversees
external reporting on sustainability matters in coordination
with the Audit Committee
● Reviews
and makes recommendations to the Board
with respect to director independence
● Reviews
Board composition and compensation in connection with long-term
strategy and identifies new directors for GE
● Oversees
Board and committee self-evaluations
● Reviews
conflicts of interest, as applicable
|
|
● Oversees
GE’s executive compensation policies, practices and
programs
● Reviews
material elements of executive compensation, including
equity awards, deferred compensation, severance and perquisites
● Oversees
and approves goals and objectives for performance-based equity
awards and evaluates performance against those goals
● Evaluates
and approves compensation of the CEO
● Reviews
risk assessment of compensation policies and practices
● Oversees
development of executive succession plans, including
recruitment, development and retention efforts for
all employees
● Oversees
strategies and policies related to human capital management,
including matters such as diversity, equity and inclusion,
workplace environment and culture, and talent recruitment,
development, engagement and retention
|
GE 2023 PROXY STATEMENT 17
Table of Contents
Key Areas of Board
Oversight
|
Strategy
The Board has oversight responsibility for management’s
establishment and execution of corporate strategy, and elements of strategy are discussed at every regularly scheduled Board meeting.
The Board also engages directly with the leaders of GE’s businesses and regularly reviews the businesses’ strategic
and operational priorities, competitive environment, market challenges, economic trends and regulatory developments. GE’s
annual long-term strategy process focuses on key strategic questions identified for each business. The leadership teams from the
businesses discuss these questions, and their business priorities for the coming year as informed by the long-term strategy process,
with the Board during strategy sessions in December of each year. A long-term orientation and these key strategic questions continue
to be integrated with how we set multi-year priorities across our businesses, as well as our budgets and operational and financial
objectives. The Board at meetings throughout the year also regularly discusses capital allocation plans, the company’s performance
against its operating plan and annual budget and potential mergers, acquisitions and dispositions with a view toward alignment
with our strategic priorities.
|
| |
OUR PATH
FORWARD |
|
In
2021, the full Board conducted a rigorous portfolio and business strategy review over several months, culminating in the announcement
of the plan to separate GE’s businesses into three industry-leading public companies, focusing on the growth sectors
of healthcare, aviation and energy.
During 2022, the Board remained closely engaged with our ongoing execution for this strategic transformation, while also continuing to conduct rigorous reviews of business strategy and
performance. In January 2023, we completed a spin-off to separate GE
HealthCare, creating a global leader in precision healthcare. The Board continues to oversee the strategic transformation
as we work to drive long-term growth and value for customers,
investors and employees with the planned launch of GE Vernova and GE Aerospace as standalone
companies with a second spin-off. |
Enterprise Risk Management
Risk assessment and risk management are the responsibility of
the company’s management, and the Board has oversight responsibility for those processes. The Audit Committee assists with
the oversight of the company’s enterprise risk management framework, and the Board has also delegated specific risk oversight
responsibility to committees of the Board based on the expertise of those committees. Our Governance Principles and committee charters
define the risk areas for which each committee has ongoing oversight responsibility, while the Board as a whole focuses on the
most significant risks facing the company. Throughout the year, the Board and the committees to which it has delegated responsibility
dedicate a portion of their meetings to review and discuss specific risk topics in greater detail.
GE’s Chief Risk Officer coordinates the company’s
enterprise risk management framework and reports regularly to the Audit Committee and the full Board on risk topics. During 2022,
reviews with the Audit Committee or Board have included discussions of top enterprise risks, risk management processes at the GE
business-level, and risks related to the company’s strategic planning and priorities. Additionally, during 2022, the Audit
Committee spent significant time reviewing key risks and standalone readiness related to the GE HealthCare spin-off.
We typically organize enterprise risks into the broad categories
of strategic, operational, financial, legal and compliance, and reputational risks. Risks identified through our risk management
processes are prioritized and, depending on the probability and severity of the risk as well as the immediacy of the risk assessed,
escalated as appropriate. Senior management discusses these risks regularly with the risk owners within the businesses or at the
corporate level. Risk leaders within the businesses and corporate functions are responsible for identifying key risks and presenting
risk assessments to senior management and, when appropriate, to the full Board or the relevant Board committee. For example, each
GE business discusses its top enterprise risks during quarterly operating reviews, as well as risk mitigation strategies and other
related considerations. In addition, at regularly scheduled Board meetings, GE business leaders review their risk management programs
and top risks with the Audit Committee, which is responsible for the oversight of GE’s overall enterprise risk management
framework. The GE business leaders also present periodically to the full Board. For a discussion of key risks
that could have a material adverse effect on our business, reputation, financial position and results of operations, please refer
to the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2022.
Sustainability
GE is rising to the challenge of building a world that works,
with a focus on opportunities for our technology in the future of smarter and more efficient flight and the energy transition to
drive decarbonization. In connection with the planned spin-offs, we have worked across GE to ensure that the independent companies
we are creating will operate with sustainability at their core on day one. We are fully seizing the opportunity to focus on the
critical global needs in energy and aviation, merging the legacy of GE’s technology and culture and the best-in-class expertise
of modern sustainability programs.
We recognize the importance of these topics to our shareholders
and other stakeholders, and sustainability is a driving force behind the work we do and the company’s long-term value. More
information that may be of interest to a variety of stakeholders about GE’s sustainability approach, priorities and performance,
including about safety, greenhouse gas emission reductions for our own operations and for our products, including Scope 3 emissions
from use of sold products, environmental stewardship, diversity and inclusion (as also discussed further below), supply chain and
human rights and other matters, can be found in our Sustainability Report. Among other things, the Sustainability Report includes
our ambition to be a net zero company by 2050, targets for reducing Scope 1 and Scope 2 emissions, Scope 3 reporting for use of
sold products and TCFD-aligned reporting on climate-related risks.
Sustainability is an integrated aspect of how we think about
strategy and risk. Our Board and management believe the long-term interests of shareholders are advanced by responsibly addressing
the concerns of other stakeholders and interested parties including employees, recruits, customers, suppliers, GE communities,
government officials and the public at large. We believe the integration of a sustainability lens with our daily operations, culture
and company priorities is important to driving results. At the Board level, these topics often span multiple functional categories
and areas of oversight, and therefore oftentimes involve discussion at the full Board level rather than individual committees.
In addition, our Governance Committee has oversight responsibility for GE’s priorities and external reporting related to
sustainability matters, and our Audit Committee also plays a role in the oversight of such external reporting, including reporting
on these matters in SEC filings and data quality related to this reporting.
| For
additional reporting on sustainability and ESG matters, see our ESG webpages, our 2021 Sustainability Report, our 2021 Human
Rights Report and our 2021 Diversity Annual Report (see Helpful Resources on page 77). |
| |
|
|
|
| Our Reach |
|
|
 |
ENERGY TRANSITION
1/3 of the world’s electricity
generated with the help of our technology
|
 |
FUTURE OF FLIGHT
3 out of 4 commercial
flights powered by
GE or partner engines
|
18 GE 2023 PROXY STATEMENT
Table of Contents
Board Oversight
Key Areas Related to Strategy, Risk & Sustainability
| FULL
BOARD |
|
AUDIT COMMITTEE
|
● Long-term
strategy
● Most
significant risks facing GE
● Reviews
with each business
● Financial
performance
● Energy
transition and climate change |
|
● Financial
statements, systems & reporting
● Regulatory,
compliance and litigation risks
● Cybersecurity
● Enterprise
risk management framework
● Auditors
(internal and external) |
| |
|
|
GOVERNANCE
& PUBLIC
AFFAIRS COMMITTEE |
|
MANAGEMENT DEVELOPMENT
&
COMPENSATION COMMITTEE |
● Corporate
governance
● Legislative,
regulatory and public policy matters
● Environmental,
health and safety matters
● Support
of full Board’s oversight on climate change
● External
reporting related to sustainability/ESG matters |
|
● Human
capital management, including diversity and pay equity
● Talent
development
● Succession
planning
● Executive
compensation |
Key
Governance Processes
Management Level
|
|
|
|
|
|
|
|
OPERATING
REVIEWS |
 |
ORGANIZATION
&
TALENT REVIEWS |
|
LONG-TERM
STRATEGY
REVIEWS |
|
BUDGET
PROCESS |
Quarterly
GE CEO reviews with each business on their operating priorities, execution against plan and top risks |
|
Annual
GE CEO review dedicated to organization and critical talent strategy to drive business results, including action plans related
to cultural transformation and diversity |
|
Annual
long-range review of business strategy, technology roadmap and competitive position, including investment requirements to deliver
sustainable growth |
|
Annual
budget planning process, designed to focus near-term financial execution and investments profile to deliver long-term strategic
objectives |
Enterprise
Risk Management Framework
Strategic
Risk |
|
Operational
Risk |
|
Financial
Risk |
|
Legal
&
Compliance
Risk |
|
Reputational
Risk |
GE 2023 PROXY STATEMENT 19
Table of Contents
Other Governance Policies & Practices
Director Attendance at Meetings
The Board expects directors to attend all meetings
of the Board and the committees on which the director serves as well as the Annual Meeting.
BOARD/COMMITTEE MEETINGS. In
2022, each of our current directors attended at least 75% of the meetings held by the Board and committees on which the member
served during the period the member was on the Board or committee. Average attendance by our directors for these meetings
was 95% during 2022.
ANNUAL SHAREHOLDERS MEETING.
All of our then-serving directors attended the 2022 Annual Meeting.
Board Integrity Policies
CODE OF CONDUCT. All
directors, officers and employees of GE must act ethically at all times and in accordance with GE’s code of conduct (The
Spirit & The Letter). Under the Board’s Governance Principles, the Board does not permit any waiver of any ethics
policy for any director or executive officer. The Spirit & The Letter, and any amendments to the code that we are required
to disclose under SEC rules, are posted on GE’s website (see Helpful Resources on page
77).
CONFLICTS OF INTEREST. All
directors are required to recuse themselves from any discussion or decision affecting their personal, business or professional
interests. If an actual or potential conflict of interest arises, the director is required to promptly inform the chairman/CEO and the
lead director. The Governance Committee reviews any such conflict of interest. If any significant conflict cannot be resolved,
the director involved is expected to resign.
Limits on Director Service on
Other Public
Boards
GE POLICY. As
discussed in detail in the Board’s Governance Principles, and summarized in the table below, the Board has adopted policies
designed to help ensure that all our directors have sufficient time to devote to GE matters.
| |
|
PERMITTED
# OF PUBLIC COMPANY BOARDS
(INCLUDING
GE) |
Public company
executives |
|
2* |
| Other
directors |
|
4 |
| |
|
PERMITTED
# OF PUBLIC COMPANY AUDIT COMMITTEES
(INCLUDING
GE) |
Audit Committee
member |
|
3** |
| |
|
OTHER
RESTRICTIONS |
| Lead Director |
|
Typically, should not serve as lead
director, chair or CEO of another public company |
| |
|
| * |
Service on the board of a public company for which
a director serves as an executive, together with service on the board of any public company subsidiary or public affiliates
as part of the director’s executive responsibilities, shall count as one board for purposes of this limit. |
| ** |
Unless the member is a retired certified public accountant, CFO,
controller or has similar experience in which case the limit for such member shall be four public company audit committees
(including GE) if the Board affirmatively determines that such service does not impair service on GE’s Audit Committee. |
HOW LIMITS WERE APPLIED TO HORTON.
In appointing Mr. Horton as lead director, the independent directors
considered the fact that Mr. Horton is also the lead director for Walmart. In reviewing Mr. Horton’s time commitment at
Walmart, the independent directors noted that Walmart has three separate positions for CEO, chairman and lead independent director,
mitigating the potential time commitment of the lead director. The Board determined that Mr. Horton could serve in both roles
under the circumstances.
|
HOW YOU CAN FIND MORE INFORMATION
ABOUT OUR GOVERNANCE PRACTICES
Each year we review GE’s governance documents and update
them as appropriate. These documents include the Board’s Governance Principles — which include our director qualifications
and director independence guidelines — as well as Board committee charters. The web links for these materials can be found
under Helpful Resources on page 77.
|
HOW YOU CAN COMMUNICATE WITH YOUR BOARD
The Audit Committee and the independent directors have established
procedures to enable anyone who has a comment or concern about GE’s conduct — including any employee who has a concern
about our accounting, internal accounting controls or auditing matters — to communicate that comment or concern directly
to the lead director or to the Audit Committee. Information on how to submit these comments or concerns can be found on GE’s
website (see Helpful Resources on page 77).
|
20 GE 2023 PROXY STATEMENT
Table of Contents
How
We Assess Director Independence
BOARD
MEMBERS. The Board’s Governance
Principles require all non-management directors to be independent. All of our director nominees (shown under Election
of Directors on page 6) other than Mr. Culp are independent. In addition, Mr. D’Souza and Ms. Seidman, who are not
standing for reelection at the Annual Meeting, Drs. Lavizzo-Mourey and Mihaljevic, who served on the Board until January
2023, Mr. Carter, who served on the Board until October 2022, and James Tisch, who served on the Board until May 2022, were
each determined to be independent during the period they served on the Board.
| ● | The
Board’s guidelines. For a director to be considered independent, the Board must
determine that he or she does not have any material relationship with GE. The Board’s
guidelines for director independence conform to the independence requirements in the New
York Stock Exchange’s (NYSE) listing standards. In addition to applying these guidelines,
which you can find in the Board’s Governance Principles (see Helpful
Resources on page 77), the Board considers all relevant facts and circumstances when
making an independence determination. |
| | |
| ● | Applying
the guidelines in 2022. In assessing director independence for 2022, the Board considered
relevant transactions, relationships and arrangements, including relationships among Board
members, their family members and the company, as described below. |
COMMITTEE
MEMBERS. All members of the Audit Committee, Management
Development & Compensation Committee, and Governance Committee must be independent, as defined by the Board’s Governance
Principles. Committee members must also meet additional committee-specific standards:
| ● | Heightened
standards for Audit Committee members. Under a separate SEC independence requirement,
Audit Committee members may not accept any consulting, advisory or other fees from GE or
any of its subsidiaries, except compensation for Board service. |
| | |
| ● | Heightened
standards for members of the Management Development & Compensation and Governance
Committees. As a policy matter, the Board also applies a separate, heightened independence
standard to members of the Management Development & Compensation and Governance
Committees: no member of either committee may be a partner, member or principal of a law
firm, accounting firm or investment banking firm that accepts consulting or advisory fees
from GE or a subsidiary. In addition, in determining that Management Development &
Compensation Committee members are independent, NYSE rules require the Board to consider
their sources of compensation, including any consulting, advisory or other compensation paid
by GE or a subsidiary. |
The Board has determined
that all members of the Audit, Management Development & Compensation and Governance Committees are independent and also satisfy
applicable committee-specific independence requirements.
Relationships
and Transactions Considered for Director Independence
The Board considered
the following relationships and transactions in making its determination that all director nominees and all directors that served since
the 2022 Annual Meeting, other than Mr. Culp, are independent.
2022
TRANSACTIONS CONSIDERED FOR DIRECTOR INDEPENDENCE
| * | Mr.
Tisch served as our director until our 2022 Annual Meeting on May 4, 2022,
at which he did not stand for reelection. |
GE
2023 PROXY STATEMENT 21
Table of Contents
Related Person Transactions
& Other
Information
HOW WE REVIEW AND APPROVE TRANSACTIONS.
We review all relationships and transactions in which the company
and our directors and executive officers or their immediate family members participate if the amount involved exceeds $120,000.
The purpose of this review is to determine whether they have a material interest in the transaction, including an indirect interest.
The company’s legal staff is primarily responsible for making these determinations based on the relevant facts and circumstances,
and for developing and implementing processes and controls for obtaining information about these transactions from directors and
executive officers. In addition, the Governance Committee reviews and approves any such related person transaction. As described
in the Governance Principles, which are available on GE’s website (see Helpful Resources on
page 77), in the course of reviewing and approving a disclosable related person transaction, the Governance Committee considers
the factors described below. As SEC rules require, we disclose in our proxy statement all such transactions that are determined
to be directly or indirectly material to a related person. During 2022, there were no related person transactions that met the
requirements for disclosure in this proxy statement.
| |
|
|
| |
FACTORS USED IN ASSESSING RELATED PERSON TRANSACTIONS |
| |
● |
Nature
of related person’s interest in transaction |
| |
● |
Material
transaction terms, including amount involved and type of transaction |
| |
● |
Importance
of transaction to related person and GE |
| |
● |
Whether
transaction would impair a director or executive officer’s judgment to act in GE’s best interest |
| |
● |
Any
other matters the committee deems appropriate, including any third-party fairness opinions or other expert reviews obtained
in connection with the transaction |
| |
|
|
For a description of shareholder derivative lawsuits
involving certain current and former GE executives and members of the Board, refer to Note 24. Commitments, Guarantees, Product
Warranties and Other Loss Contingencies in GE’s financial statements in our Annual Report on Form 10-K for 2022.
Independent Oversight of
Political Spending
The Governance Committee, composed solely of independent
directors, oversees the company’s political spending and lobbying. This includes political and campaign contributions as
well as any contributions to trade associations and other tax-exempt and similar organizations that may engage in political activity.
As part of its oversight role in public policy and corporate social responsibility, the Governance Committee is responsible for
the following:
| ● |
Policy oversight. A yearly review of GE’s
political spending policies and lobbying practices. |
| ● |
Budget oversight. Approval of GE’s annual budget for
political activities. |
| ● |
Reporting. Oversight of a report on the company’s political
spending, which is updated twice each year and made available on our ESG website (see Helpful
Resources on page 77). |
GE currently discloses the names of all trade associations
receiving more than $50,000 from the company, including the portion of the company’s payment used for lobbying or political
expenditures, as well as any contributions to 501(c)(4) organizations, beginning with contributions made in 2018. GE’s political
spending has declined in recent years, and in 2022 GE did not contribute any corporate funds to political campaigns, committees
or candidates for public office.
22 GE 2023 PROXY STATEMENT
Table of Contents
Director Compensation
The compensation program for independent directors
is designed to achieve the following goals:
| ● |
Fairly pay directors for the work required
at a company of GE’s size and scope, as benchmarked against our peer group; |
| ● |
Align directors’ interests with the long-term interests
of GE shareholders; and |
| ● |
Be simple, transparent and easy for shareholders to understand. |
Annual Compensation
OVERVIEW. Our
independent directors receive annual compensation as shown in the table below. There are no additional meeting fees. The lead
director and members of our Board committees receive additional compensation due to the workload and broad responsibilities of
these positions.
| All independent directors |
$ |
275,000 |
| Lead director |
$ |
50,000 |
| Audit Committee members |
$ |
35,000 |
| Management Development & Compensation Committee members |
$ |
25,000 |
| Governance & Public Affairs Committee members |
$ |
10,000 |
| ● |
Form of payment. 40% in cash and 60% in
awards of deferred stock units (DSUs); directors can elect to defer some or all of the cash portion and instead receive additional DSUs |
| ● |
Time of payment. Quarterly installments in arrears |
| ● |
Multiple committees. If a director serves on more than one
committee, the additional compensation applies separately for each committee |
| ● |
Limit on director compensation. $1,000,000 annually, including
cash & equity but excluding amounts awarded under the Charitable Award Program (which has been closed to new directors) |
HOW DEFERRED STOCK UNITS WORK.
Each DSU is equal in value to a share of GE stock and is fully
vested upon grant but does not have voting rights. To calculate the number of DSUs to be granted, we divide the target value of
the DSUs by the average closing price of GE stock for the 20 days preceding and including the grant date.
DSUs accumulate quarterly dividend-equivalent payments,
which are reinvested into additional DSUs. The DSUs are paid out in cash beginning one year after the director leaves the Board.
Directors may elect to take their DSU payments as a lump sum or in payments spread out for up to 10 years.
OUR PATH
FORWARD |
|
TREATMENT
OF DEFERRED STOCK UNITS IN CONNECTION WITH THE GE HEALTHCARE SPIN-OFF. |
| |
In the GE HealthCare spin-off, each current or former director of GE (including individuals who are now serving as directors of GE HealthCare and no longer serving as directors of GE) that held outstanding DSUs denominated in GE stock as of the GE HealthCare spin-off retained his or her GE-denominated DSUs and received additional DSUs from GE denominated in shares of GE HealthCare common stock based on the shareholder distribution ratio utilized for the GE HealthCare spin-off. As this treatment is consistent with the manner in which GE shareholders received GE HealthCare shares in the spin-off,
it promotes alignment with GE shareholders for directors through the execution of our planned business separations. |
OTHER COMPENSATION. Our
independent directors may also receive the following benefits:
| ● |
Matching Gifts Program. Independent directors
may participate in the GE Foundations Matching Gifts Program on the same terms as GE employees. Under this program, the GE
Foundation matches for each participant up to $5,000 for annual contributions to approved charitable organizations. |
| ● |
Charitable Award Program. Each director who joined the Board
before 2016 may, upon leaving the Board, designate up to five charitable organizations to share in a $1 million GE contribution.
Directors may not choose a private foundation with which they are affiliated. The Board terminated this program for new directors
in 2015. |
| ● |
Incidental Board Meeting Expenses. The company occasionally
provides travel and sponsors activities for spouses or other guests of the directors in connection with Board meetings. No
such expenses were incurred during 2022. |
No Additional Director Compensation
Independent directors do not
receive any cash incentive compensation, hold deferred compensation balances (other than DSUs) or receive pension benefits.
Since 2003, DSUs have been the only equity incentive compensation awarded to the independent
directors; we ceased granting
stock options to directors in 2002, and no independent director had stock options outstanding as of the most recent fiscal
year-end. Directors who are company employees do not receive any compensation for their services as directors.
Share Ownership Requirements for Independent
Directors
STOCK OWNERSHIP REQUIREMENTS
(MULTIPLES OF ANNUAL CASH RETAINER)
5X
for independent directors
|
All independent directors are required to hold at
least $550,000 (which is five times the cash portion of their annual retainer, or $110,000) worth of GE stock and/or DSUs while
serving as GE directors. A director has five years from joining the Board to meet this ownership threshold. All directors are
in compliance with this requirement.
GE 2023 PROXY STATEMENT 23
Table of Contents
Director Compensation Table
This table shows the compensation that each independent
director earned for his or her 2022 Board and committee service. Mr. Garden has advised us that, pursuant to his arrangement with
Trian, he transfers to Trian, or holds for the benefit of Trian and/or Trian entities, all director compensation paid to him.
| NAME
OF DIRECTOR | |
CASH
FEES | | |
STOCK
AWARDS | | |
MATCHING
GIFTS | | |
TOTAL | |
| Stephen Angel | |
$ | 7,639 | | |
$ | 219,545 | | |
$ | 0 | | |
$ | 227,184 | |
| Sébastien Bazin | |
$ | 0 | | |
$ | 296,667 | | |
$ | 0 | | |
$ | 296,667 | |
| Ashton Carter* | |
$ | 101,087 | | |
$ | 143,055 | | |
$ | 0 | | |
$ | 244,142 | |
| Francisco D’Souza | |
$ | 0 | | |
$ | 320,591 | | |
$ | 0 | | |
$ | 320,591 | |
| Edward Garden | |
$ | 120,000 | | |
$ | 172,258 | | |
$ | 0 | | |
$ | 292,258 | |
| Isabella Goren | |
$ | 97,716 | | |
$ | 139,368 | | |
$ | 5,000 | | |
$ | 242,084 | |
| Thomas Horton | |
$ | 141,500 | | |
$ | 202,897 | | |
$ | 0 | | |
$ | 344,397 | |
| Risa Lavizzo-Mourey | |
$ | 114,000 | | |
$ | 163,645 | | |
$ | 5,000 | | |
$ | 282,645 | |
| Catherine Lesjak | |
$ | 128,000 | | |
$ | 183,742 | | |
$ | 0 | | |
$ | 311,742 | |
| Tomislav Mihaljevic | |
$ | 81,643 | | |
$ | 116,115 | | |
$ | 0 | | |
$ | 197,758 | |
| Paula Rosput Reynolds | |
$ | 100,500 | | |
$ | 224,414 | | |
$ | 0 | | |
$ | 324,914 | |
| Leslie Seidman | |
$ | 124,000 | | |
$ | 178,000 | | |
$ | 5,000 | | |
$ | 307,000 | |
| James Tisch* | |
$ | 0 | | |
$ | 94,046 | | |
$ | 0 | | |
$ | 94,046 | |
| |
|
| * |
Mr. Carter passed away on October 24, 2022, and
Mr. Tisch did not stand for re-election at our 2022 Annual Meeting. The amounts reported for these former directors
represent compensation earned for their 2022 service as directors. |
CASH FEES. Amount
of cash compensation earned in 2022 for Board and committee service.
STOCK AWARDS. Aggregate
grant date fair value of DSUs granted in 2022, as calculated in accordance with SEC rules, including amounts that the directors
deferred into DSUs in lieu of all or a part of their cash compensation. Grant date fair value is calculated by multiplying the
number of DSUs granted by the closing price of GE stock on the grant date (or the last trading day prior to the grant date), which
was $91.50 for March 31, 2022 grants, $63.67 for June 30, 2022 grants, $61.91 for September 30, 2022 grants, and $83.79 for December
31, 2022 grants. The table below shows the cash amounts that the directors deferred into DSUs in 2022 and the number of DSUs accrued
as of 2022 fiscal year-end.
| DIRECTOR | |
CASH DEFERRED
INTO DSUs IN 2022 | |
| #
DSUs ACCRUED
AT
2022 FISCAL
YEAR-END* | |
| Stephen Angel | |
$ | 87,912 | |
| 3,138 | |
| Sébastien Bazin | |
$ | 124,000 | |
| 22,285 | |
| Ashton Carter | |
$ | 0 | |
| 5,658 | |
| Francisco D’Souza | |
$ | 134,000 | |
| 27,977 | |
| Edward Garden | |
$ | 0 | |
| 12,078 | |
| Isabella Goren | |
$ | 0 | |
| 1,976 | |
| Thomas Horton | |
$ | 0 | |
| 13,144 | |
| Risa Lavizzo-Mourey | |
$ | 0 | |
| 13,252 | |
| Catherine Lesjak | |
$ | 0 | |
| 9,575 | |
| Tomislav Mihaljevic | |
$ | 0 | |
| 1,678 | |
| Paula Rosput Reynolds | |
$ | 33,500 | |
| 11,665 | |
| Leslie Seidman | |
$ | 0 | |
| 15,573 | |
| James Tisch | |
$ | 38,835 | |
| 27,938 | |
| |
|
| * |
Amounts do not take into account the treatment of outstanding DSUs in 2023 in connection with the GE HealthCare spin-off. See Treatment
of Deferred Stock Units in Connection with the GE HealthCare Spin-Off on page 23 for additional details. |
24 GE 2023 PROXY STATEMENT
Table of Contents
Stock Ownership Information
Beneficial Ownership Table
The following table shows beneficial ownership of
our common stock as calculated under SEC rules, as of December 31, 2022, for (i) our directors and nominees, (ii) our named executives,
(iii) our current directors and executives as a group, and (iv) beneficial owners of more than 5% of our common stock. Except
to the extent noted below, everyone included in the table has sole voting and investment power over the shares reported. None
of the shares are pledged as security by the named person, although standard brokerage accounts may include non-negotiable provisions
regarding set-offs or similar rights. This table does not take into account the treatment of outstanding equity in 2023
as a result of the GE HealthCare spin-off. See Treatment of Outstanding Equity Awards with GE HealthCare Spin-Off on page 38 for additional details.
| DIRECTORS
& NOMINEES | |
| NUMBER
OF
SHARES | | |
| PERCENT OF
CLASS | |
| Stephen Angel | |
| 11,098 | * | |
| ** | |
| Sébastien Bazin | |
| 0 | * | |
| ** | |
| Francisco D’Souza | |
| 18,937 | * | |
| ** | |
| Edward Garden | |
| 4,016,414 | * | |
| ** | |
| Isabella Goren | |
| 0 | * | |
| ** | |
| Thomas Horton | |
| 6,906 | * | |
| ** | |
| Catherine Lesjak | |
| 0 | * | |
| ** | |
| Darren McDew | |
| 0 | | |
| ** | |
| Paula Rosput Reynolds | |
| 6,100 | * | |
| ** | |
| Leslie Seidman | |
| 1,812 | * | |
| ** | |
| Jessica Uhl | |
| 0 | | |
| ** | |
| Total | |
| 4,061,267 | | |
| ** | |
| | |
| | | |
| | |
| NAMED
EXECUTIVES | |
| | | |
| | |
| H. Lawrence Culp, Jr. | |
| 1,955,661 | | |
| ** | |
| Carolina Dybeck Happe | |
| 52,362 | | |
| ** | |
| Peter Arduini | |
| 0 | | |
| ** | |
| John Slattery | |
| 101,414 | | |
| ** | |
| Russell Stokes | |
| 292,185 | | |
| ** | |
| Total | |
| 2,401,622 | | |
| ** | |
| | |
| | | |
| | |
| CURRENT DIRECTORS & EXECUTIVES | |
| | | |
| | |
| Current directors & executives as a group (18 people) | |
| 7,263,141 | | |
| ** | |
| | |
| | | |
| | |
| 5%
BENEFICIAL OWNERS | |
| | | |
| | |
| Capital Research Group Global Investors, 333 S. Hope St., 55th Fl., Los Angeles, CA 90071 | |
| 102,093,162 | | |
| 9.4 | % |
| The
Vanguard Group, 100 Vanguard Blvd., Malvern, PA 19355 | |
| 86,785,547 | | |
| 8.0 | % |
| BlackRock, Inc., 55 East 52nd Street, New York, NY 10055 | |
| 67,872,032 | | |
| 6.2 | % |
| Fidelity Management & Research, 245 Summer Street, Boston, MA 02210 | |
| 60,332,310 | | |
| 5.5 | % |
| Total | |
| 317,083,051 | | |
| 29.1 | % |
| * |
Our independent directors receive
quarterly installments of deferred stock units (DSUs), which are not paid out until one year after the director leaves the
Board, and therefore are not included in this table. See Director Compensation Table on
page 24 for the number of DSUs each director has accrued. |
| ** |
Less than 1%. No director or named executive
owns more than one-tenth of 1% of the total outstanding shares of GE common stock, other than Mr. Garden, who may be deemed
to indirectly beneficially own 0.4% of our outstanding shares as a result of his affiliation with Trian and Mr. Culp, who
has sole voting but not investment power over 0.2% of our outstanding shares. |
For the directors, nominees & named executives,
the table includes (1) shares that may be acquired under stock options that are or will become exercisable within 60 days: Dybeck
Happe (43,678), Slattery (88,193) and Stokes (242,072), (2) RSUs that will vest in 60 days: Dybeck Happe (5,257), Slattery (6,308)
and Stokes (3,680), and (3) shares over which the named individual has shared voting and investment power through family trusts
or other accounts: Angel (5,960), Culp (212,783), Garden (4,016,414)(1), Horton (6,903), Reynolds (537). For Mr. Culp,
this column also includes 1,742,878 performance shares over which he has sole voting but no investment power.
For our current directors & executives
as a group, the table includes (1) 1,033,579 shares that may be acquired under stock options that are or will become exercisable
within 60 days, (2) 28,914 RSUs that will vest in 60 days, (3) 4,272,040 shares over which there is shared voting and investment
power, and (4) 1,742,878 shares over which there is sole voting power but no investment power.
| (1) |
For Mr. Garden, the table includes 4,016,414
shares owned Trian SPV (Sub) X, L.P (Trian SPV X). Trian, an institutional investment manager, serves as the management company
for Trian SPV X and as such determines the investment and voting decisions of Trian SPV X with respect to the shares of the
company held by Trian SPV X. None of such shares are held directly by Mr. Garden. Mr. Garden is a member of Trian Fund Management
GP, LLC, which is the general partner of Trian, and therefore is in a position to determine the investment and voting decisions
made by Trian on behalf of Trian SPV X. Accordingly, Mr. Garden may be deemed to indirectly beneficially own (as that term
is defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the Exchange Act)) the shares owned by Trian
SPV X. Mr. Garden disclaims beneficial ownership of such shares for all other purposes. |
For our 5% beneficial owners, the table includes:
| (#
OF SHARES) |
|
CAPITAL
RESEARCH |
|
VANGUARD |
|
BLACKROCK |
|
FIDELITY |
Sole voting
power |
|
102,084,780 |
|
0 |
|
60,539,451 |
|
51,806,970 |
Shared voting
power |
|
0 |
|
1,460,923 |
|
0 |
|
0 |
Sole investment
power |
|
102,093,162 |
|
82,472,260 |
|
67,872,032 |
|
60,332,310 |
Shared
investment
power |
|
0 |
|
4,313,287 |
|
0 |
|
0 |
The foregoing information is based solely on Schedule
13G filed by Capital Research Global Investors on February 13, 2023, and Schedules 13G/A filed by Vanguard, BlackRock and Fidelity
on February 9, 2023, February 7, 2023, and February 9, 2023, respectively.
GE 2023 PROXY STATEMENT 25
Table of Contents
|
MANAGEMENT
PROPOSAL NO. 2
Advisory Approval of Our Named Executives’ Compensation
What are you voting on?
Pursuant to Section 14A of the Exchange Act, we are asking shareholders
to approve on a non-binding basis the compensation paid to our named executives, as described in this proxy statement.
We currently hold say-on-pay votes annually, and we expect to hold
the next such vote at our 2024 Annual Meeting. See Management Proposal No. 3.
Your Board recommends
a vote FOR the say-on-pay proposal
Why the Board recommends a vote FOR the say-on-pay proposal. The
Board believes that our compensation policies and practices are effective in achieving the goals of the compensation program, and
that our actions have been responsive to shareholder feedback related to last year’s say-on-pay vote. |
|
Compensation
To Our Shareholders,
This period of GE’s historic transformation into three
industry-leading, independent public companies has been a particularly exciting and dynamic time for us as members of the
Management Development & Compensation Committee. It has placed us in the midst of the recruitment, development and
placement of key talent for the planned future companies, while we also seek, as always, to properly incentivize and reward
execution and performance aligned with the company’s strategic and business plans. We thank the many shareholders who
have taken the time to meet and provide feedback on compensation matters over the past year.
In addition to successfully separating GE HealthCare with a spin-off in January 2023, GE managed through a challenging external environment to finish 2022 strong. The Aerospace, Power and HealthCare businesses performed well, and the company delivered revenue growth, margin expansion and better cash generation. However, challenges at the Renewable Energy business in particular, alongside macroeconomic headwinds, contributed to results for Renewable Energy that fell well below our targets and adversely affected total company performance for the year as well. We have heard the support from shareholders for a formulaic approach to annual bonuses, and for 2022 the committee again applied no discretion in approving the results for our named executives under our annual bonus plan. We also certified zero payout for the 2020 and 2022 grants of performance stock units (PSUs) because they did not meet the minimum threshold performance targets.
We have made a number of enhancements to our compensation program
design during the past year to continue driving accountability and performance aligned with shareholders’ interests.
In particular, during our engagements about say-on-pay and executive compensation matters during the past year, we
discussed long-term incentive design with nearly all shareholders that we met with. While not an area of significant concern
for many shareholders, the feedback centered on two areas of our prior PSU design: (i) the use of one-year financial targets
with a three-year relative TSR modifier for the performance period; and (ii) the use of free cash flow as a metric for both
PSUs and annual bonuses. As described more fully on page 27 and throughout the CD&A, we have adopted a new design for
the PSUs granted in March 2023, averaging together three one-year performance periods to provide a longer time horizon for
the specific financial targets. Most shareholders we met with agreed this would be an appropriate response to their
concerns, particularly given GE’s business separations and the challenges with setting multi-year financial targets
during this ongoing transitional period. Similarly, we heard a range of feedback about metrics that might be considered for
our compensation programs, with many investors acknowledging the importance of free cash flow as a measure of GE performance
that excludes non-cash items and supporting the continued use of that metric across our compensation program design.
Most shareholders also appreciated that the planned separations into three independent companies will enable further
tailoring and refinement of performance metrics in the future for each of the three companies at the direction of their
compensation committees.
With the benefit of the insightful shareholder questions and feedback about these and other executive compensation topics, we have also enhanced this year’s proxy disclosure to provide additional explanation about our compensation design choices, and also to provide a look toward the future state following the planned separations. We hope shareholders will find the disclosure enhancements about our spin-off related actions and plans helpful for analyzing 2022 compensation decisions, as well as showing the path ahead.
We appreciate the feedback from shareholders on all of these topics, and we hope to have your support on this year’s say-on-pay vote. We thank you for your support of GE.
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Management Development & Compensation Committee |
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STEPHEN
ANGEL
(Chair) |
|
SÉBASTIEN
BAZIN |
|
FRANCISCO
D’SOUZA |
|
EDWARD
GARDEN |
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26 GE 2023 PROXY STATEMENT
Table of Contents
Shareholder
Engagement on Executive Compensation
We value the ongoing feedback that we receive from our shareholders
on executive compensation matters, including the feedback reflected in our annual say-on-pay votes. With support for say-on-pay
of 66% in 2022, the committee has continued to prioritize seeking shareholders’ perspectives about specific areas of concern
and potential improvements.
During the past year, we met with shareholders representing approximately
53% of our outstanding common stock and approximately 74%
of our common stock held by institutional investors. We offered many of our large institutional investors the opportunity
to meet with independent directors as part of these meetings, and directors led and participated in meetings as guided by shareholders’
preferences. Our engagements also included representatives from our Legal, Human Resources and Investor Relations teams.
The shareholder feedback we received and reviewed with the
committee represents a range of views from different shareholders. It was clear that a majority of investors were supportive
of our actions and commitments in response to the 2021 say-on-pay vote that did not receive majority support, and that many
shareholders were supportive of our compensation program and actions as reflected in the improvement in voting results from
2021 to 2022. We strive to continuously improve our compensation program to drive strong alignment with company performance
and with our shareholders’ expectations. The following table provides an overview of three main themes related to
executive compensation that shareholders raised following the 2022 say-on-pay vote, and actions the committee is taking in
response.
| |
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| |
What We Heard |
|
|
|
|
How We are Responding |
|
| |
TOPIC |
FEEDBACK |
|
|
|
|
ACTIONS |
|
|
| |
No changes to predetermined performance targets |
Shareholders were supportive of the formulaic approach to 2021 annual bonuses for our named executives, and of the absence of changes to performance targets for previously issued equity awards. Shareholders expressed a desire for the company to continue keeping named executives’ compensation aligned with predetermined performance targets, and to clearly explain any future use of discretion to depart from those targets. |
|
 |
Again
for 2022, annual bonuses for our named executives were formulaic and based only on the predetermined performance targets for
our businesses. The committee also certified zero payout for the 2020 and 2022 PSU awards; for four of the past five years,
annual PSU awards have received zero payout because they did not meet the minimum threshold performance targets. See How
we Performed Against Annual Bonus Targets for 2022 on page 33 and How Our PSU Awards
Performed Against Targets on page 37 for more information. |
|
| |
PSU design |
We discussed long-term incentive design with nearly all shareholders that we met with. While not an area of significant concern for many investors, the feedback centered on two areas of the 2021 PSU design:
● For some investors, the use of a one-year financial targets with a three-year relative TSR modifier for the performance period. While many investors expressed a general preference for multi-year financial targets in long-term incentive design, most also acknowledged the practical difficulties of GE using such targets during the transitional period in advance of the planned spin-offs.
● To
a lesser extent, concern about the use of free cash flow as a metric for both PSUs and annual bonuses. However, most
investors stated that the committee is best suited to choose the proper metrics for incentive programs. Many investors
acknowledged the importance of free cash flow as a measure of GE performance.
|
|
|
We
modified
the design
of our PSUs to address the primary area of concern in this feedback.
Grants of
PSUs in 2023
will measure
performance
based on
the average
of three
consecutive
one-year
periods with
predetermined
financial
targets set
each year,
and modified
based on
three-year
relative
TSR.* The
committee
believes
this approach
is responsive
to shareholder
feedback
and appropriate
during the
transitional
period for
the company
today. After
completion
of the planned
business
separations,
GE (which
will be GE
Aerospace
at that time)
plans to
develop long-term
incentive
awards that
include multi-year
financial
targets.
See Shareholder
Feedback
on Our PSU
Design
and Plans
to Use Longer
Performance
Periods Following
Spin-Off
on
page 36
for more
information.
To provide greater clarity on the committee’s choices about specific performance metrics and targets, we added additional disclosure in the Compensation Discussion & Analysis section. See How We Selected Metrics for the 2022 AEIP, How We Selected Targets for the 2022 AEIP, and How We Selected Metrics and Targets for the 2022 PSUs on pages 32-36. |
|
| |
Disclosure |
With the scope of GE’s operations across diverse industries, and with the company in a significant period of transition working toward the planned separation into three independent companies, we sought shareholders’ feedback on how our proxy disclosure could be improved. We received many helpful suggestions, and one overarching area of shareholder interest was to hear about how executive compensation is evolving through the planned separation into three independent companies. |
|
|
We have included a variety of proxy disclosure enhancements informed by the various shareholder feedback. Those include highlighted sections detailing key progress, actions and expectations related to the spin-offs (see the “Our Path Forward” call-out boxes), as well as a redesigned Compensation Discussion & Analysis section and new disclosure about the choice of metrics and targets in the compensation program. |
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| |
|
| * |
Grants of PSUs in 2022 had already been made at the time of last year’s proxy filing, and the 2022 PSUs have the same design as the 2021 PSUs; however, the 2022 PSUs have been cancelled and will have no payout. |
GE 2023 PROXY STATEMENT 27
Table of Contents
Compensation
Discussion & Analysis
This Compensation Discussion & Analysis section provides a description of actions taken by the Management Development & Compensation Committee (the committee) with respect
to GE’s executive compensation philosophy, and programs and more specifically, discusses the process in determining the 2022
compensation for our named executive officers (named executives or NEOs) who were determined in accordance with SEC rules.
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Section |
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Begins on Page... |
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Overview of Our Executive Compensation Program
● Compensation philosophy
● Key compensation
program elements
● Peer group |
|
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29 |
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| |
Key Elements of Compensation for Our Named Executives
● Target compensation
structure
● Base salaries
● Annual Executive
Incentive Plan
● Long-term incentive
compensation
● Plans to use longer
performance periods following spin-off
|
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30 |
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| |
Compensation Actions for 2022
● Compensation decisions
for our CEO
● Compensation decisions
for our other named executives |
|
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39 |
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| |
Summary Compensation
● Summary Compensation
Table |
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42 |
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Incentive Compensation
● Grants of Plan-Based
Awards Table
● Outstanding Equity
Awards Table
● Options Exercised
and Stock Vested Table
● Equity Compensation
Plan Information Table |
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44 |
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Deferred Compensation
● Description of nonqualified
deferred compensation plans
● Nonqualified Deferred
Compensation Table |
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47 |
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Pension Benefits
● Description of pension
plans
● Pension Benefits
Table |
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49 |
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Potential Termination Payments
● Description of employment
agreements, offer letters & severance plan
● Policy on shareholder
approval of severance & death benefits
● Potential Benefits
Upon Termination or Change of Control Tables |
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51 |
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| |
Other Executive Compensation Policies & Practices
● Roles and responsibilities
● Use of compensation
consultants
● Clawback policy
● Compensation risk assessment
● Stock ownership
& equity grant policies |
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56 |
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Management Development & Compensation
Committee Report
● Report by the committee |
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57 |
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28 GE 2023 PROXY STATEMENT
Table of Contents
Overview
of Our Executive Compensation Program
Compensation
Philosophy
The table below describes the key factors the committee considers
when designing pay programs and making compensation decisions.
| OBJECTIVE |
HOW OUR COMPENSATION PROGRAM SUPPORTS THIS PHILOSOPHY |
Drive
Accountability
and Performance |
● Our incentive programs
are designed to drive accountability for executing our strategy.
● Annual bonuses are
tied to business unit performance for business unit executives or to total company performance for corporate executives; annual
equity awards for all executives are based on overall company performance.
● We set target performance
levels that are challenging and aligned to the goals we communicate to investors.
● We set commensurately
more challenging goals in association with above-target payout levels. |
Incentivize
Short- and
Long-Term
Performance |
● Our program provides
an appropriate mix of compensation elements balancing short-term and long-term considerations.
● Cash payments reward
achievement of short-term goals while equity awards encourage our named executives to deliver sustained strong results over multi-year
performance periods.
● The committee continues
to increase the portion of our executive compensation delivered in the form of long-term equity incentive compensation, rather
than cash, to further align our executives with investors’ interests. |
Attract and
Retain Top Talent |
● We provide competitive
compensation programs that attract and retain talented executives with a strong track record of success, assuring a high performing
and stable leadership team to lead our businesses.
● We continue to monitor
market trends and align compensation programs with market where relevant. |
No Excessive
Risk Taking |
● Our equity awards
have specific holding and retention requirements for senior executives, which discourage excessive risk taking by keeping long-term
compensation aligned with our share price performance even after it is earned.
● The committee retains
discretion to adjust compensation for quality of performance and lack of adherence to company values, and in cases of detrimental
misconduct pursuant to our clawback policy. |
Key
Compensation Program Elements
The table below sets forth the key components of our executive compensation
program framework.
| |
Fixed |
Performance-Based
/ At-Risk |
| |
Short-Term Incentive |
Long-Term Equity-Based
Incentive (generally 3-year vesting) |
| Component |
SALARY |
ANNUAL BONUS
|
PERFORMANCE STOCK UNITS (PSUs)
|
OPTIONS |
RESTRICTED STOCK
UNITS (RSUs) |
| Link to Shareholder Value |
Provide base pay level aligned with roles, responsibilities and individual performance
to attract and retain top talent |
Deliver on annual investor framework Serves as key compensation vehicle for differentiating
performance each year |
Focus executives on the achievement of specific financial
performance goals directly aligned with our operating and strategic plans, and with a TSR modifier based on three-year
return from stock price appreciation and dividends
PSU awards provide a significant stake in the long-term
financial success of GE that is aligned with shareholder interests and promote employee retention |
Reward stock price performance over time |
Provide for long-term employee retention |
| |
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GE 2023 PROXY STATEMENT 29
Table of Contents
|
Peer
Group and Benchmarking
DETERMINING OUR PEER GROUP. Since
2019, the committee has used a peer group for compensation benchmarking purposes. Based on the criteria set forth below, the committee
reviews the peer group each year.
In determining the peer group, the committee considered the following
factors:
● Industry
– companies operating in similar or comparable industry spaces and with comparable operational scope
● Size –
companies that are comparable to GE in terms of revenues, market capitalization and number of employees
● Investment Peers
– U.S. public companies whose performance is monitored regularly by the same market analysts who monitor GE
|
|
2022 PEER COMPANIES |
| 3M |
Honeywell |
| Abbott Laboratories |
HP |
| Boeing |
IBM |
| Caterpillar |
Intel |
| Chevron |
Johnson Controls |
| Cisco |
Johnson & Johnson |
| Deere |
Lockheed Martin |
| DuPont |
Medtronic |
| Exxon Mobil |
Northrup Grumman |
| Ford |
Raytheon |
| General Dynamics |
Technologies |
| General Motors |
United Parcel Service |
| |
|
|
|
HOW WE USE THE PEER GROUP. The
committee uses the peer group to assess the pay level of our executives, pay mix, compensation program design and pay practices.
The peer group is also used as a reference point when assessing individual pay, although compensation decisions are also supplemented
by input from the company’s independent compensation consultant and are impacted by principles of internal equity, retention
considerations, succession planning and other internal GE dynamics.
| OUR
PATH FORWARD |
|
CHANGES TO THE 2023 PEER GROUP.
In 2022, Exxon and Chevron were removed from the peer group
for 2023 because their size and market capitalization are no longer comparable to GE. The committee also approved the
removal of healthcare industry peers Abbott Laboratories, Johnson & Johnson and Medtronic from the peer group for
2023 to reflect the spin-off of GE HealthCare. |
Key Elements
of Compensation for Our Named Executives
This section provides an overview of the elements of GE’s executive
compensation program for our 2022 named executives, who were determined in accordance with SEC rules: Mr. Culp, Ms. Dybeck
Happe, Mr. Arduini, Mr. Slattery and Mr. Stokes. See Compensation Actions for 2022 on
page 39 for specific details about the compensation for each of these named executives.
Target
Compensation Structure for Our CEO and Other Named Executives
GE’s executive compensation program is designed to strengthen
the link between pay and performance by having a significant portion of total executive compensation tied to the achievement of
predetermined performance targets directly related to our business goals and strategies. Our pay mix is as follows:
 |
|
|
| CEO TARGET COMPENSATION |
|
AVERAGE 2022 TARGET COMPENSATION
FOR OTHER NEOs |
 |
|
 |
Mr. Culp’s target compensation as depicted above includes an
annual equity grant of performance stock units with a grant date fair value of $15 million, in accordance with his employment agreement.
As previously reported, in 2022 Mr. Culp received a PSU award with a grant date fair value of $5 million. The average target compensation
for other NEOs depicted above is based on year-end salary and target short- and long-term incentive awards for 2022.
30 GE 2023 PROXY STATEMENT
Table of Contents
Base
Salaries
The table below shows the annual base salaries as of January 1, 2022,
for our named executives set by the committee, which were determined based on the scope of their responsibilities, their leadership
skills and values, and their performance and length of service. There were no changes to the annual base salaries of any of our named executives from their
2021 levels.
| 2022 NAMED EXECUTIVES |
2022 BASE SALARY |
| H. Lawrence Culp, Jr., Chairman and Chief Executive
Officer, GE and Chief Executive Officer, GE Aerospace |
|
$ |
2,500,000 |
| Carolina Dybeck Happe, Senior Vice President and Chief Financial Officer,
GE |
|
$ |
1,500,000 |
| Peter Arduini, President and Chief Executive Officer, GE HealthCare* |
|
$ |
1,250,000 |
| John Slattery, Executive Vice President and Chief Commercial Officer,
GE Aerospace |
|
$ |
1,250,000 |
| Russell
Stokes, President and Chief Executive Officer, Commercial Engines and Services, GE Aerospace |
|
$ |
1,400,000 |
| * |
Following the spin-off of GE HealthCare on January 3, 2023 that separated GE HealthCare Technologies
Inc. from GE, Mr. Arduini is no longer employed by GE. |
Annual
Executive Incentive Plan
We provide annual cash incentive opportunities to our named executives
under GE’s Annual Executive Incentive Plan (AEIP). The financial performance metrics and targets for awards under the AEIP
are designed to drive company and business unit performance, based on our financial and operational priorities.
How
We Determined 2022 AEIP Bonuses for Our Named Executives
All employees at the executive-band level and above within GE are
eligible to participate in the AEIP. Individual bonuses are based on an employee’s employment within Corporate or a business
unit. For our named executives, individual target award percentages are typically set between 100-150% of base salary, based on
their respective position and alignment with peer compensation practices.
Each year, the committee evaluates and sets AEIP performance metrics
and targets for Corporate (based on total company performance) and business units during the first quarter of the performance year.
Following the conclusion of the performance year, the committee assesses total company and business unit performance against applicable
performance metrics for the performance year to determine the AEIP bonus payouts. The CEO may also provide perspective to the committee
about business or individual performance for the year, although the CEO has no role in the committee’s determination of his
own compensation.
For 2022, bonuses under the AEIP paid to our named executives were
determined quantitively based on the named executive’s base salary, target award percentage, achievement of applicable total
company or business unit financial performance targets and a safety modifier. While the committee has the ability under the AEIP
to apply discretion at the business or individual levels when appropriate, no discretion was used in determining the 2022 bonuses
for our named executives.
| |
|
|
NAMED
EXECUTIVE 2022 BONUS DETERMINATIONS |
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| |
BASE SALARY |
 |
TARGET AWARD PERCENTAGE |
|
FINANCIAL PERFORMANCE |
 |
SAFETY
MODIFIER (+/-10%) |
|
| |
|
|
|
|
|
|
|
|
|
|
GE 2023 PROXY STATEMENT 31
Table of Contents
How We Selected Metrics for the 2022 AEIP
The committee selects performance metrics for the AEIP that are
aligned with furthering the company’s and business units’ goals for the year. For 2022, as in recent years, the selected
financial metrics were based upon total company results for our Corporate named executives, and upon business unit results for
named executives who lead individual businesses. The metrics for the 2022 AEIP and their respective weightings for Corporate and
business unit named executives, are listed below.
2022 AEIP PERFORMANCE METRICS AND WEIGHTING
| |
|
ORGANIC
REVENUE
GROWTH* |
|
PROFIT |
|
ORGANIC
MARGIN
EXPANSION* |
|
FREE
CASH
FLOW* |
|
SAFETY
MODIFIER |
| Corporate |
|
25% |
|
25%** |
|
25% |
|
25% |
|
+/- 10% |
| Aerospace |
|
25% |
|
25% |
|
25% |
|
25% |
|
+/- 10% |
| HealthCare |
|
50% |
|
12.5% |
|
12.5% |
|
25% |
|
+/- 10% |
| Renewable
Energy |
|
|
|
50% |
|
|
|
50% |
|
+/- 10% |
| Power |
|
|
|
50% |
|
|
|
50% |
|
+/- 10% |
| * |
Non-GAAP Financial Measure.
For information on how these metrics are calculated, see Explanation of Non-GAAP Financial Measures and Performance Metrics
on page 75. |
| ** |
For Corporate, we used total company adjusted profit, a non-GAAP
Financial Measure. |
The committee selected these metrics to incentivize strong performance
across key drivers of long-term value creation, and also to reflect how the business units are managed. In 2022, the committee
introduced profit as an AEIP metric for business-unit employees and adjusted profit as an AEIP metric for Corporate employees to
incentivize profitable growth as we transition to three independent companies. The selection of metrics, the determination of the
business units to which they applied, and the relative weighting of each, were a function of the unique context for the company
and each business unit.
The committee selected these metrics to incentivize performance
in a manner consistent with how management measures and reports the company’s operating results. Accordingly, the AEIP uses
the same non-GAAP financial measures that management uses to report the company’s financial results each quarter and when
providing an annual financial outlook for the year. The committee believes the use of these measures in compensation program design
is appropriate and promotes consistency with metrics that many investors use to evaluate the company’s financial performance.
See page 75 for additional discussion on the reasons we use these non-GAAP financial measures and how these measures are calculated.
In addition, to further align the AEIP with GE’s overarching
operational priority of safety, the committee selected a performance modifier that can increase or decrease awards by up to 10%
based on achievement of defined safety metrics. Safety performance is determined based on an assessment of Corporate (based on
total company) and business unit performance against the following safety metrics relative to targets set at the beginning of the
performance year: injury and illness rates; serious incidents; fatalities; and overall safety culture and progress since the prior
year. Targets for each business are established to achieve year-over-year improvements across the aforementioned safety metrics,
recognizing the differences in the nature of the working environments and safety risk profiles across our businesses.
For the 2023 AEIP the committee selected the following financial
performance metrics: free cash flow (40% weighting), organic revenue growth (20% weighting), and profit or adjusted profit (as
applicable) (40% weighting) for each of Corporate (based on total company) and the business units. The committee believes this
further simplified set of financial metrics will focus management on driving performance aligned with shareholders’ interests
and will better align with peers. The committee also maintained the safety modifier to increase or decrease the award by up to
10%.
How We Selected Targets for the 2022 AEIP
The committee establishes targets and performance levels which
are designed to be rigorous but realistic and informed by our annual financial performance goals and external guidance.
The target, threshold and maximum performance levels for each
performance measure are set with reference to annual budgets for the total company and business units that our CEO, CFO and business
unit CEOs establish, and the committee approves the performance levels for compensation purposes. Failure to achieve threshold
on any one metric would result in no payout for that metric; and failure to achieve threshold on all metrics would result in no
payout for the AEIP bonus. Awards are also subject to a 10% safety modifier. For the 2022 AEIP, named executives could receive
between 0% and 150% of their target award.
32 GE 2023 PROXY STATEMENT
Table of Contents
How We Performed Against Annual Bonus Targets
for 2022
The following charts set forth the results for named executives
relative to their respective targets under the AEIP for 2022. These results are formulaic and based only on the predetermined targets
for Corporate and the businesses listed.
| * |
Non-GAAP Financial Measure.
For information on how these metrics are calculated, see Explanation of Non-GAAP Financial Measures
and Performance Metrics on page 75. |
GE 2023 PROXY STATEMENT 33
Table of Contents
| * |
Non-GAAP Financial Measure. For information on how these metrics are calculated, see Explanation of Non-GAAP Financial Measures and Performance Metrics on page 75. |
| ** |
The company does not report at the sub-segment level for Commercial Engine Operations and Aviation Services. |
34 GE 2023 PROXY STATEMENT
Table of Contents
| * |
Non-GAAP Financial Measure. For information on how these metrics are calculated, see Explanation of Non-GAAP Financial Measures and Performance Metrics on page 75. |
GE 2023 PROXY STATEMENT 35
Table of Contents
Long-Term Incentive Compensation
As part of our annual compensation program, we use a mix of long-term
incentive compensation awards: PSUs, RSUs and stock options.
HOW WE DETERMINE AWARD MIX AND
AMOUNTS. In determining award mix and amounts, the committee evaluates each executive’s overall compensation relative
to the market for similar talent, the mix of cash versus equity as a percentage of the executive’s overall compensation,
the executive’s expected future contribution to the success of the company and the retentive value of such awards. In 2022,
our annual equity incentive awards for named executives other than Mr. Culp (who only received PSUs) were weighted approximately
50% as PSUs, 30% as stock options and 20% as RSUs.
OUR CEO’S LONG-TERM INCENTIVE
AWARDS ARE ENTIRELY PERFORMANCE-BASED. Since he was hired in 2018, all of Mr. Culp’s equity awards have been in
the form of performance-based equity. By granting Mr. Culp solely performance-based equity, the committee has tied Mr. Culp’s
compensation to long-term shareholder value creation.
Performance Stock Units
HOW OUR ANNUAL PSUs WORK.
PSU awards are designed to focus our named executives on long-term
financial and operating goals for the company overall. Our PSU awards have formulaically determined payouts that are earned only
if the company achieves specified performance levels over the relevant performance period. In the first quarter of each year, the
committee selects the performance metrics for our PSU awards to be granted that year. The committee chooses performance metrics
that it believes align with the company’s long-term strategic objectives and contribute to the creation of long-term shareholder
value. The committee then monitors company performance against the performance metrics over the applicable performance period,
and the committee certifies the final levels of achievement. The certified achievement levels determine the percentage of the target
number of PSUs under the award that a named executive will earn.
HOW WE SELECTED METRICS AND TARGETS FOR THE
2022 PSUs.
The performance metrics and targets our 2022 PSUs were approved by the
committee in February 2022, prior to the publication of last year’s proxy statement. See Shareholder
Feedback on PSU Design on page 36 for a description of the changes we made to our 2023 PSUs is response to subsequent feedback
from our shareholders.
The annual PSU awards granted to the named executives in 2022
had a three-year period, based on 2022 adjusted earnings per share (50% weighting) and free cash flow (50% weighting) performance
against target levels and subject to modification of +/- 20% based on three-year relative TSR performance versus the S&P 500
Industrials Index, with results interpolated for performance between threshold, target and maximum levels. The committee chose
adjusted earnings per share and free cash flow as metrics to incentivize and focus management on both profitability and cash generation,
which continue to be important financial priorities for GE. These are total company financial metrics that help align
all company leaders that receive the PSUs with the same performance target, in contrast to the metrics used in our AEIP that for
business unit employees are based on business-level performance.
The committee establishes targets and performance levels that
are designed to be rigorous but realistic and informed by our annual financial performance goals and external guidance. The
target, threshold and maximum performance levels for each performance measure are set with reference to annual budgets for the
total company that our CEO and CFO establish. In 2022, company performance was below the threshold level for adjusted earnings
per share and free cash flow in the 2022 PSU awards, resulting in no PSUs being earned. Accordingly, the 2022 PSU awards were cancelled
in February 2023 with no payout.
SHAREHOLDER FEEDBACK ON OUR PSU DESIGN.
In response to shareholder feedback, we adopted a new design for
the PSU awards granted to named executives in 2023. These awards will vest over a three-year performance period with performance
measured as the average of three consecutive one-year performance periods (2023, 2024 and 2025) against adjusted earnings per share
(50% weighting) and free cash flow (50% weighting) targets, subject to modification of +/- 20% based on three-year relative TSR
versus the S&P 500 Industrials Index, with results interpolated for performance between threshold, target and maximum. The
committee believes this approach to average three consecutive performance years is responsive to shareholder feedback about the
length of the PSU performance period and appropriate during the transitional period for the company today. The PSUs continue to
use the total company performance metrics of adjusted earnings per share and free cash flow, which continue to be important measures
for the company’s performance and, as total company metrics, are differentiated from the metrics applicable to business-level
employees under the AEIP.
| OUR PATH FORWARD |
|
PLANS TO USE LONGER PERFORMANCE PERIODS FOLLOWING SPIN-OFF.
It has been a challenge to set long-term financial targets while
we have been in the midst of significant transformation into three independent public companies. After completion of the planned
business separations, GE (which will be GE Aerospace at that time) plans to develop long-term incentive awards that include multi-year
financial targets. We also anticipate that GE HealthCare and GE Vernova as standalone companies will do so as well, as ultimately
will be determined by the compensation committees for those companies
|
36 GE 2023 PROXY STATEMENT
Table of Contents
How Our PSU Awards Performed Against Targets
2020. The annual
PSU awards granted to the named executives in 2020 used a three-year performance period based on GE’s relative TSR
performance versus the S&P 500 Industrials Index, with results interpolated for performance between threshold, target and maximum.
| |
PERFORMANCE
GOAL |
|
THRESHOLD
EARN 25% |
|
TARGET
EARN 100% |
|
MAXIMUM
EARN 175% |
|
WEIGHTING |
|
STATUS |
| |
Relative TSR |
|
 |
|
 |
|
2020 PSUs HAD NO PAYOUT.
The company did not achieve the threshold level of performance
for the payout of these awards, and accordingly, in February 2023 the committee cancelled all 2020 PSUs with no payout.
|
| |
|
|
|
|
|
|
|
2021. The annual PSU
awards granted to the named executives in 2021 used a three-year performance period based on GE’s 2021 adjusted earnings
per share and total company free cash flow performance against target levels and subject to modification of +/- 20% based on
three-year relative TSR versus the S&P 500 Industrials Index, with results interpolated for performance between threshold,
target and maximum.
| |
PERFORMANCE
GOAL |
|
THRESHOLD
EARN 25% |
|
TARGET
EARN 100% |
|
MAXIMUM
EARN 175% |
|
WEIGHTING |
|
STATUS |
| |
Adjusted Earnings per Share* |
|
 |
|
 |
|
2021 PSUs REMAIN SUBJECT TO THREE-YEAR RELATIVE TSR. |
| |
Total Company Free Cash Flow ($M)* |
|
 |
|
 |
|
The
2021 PSUs performed above the maximum level for the adjusted earnings per share and free cash flow performance metrics. The
awards remain subject to the three-year relative TSR modifier, which will determine the number of shares earned. |
| |
Relative TSR |
|
 |
|
+/- 20%
modifier |
|
Results will be certified by the committee in February 2024. |
| |
|
|
|
|
|
|
|
PSU metrics for 2021 were set and reported here using our prior three-column financial statement metrics of GE Industrial earnings per share and GE Industrial free cash flow.
2022. The annual PSU
awards granted to the named executives in 2022 used a three-year performance period based on GE’s 2022 adjusted earnings
per share and total company free cash flow performance against target levels and subject to modification of +/- 20% based on three-year
relative TSR versus the S&P 500 Industrials Index, with results interpolated for performance between threshold, target and
maximum.
| * |
Non-GAAP Financial Measure. For information on how these metrics are calculated, see Explanation of Non-GAAP Financial Measures
and Performance Metrics on page 75. |
GE 2023 PROXY STATEMENT 37
Table of Contents
OTHER PERFORMANCE STOCK UNIT AWARD.
On January 3, 2022, Mr. Arduini became President and Chief
Executive Officer of GE HealthCare, after joining GE as an employee in December 2021. In connection with becoming Chief Executive
Officer of GE HealthCare, in February 2022, he received a PSU award (New Hire PSU Award). Mr. Arduini’s New Hire PSU Award is
eligible to vest on March 1, 2025, in an amount between 0% and 150% of the target number of PSUs, based on the final average
achievement of annual performance objectives set for each of 2022, 2023 and 2024. For 2022, the committee chose annual performance
metrics, which consisted of HealthCare free cash flow (25% weighting), organic margin expansion (12.5% weighting), organic revenue
growth (50% weighting) and profit (12.5% weighting), in each case with respect to the HealthCare business, subject to modification
of +/- 10% for safety performance. The performance metrics and targets established for the 2022 performance year reflected GE
HealthCare's status as a business within GE, rather than a standalone public company, and therefore aligned with GE's established
metrics and targets for that business. GE HealthCare, as a standalone company, will determine performance metrics and targets for
the remaining performance years. In January 2023, Mr. Arduini’s New Hire PSU Award was converted into GE HealthCare PSUs and
remains subject to the performance conditions.
RESTRICTED STOCK UNITS AND STOCK OPTIONS.
WE USE STOCK OPTIONS AND RSUs TO FOCUS ON LONG-TERM VALUE CREATION.
We believe that awards of stock options and RSUs effectively focus our named executives on delivering long-term value to
our shareholders. Stock options have value only to the extent that the price of GE stock rises between an award’s grant date
and its exercise date. RSU awards reward and retain the named executives by offering them the opportunity to receive GE stock if
they remain employed by the company on the date that an award’s restrictions lapse.
2022 RSUs AND STOCK OPTIONS. The annual awards of RSUs and
stock options granted in 2022 will vest in two equal installments on the second and third anniversary of the grant date.
OUR POLICY ON DIVIDEND EQUIVALENTS.
Our awards of PSUs, performance shares and RSUs are entitled to receive
dividend equivalents or dividends, as applicable, and such dividend equivalents or dividends are only paid out on the shares actually
received by our named executives under the terms of such awards. Stock options are not entitled to receive any dividend equivalents
or dividends.
| |
OUR PATH FORWARD |
|
| |
|
| |
|
|
|
| |
TREATMENT OF OUTSTANDING EQUITY AWARDS WITH GE
HEALTHCARE SPIN-OFF.
In the GE HealthCare (GEHC) spin-off in January 2023, GE
shareholders received a distribution of one share of GE HealthCare common stock for every three shares of GE common stock
held. Because unvested equity awards held by GE employees were not eligible to receive a distribution of GEHC shares, the
company made equitable adjustments designed to preserve the pre-spin-off value of those awards following the reduction in
parent company stock price that occurs when a significant business is distributed to shareholders in a spin-off. In advance
of the spin-off, the committee established conversion ratios to govern the adjustments that, depending on the type of award,
either were based on a comparison of the pre-spin-off GE stock price to the post-spin-off GE and GEHC stock prices or were
the same as the ratio used to establish the number of GEHC shares distributed to GE shareholders in the spin-off.
The approach for these equitable adjustments was
to align employees with their business assignments and roles relative to the spin-off: GEHC employees’ awards converted into
GEHC awards; business-level GE employees continued to hold GE awards; and Corporate employees at GE received a combination of GE
and GEHC awards, aligned with how GE shareholders received GEHC shares as a distribution on their existing GE shares in the spin-off.
In each case, the approach was designed to preserve the pre-spin-off value of the relevant employee equity awards.
The post-spin-off equity awards reflecting these equitable
adjustments are generally subject to the same vesting conditions and other terms prior to the spin-off, except that (i) the annual
2021 PSU awards now held by GE employees will measure GE’s relative TSR for the remainder of the performance period by adding
together the pre-spin-off and post-spin-off GE relative TSR as two discrete periods, and (ii) the annual 2021 PSU awards that
converted to GEHC awards following the spin-off will vest at the end of the performance period based on the GE relative TSR
performance up to the time of the spin-off. There were no changes to the terms of Mr. Culp’s Leadership Performance Shares
granted on August 18, 2020, and Ms. Dybeck Happe’s Leadership PSUs granted on September 3, 2020, in connection with the
spin-off, and pursuant to the terms of those awards the performance level achieved will be based on a weighted average of the GE and
GEHC stock prices.
|
38 GE 2023
PROXY STATEMENT
Table of Contents
Compensation
Actions for 2022
| |
|
|
|
|
| |
CURRENT AND PRIOR ROLES
Chairman & CEO, GE (since September 2018) and CEO, GE Aerospace
(since June 2022); former senior lecturer, Harvard Business School (2015-2018); former Senior Advisor, Bain Capital Private
Equity (2017-2018); former CEO & President, Danaher (2001-2014)
2022 Performance Highlights
As Chairman & CEO, Mr. Culp plays a central role in shaping the
company’s strategy, establishing the framework against which performance is measured and delivering on that performance.
Performance highlights during 2022 included:
● Leading the execution
of GE’s strategy to form three independent, investment-grade companies, including the successful spin-off of GE HealthCare
and the recruitment of new directors to the boards of GE and GE HealthCare
● Continuing to lead
GE’s enterprise-wide focus on operational improvement and execution by more deeply embedding lean and decentralization across
the company
● Assuming an expanded
leadership role beginning in June 2022 as the CEO of our Aerospace business, which delivered strong financial results amidst the
demand ramp for engines and services with the industry’s ongoing recovery from the peak of the COVID-19 pandemic
|
|
H. Lawrence Culp, Jr.
CHAIRMAN & CEO
CEO, GE AEROSPACE
Age: 59
Education:
Washington College; MBA,
Harvard Business School
GE Tenure: 4 Years
|
|
| |
|
|
|
|
| |
Response to Shareholder Feedback
In response to prior shareholder feedback, the committee and Mr. Culp agreed to reduce his annual equity incentive grant for 2022 from a grant date fair value of $15 million to $5 million.
|
|
| |
|
|
Annual
CEO Pay Structure
| ● |
Salary. Upon his appointment as CEO, Mr. Culp’s salary was set at $2,500,000 under his 2018 employment agreement and (other than certain forfeitures of his salary in 2020 in connection with the COVID-19 pandemic) has not changed. |
| |
|
| ● |
Bonus. Mr. Culp’s bonus target is set at 150% of salary and has not changed since his appointment as CEO. |
| |
|
| ● |
Annual equity awards. Since becoming CEO in 2018, Mr. Culp’s employment agreement has provided for an annual equity grant with a grant date fair value of $15 million. For 2022, in response to prior shareholder feedback, the committee and Mr. Culp agreed to reduce his annual PSU award in March 2022 to a grant date fair value of $5 million. |
GE 2023 PROXY STATEMENT 39
Table of Contents
Compensation for Our
Other Named Executives
| |
|
|
|
|
| |
CURRENT AND PRIOR ROLES
Senior Vice President & CFO, GE (since March 2020); former
CFO and Executive committee member, A.P. Moller-Maersk A/S (2019-2020); former Executive Vice-President and CFO, Assa Abloy AB
(2012-2018)
2022 Performance Highlights
As CFO, Ms. Dybeck Happe leads the company’s Finance organization
and has responsibility for treasury activities and GE Capital. Performance highlights during 2022 included:
● Developing the annual
budget and delivering on the company’s financial goals, including solid revenue growth, margin expansion and free cash flow
in 2022
● Surpassing $100
billion of gross debt reduction since 2018, evidencing the company’s significant progress in recent years to strengthen the
balance sheet and reduce leverage
● Leading the finance,
treasury and digital technology functions through separation activities in connection with the planned spin-offs, and advising
on the execution of the GE HealthCare spin-off and ongoing capital allocation matters
|
|
Carolina Dybeck
Happe
Age: 50
Education:
Uppsala University, Sweden
GE Tenure: 3 Years
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
CURRENT AND PRIOR ROLES
President and CEO, GE HealthCare (since January
2022); President and Chief Executive Officer, Integra LifeSciences (2012-2021). Following the GE HealthCare spin-off in January
2023, Mr. Arduini is no longer a GE employee.
2022 Performance Highlights
As CEO of the HealthCare business, Mr. Arduini led the successful
spin-off of GE HealthCare. Performance highlights during 2022 included:
● Successfully leading
the HealthCare business in its preparations to separate from the company, including recruitment and selection of GE HealthCare’s
senior leadership team with balance of prior public company experience and legacy customer, market, and product knowledge
● Driving strong operational
and financial performance in 2022 for the HealthCare business, including increased annual revenues and cash flow conversion
● Delivering new products
and technology to healthcare customers globally, and partnering with industry peers to develop products and services that advance
precision care
|
|
Peter Arduini
Age: 58
Education:
Northwestern University’s
Kellogg School of Management,
MA; Susquehanna University
GE Tenure: 1 Years
|
|
| |
|
|
|
|
40 GE 2023 PROXY STATEMENT
Table of Contents
| |
|
|
|
|
| |
CURRENT AND PRIOR ROLES
Executive Vice President and Chief Commercial Officer, GE Aerospace
(since June 2022); former President & CEO, GE Aviation (2020-2022); former President & CEO of Commercial Aviation,
Embraer S.A. (2016-2020); former Chief Commercial Officer, Embraer S.A. (2012-2016)
2022 Performance Highlights
Mr. Slattery served as CEO of GE Aerospace until June 2022, when he
transitioned to Executive Vice President and Chief Commercial Officer to focus on leading the commercial growth of the future
standalone business. Performance highlights during 2022 included:
● Leading the Aerospace
business during the first half of 2022 amidst the demand ramp for engines and services with the industry’s ongoing recovery
from the peak of the COVID-19 pandemic
● Developing and strengthening
relationships with customers and industry partners to foster future technological progress and embed lean principles
● Delivering strong
orders and focusing on customer support in the ongoing growth across engines and services, and across our existing fleet in services
|
|
John Slattery
Age: 54
Education:
University of Glamorgan;
MBA, University of Limerick
GE Tenure: 3 Years
|
|
| |
|
|
|
|
| |
Changes for 2023 Compensation: Consistent with the change in his job
responsibilities during 2022, the committee approved an annual equity grant in 2023 for Mr. Slattery of $3.0 million.
|
|
| |
|
|
| |
|
|
|
|
| |
CURRENT AND PRIOR ROLES
President and CEO, GE Commercial Engines & Services, GE Aerospace
(since July 2022); former President and CEO, GE Aviation Services (2020-2022); former President and CEO, GE Power Portfolio
(2018-2020); former President and CEO, GE Power (2017-2018); former President & CEO, GE Energy Connections (2015-2017); former
President & CEO, GE Transportation (2013-2015)
2022 Performance Highlights
As CEO of the Commercial Engines & Services business, a
sub-business within our Aerospace business, Mr. Stokes leads an organization that manufactures jet engines for commercial aircrafts
and provides maintenance, component repair and overhaul services, including sales of replacement parts. Performance highlights during 2022 included:
● Realigning Commercial
Engines & Services as an integrated P&L to better serve customer priorities, and driving operational improvements that
resulted in improved orders, revenues, and profit margins in 2022 for the largest business unit within the Aerospace business
● Implementing lean
processes globally to improve turnaround time, contract selectivity, and estimates of future contract performance, driving increased
profitability
● Expanding our global
maintenance, repair and overhaul network to provide full flexibility to meet customers’ needs
|
|
Russell Stokes
Age: 51
Education:
Cleveland State University
GE Tenure: 26 Years
|
|
| |
|
|
|
|
| |
Changes for 2023 Compensation: Consistent with his expanded operational
responsibilities during 2022, the committee approved an annual equity grant in 2023 for Mr. Stokes of $5.0 million.
|
|
| |
|
|
GE 2023 PROXY STATEMENT 41
Table of Contents
Summary Compensation
Summary Compensation Table
NAME &
PRINCIPAL POSITION | |
YEAR | | |
SALARY | | |
BONUS* | |
STOCK
AWARDS | | |
STOCK
OPTION | | |
NON-EQUITY
INCENTIVE
PLAN COMP. | | |
CHANGE
IN
PENSION
VALUE &
DEFERRED
COMP. | | |
ALL
OTHER
COMP | | |
SEC
TOTAL | |
H.
Lawrence Culp, Jr.
Chairman & CEO, GE and CEO, GE Aerospace | |
| 2022 | | |
$ | 2,500,000 | | |
$ | 0 | | |
$ | 5,000,021 | | |
$ | 0 | | |
$ | 525,000 | | |
$ | 151,653 | | |
$ | 21,350 | | |
$ | 8,198,024 | |
| |
| 2021 | | |
$ | 2,500,000 | | |
$ | 4,200,000 | | |
$ | 14,999,996 | | |
$ | 0 | | |
$ | 0 | | |
$ | 943,153 | | |
$ | 20,300 | | |
$ | 22,663,449 | |
| |
| 2020 | | |
$ | 653,409 | | |
| 0 | | |
$ | 72,054,874 | | |
$ | 0 | | |
$ | 0 | | |
$ | 463,799 | | |
$ | 19,950 | | |
$ | 73,192,032 | |
Carolina
Dybeck Happe
SVP & CFO | |
| 2022 | | |
$ | 1,500,000 | | |
$ | 0 | | |
$ | 3,354,008 | | |
$ | 1,500,016 | | |
$ | 262,500 | | |
$ | 0 | | |
$ | 3,124,668 | | |
$ | 9,741,192 | |
| |
| 2021 | | |
$ | 1,500,000 | | |
$ | 2,100,000 | | |
$ | 3,602,609 | | |
$ | 1,499,998 | | |
$ | 0 | | |
$ | 351,465 | | |
$ | 1,415,986 | | |
$ | 10,470,058 | |
| |
| 2020 | | |
$ | 1,250,000 | | |
$ | 1,325,000 | | |
$ | 10,415,106 | | |
$ | 9,500,003 | | |
$ | 0 | | |
$ | 246,010 | | |
$ | 1,032,906 | | |
$ | 23,769,025 | |
Peter
Arduini
SVP, GE and CEO, HealthCare | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| 2022 | | |
$ | 1,250,000 | | |
$ | 0 | | |
$ | 6,135,961 | | |
$ | 2,099,996 | | |
$ | 890,625 | | |
$ | 0 | | |
$ | 120,520 | | |
$ | 10,497,102 | |
John
Slattery
EVP & CCO Aerospace | |
| 2022 | | |
$ | 1,250,000 | | |
$ | 0 | | |
$ | 4,024,812 | | |
$ | 1,800,006 | | |
$ | 1,462,500 | | |
$ | 105,114 | | |
$ | 138,843 | | |
$ | 8,781,275 | |
| |
| 2021 | | |
$ | 1,250,000 | | |
$ | 1,337,500 | | |
$ | 4,323,123 | | |
$ | 1,799,998 | | |
$ | 0 | | |
$ | 292,217 | | |
$ | 451,616 | | |
$ | 9,454,454 | |
| |
| 2020 | | |
$ | 588,768 | | |
$ | 1,375,000 | ** | |
$ | 2,097,221 | | |
$ | 2,399,998 | | |
$ | 0 | | |
$ | 87,815 | | |
$ | 4,685,336 | | |
$ | 11,234,138 | |
Russell
Stokes
SVP, GE & CEO Commercial Engines & Services | |
| 2022 | | |
$ | 1,400,000 | | |
$ | 0 | | |
$ | 2,549,063 | | |
$ | 1,140,001 | | |
$ | 1,652,000 | | |
$ | 3,217 | | |
$ | 113,422 | | |
$ | 6,857,703 | |
| |
| 2021 | | |
$ | 1,400,000 | | |
$ | 1,456,000 | | |
$ | 2,521,819 | | |
$ | 1,050,001 | | |
$ | 0 | | |
$ | 2,733 | | |
$ | 89,211 | | |
$ | 6,519,764 | |
| |
| 2020 | | |
$ | 1,400,000 | | |
$ | 1,300,000 | | |
$ | 7,267,127 | | |
$ | 1,050,002 | | |
$ | 0 | | |
$ | 5,919,977 | | |
$ | 89,573 | | |
$ | 17,026,679 | |
| * |
For 2022, we reported AEIP bonuses paid to our
named executives under “Non-Equity Incentive Plan Compensation”, as they were based on predetermined performance
measures without the use of discretion. AEIP bonuses paid to our named executives in 2020 and 2021 are under this “Bonus”
column. |
| ** |
Includes $1.0 million signing bonus for Mr. Slattery, pursuant to
his offer letter agreement. |
SALARY. Base
salaries for our named executives. Each of the named executives contributed a portion of his or her salary to the GE Retirement
Savings Plan (GE RSP), the company’s 401(k) savings plan. Mr. Culp voluntarily forfeited 74% of his salary for 2020, in
light of the business challenges resulting from the COVID-19 pandemic. See Base Salaries on
page 31 for more information.
BONUS. Amounts
earned under the AEIP in 2020 and 2021. For amounts earned under the AEIP in 2022, see Non-Equity
Incentive Plan Compensation. See Annual Executive Incentive Plan on page 31 for additional information on the AEIP program.
STOCK AWARDS. Aggregate
grant date fair value of stock awards in the form of PSUs and RSUs, and in the case of Mr. Culp, performance shares, granted in
the years shown. Generally, the aggregate grant date fair value is the amount that the company expects to expense for accounting
purposes over the award’s vesting schedule and does not correspond to the actual value that the named executives will realize
from the award. In particular, the actual value of PSUs and performance shares received are different from the accounting expense
because it depends on performance. For example, as described on page 37, the 2020 and 2022 PSU grants were cancelled by the
committee and as a result, none of our named executives received a payout for these awards. When PSUs awards are cancelled, GE
does not adjust the related amounts previously reported as compensation in the year of the PSU award to reflect the cancellation.
In accordance with SEC rules, the aggregate grant date fair value of the 2022 PSUs and the 2022 portion of Mr. Arduini’s
New Hire PSU Award is calculated based on the most probable outcome of the performance conditions as of the grant date, which
was less than maximum performance. If the most probable outcome of the performance conditions on the grant date had been maximum
performance, then the grant date fair value of the 2022 PSUs would have been as follows: Culp ($7,818,428), Dybeck Happe ($3,887,734),
Arduini ($7,603,440), Slattery ($4,665,328), and Stokes ($2,954,684) and the grant date fair value of the New Hire PSU Award
would have been $2,160,517. Portions of Mr. Arduini’s New Hire PSU Award are tied to performance goals for 2023 and 2024
that were not set at the time of the grant, and in accordance with SEC rules, no value was estimable for those portions at the
time of the grant. A fair value for those portions will be disclosed in future years once the targets are known and the value is
estimable. See the 2022 Grants of Plan-Based Awards Table on page 44
for additional information for PSUs and RSUs granted in 2022.
STOCK OPTIONS. Aggregate
grant date fair value of option awards granted in the years shown. These amounts reflect the company’s accounting expense
and do not correspond to the actual value that the named executives will realize. For information on the assumptions used in valuing
a particular year’s grant, see the note on Share-Based Compensation in GE’s
financial statements in our annual report on Form 10-K for 2022. See the 2022 Grants of Plan-Based
Awards Table on page 44 for additional information on 2022 grants.
NON-EQUITY INCENTIVE PLAN COMPENSATION. Amounts
earned under the AEIP for 2022. See the 2022 Grants of Plan-Based Awards Table on
page 44 and Annual Executive Incentive Plan on page 31 for
additional information.
CHANGE IN PENSION VALUE & DEFERRED COMP. Sum of the change in pension value and above-market
earnings on nonqualified deferred compensation, which break down as shown in the following table.
| NAME | |
CHANGE
IN
PENSION VALUE | | |
ABOVE MARKET
EARNINGS | |
| Culp | |
$ | 151,653 | | |
$ | 0 | |
| Dybeck Happe | |
$ | 0 | | |
$ | 0 | |
| Arduini | |
$ | 0 | | |
$ | 0 | |
| Slattery | |
$ | 105,114 | | |
$ | 0 | |
| Stokes | |
$ | 0 | | |
$ | 3,217 | |
Year-over-year changes in pension value generally
are driven by changes in actuarial pension assumptions as well as increases in age, and any additional service and compensation
(as applicable by plan). See Pension Benefits on page 49 for additional information,
including the present value assumptions used in this calculation. Above-market earnings represent the difference between market
interest rates calculated under SEC rules and the 6% to 14% interest contingently credited by the company on salary that the named
executives deferred under various executive deferred salary programs in effect between 1991 and 2022. See Deferred
Compensation on page 47 for additional information.
42 GE 2023 PROXY STATEMENT
Table of Contents
ALL OTHER COMP. We
provide our named executives with other benefits that we believe are reasonable, competitive and consistent with our overall executive
compensation program. The costs of these benefits for 2022, minus any reimbursements by the named executives, are shown in the
table below.
| NAME | |
LIFE
INSURANCE
PREMIUMS | | |
COMPANY
CONTRIBUTIONS
TO SAVINGS
PLANS | | |
COMPANY
CREDITS TO
RESTORATION
PLAN | | |
RELOCATION
AND
EXPATRIATE
BENEFITS | | |
RELOCATION
AND
EXPATRIATE
TAX BENEFITS | | |
OTHER | | |
TOTAL | |
| Culp | |
$ | 0 | | |
$ | 21,350 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 21,350 | |
| Dybeck Happe | |
$ | 0 | | |
$ | 9,150 | | |
$ | 0 | | |
$ | 429,913 | | |
$ | 2,664,677 | | |
$ | 20,928 | | |
$ | 3,124,668 | |
| Arduini | |
$ | 0 | | |
$ | 21,350 | | |
$ | 74,970 | | |
$ | 0 | | |
$ | 0 | | |
$ | 24,200 | | |
$ | 120,520 | |
| Slattery | |
$ | 0 | | |
$ | 21,350 | | |
$ | 0 | | |
$ | 69,164 | | |
$ | 44,651 | | |
$ | 3,678 | | |
$ | 138,843 | |
| Stokes | |
$ | 83,521 | | |
$ | 19,825 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 10,076 | | |
$ | 113,422 | |
Life Insurance Premiums. Taxable payments
to cover premiums for universal life insurance policies the named executives own. These policies include: (1) Executive Life,
which provides universal life insurance policies for the indicated named executives totaling up to $3 million in coverage at the
time of enrollment and increased 4% annually thereafter; and (2) Leadership Life, which provides universal life insurance policies
for the indicated named executives with coverage of 2X their annual pay (salary plus most recent bonus). As of January 1, 2018,
these plans were closed to new employees and employees who were not already employed at the relevant band level, including Messrs.
Culp, Slattery, Arduini and Ms. Dybeck Happe.
Company Contributions to Savings Plans. Represents
GE’s matching contributions to the named executives’ RSP accounts equaling up to 4% of eligible pay, and automatic
contributions equaling 3% of eligible pay, up to the caps imposed under IRS rules. The GE RSP was split into two plans effective January 1, 2023 – one maintained by GE HealthCare, and one maintained
by GE. Mr. Arduini’s RSP benefits were allocated to the GE HealthCare Retirement Savings Plan and the other
named executives remained in the GE RSP. We anticipate splitting the GE RSP again in anticipation of the planned spin-off
of GE Vernova.
Company Credits to Restoration Plan. Represents
GE’s accrued credits to the named executives’ Restoration Plan accounts equaling 7% of their annual earnings, which
include base salary and up to one-half of eligible bonus payments, that exceed the IRS-prescribed limit.
Relocation and Expatriate Benefits. Expenses
for relocating the named executives and their families in connection with their hiring from outside GE. With respect to Ms. Dybeck
Happe, this amount includes expenses for relocating her and her family from Sweden to GE’s headquarters in Boston in 2020
and continued residence outside her home country, which includes the following: (1) housing and utilities ($275,000), (2) educational
support for her children ($142,430), (3) tax preparation services and (4) other relocation benefits. With respect to Mr. Slattery,
this amount includes the benefits provided to him in connection with his relocation from Ireland to GE Aerospace’s headquarters
in Cincinnati, which consists of: educational support for his children ($69,164). Relocation and international assignment benefits,
such as those provided to Ms. Dybeck Happe and Mr. Slattery, allow us to recruit the best executives from all over the world,
regardless of where they are based.
Relocation and Expatriate Tax Benefits. Tax
benefits provided in connection with new hire relocations and international assignments. For Ms. Dybeck Happe, these benefits
are pursuant to her employment agreement, and in 2022, include the following: (1) tax equalization payments ($1,525,298 ) intended to ensure
that Ms. Dybeck Happe is not put in a disadvantaged tax position as a result of her position with GE in the United States, (2)
taxes paid in connection with relocation benefits ($334,185), and (3) tax gross-up payments related to the tax benefits ($805,194).
Tax benefits were higher in 2022 for Ms. Dybeck Happe partially because they related to multiple tax years. Benefits for Mr. Slattery
included taxes paid in connection with relocation benefits ($44,651).
Other. Total amount of other benefits provided,
none of which individually exceeded the greater of $25,000 or 10% of the total amount of personal benefits for the named executive.
These other benefits included items such as: (1) car service fees; (2) certain expenses associated with the named executives’
and their invited guests’ attendance at sporting events; (3) transition credits related to participation in the GE Pension
Plan; (4) annual physical examinations; (5) legal and professional fees and (6) incremental costs associated with personal use
of aircraft and travel by guests accompanying the executive on business travel on a company-leased aircraft, such as for catering.
Our named executives are permitted to use an aircraft that is leased by the company for personal use, but, to the extent the named
executives engaged in such use during 2022, all such use was reimbursed to the company at rates sufficient to cover the variable
costs associated with those flights, other than certain incremental costs as noted above and reported under this item. In addition,
the company engages in certain sponsorships and purchases tickets to sporting events in advance for the purposes of customer entertainment.
Occasionally, tickets from sponsorship agreements or unused tickets purchased for customer entertainment are made available for
personal use by the named executives or other employees. These tickets typically result in no incremental cost to the company.
SEC Total. Total compensation, as determined
under SEC rules.
GE 2023 PROXY STATEMENT 43
Table of Contents
Incentive Compensation
In recent years, we have used a mix of short-term
incentive compensation under the AEIP and long-term incentive compensation awards: PSUs, performance shares, RSUs, and stock options.
In 2022, we granted annual equity awards in March.
2022 Grants of Plan-Based
Awards Table
The following table shows bonuses under our
AEIP, and awards of RSUs, PSUs and stock options granted to our named executives in 2022. These awards were approved under
the GE 2007 Long-Term Incentive Plan, a plan that shareholders approved in 2007, 2012 and 2017 (the 2007 LTIP). In 2022, our
shareholders approved the GE 2022 Long-Term Incentive Plan (the 2022 LTIP), which replaced the 2007 LTIP. For more
information on each of the award types, see Long-Term Incentive Compensation on
page 36. This table includes PSU awards granted in 2022, which were cancelled without payout as a result of below-threshold
performance. This table does not take into account the treatment of outstanding equity awards in 2023 in connection with the GE HealthCare spin-off. See Treatment of Outstanding Equity Awards with GE HealthCare Spin-Off on page 38 for additional details.
| | |
|
|
| |
| |
ESTIMATED
FUTURE
PAYOUTS UNDER
NON-EQUITY INCENTIVE
PLAN AWARDS | | |
ESTIMATED
FUTURE
PAYOUTS UNDER
PSUs | | |
RESTRICTED
STOCK UNITS
(#) | | |
STOCK
OPTIONS
(#) | | |
OPTION
EXERCISE
PRICE | | |
GRANT
DATE
FAIR VALUE OF
AWARDS | |
| NAME | |
GRANT
DATE |
|
APPROVAL
DATE | |
AWARD
TYPE | |
THRESHOLD
($) | | |
TARGET
($) | | |
MAXIMUM
($) | | |
THRESHOLD
(#) | | |
TARGET
(#) | | |
MAXIMUM
(#) | | |
| |
| |
| |
|
| Culp | |
|
|
| |
AEIP | |
$ | 93,750 | | |
$ | 3,750,000 | | |
$ | 5,625,000 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
3/21/2022 |
|
3/6/2022 | |
Annual Equity | |
| | | |
| | | |
| | | |
| 5,542 | | |
| 55,424 | | |
| 96,992 | | |
| | | |
| | | |
| | | |
$ | 5,000,021 | |
| Dybeck Happe | |
|
|
| |
AEIP | |
$ | 46,875 | | |
$ | 1,875,000 | | |
$ | 2,812,500 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
3/1/2022 |
|
2/23/2022 | |
Annual Equity | |
| | | |
| | | |
| | | |
| 2,824 | | |
| 28,238 | | |
| 49,417 | | |
| | | |
| | | |
| | | |
$ | 2,499,967 | |
| |
3/1/2022 |
|
2/11/2022 | |
Annual Equity | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 10,317 | | |
| | | |
| | | |
$ | 854,041 | |
| |
3/1/2022 |
|
2/11/2022 | |
Annual Equity | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 45,032 | | |
$ | 92.33 | | |
$ | 1,500,016 | |
| Arduini | |
|
|
| |
AEIP | |
$ | 0 | | |
$ | 1,562,500 | | |
$ | 2,343,750 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
2/23/2022 |
|
2/23/2022 | |
New Hire | |
| | | |
| | | |
| | | |
| 0 | | |
| 17,316 | | |
| 25,974 | | |
| | | |
| | | |
| | | |
$ | 1,440,345 | |
| |
3/1/2022 |
|
2/23/2022 | |
Annual Equity | |
| | | |
| | | |
| | | |
| 3,953 | | |
| 39,534 | | |
| 69,185 | | |
| | | |
| | | |
| | | |
$ | 3,500,024 | |
| |
3/1/2022 |
|
2/11/2022 | |
Annual Equity | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 14,443 | | |
| | | |
| | | |
$ | 1,195,592 | |
| |
3/1/2022 |
|
2/11/2022 | |
Annual Equity | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 63,044 | | |
$ | 92.33 | | |
$ | 2,099,996 | |
| |
|
|
| |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Slattery | |
|
|
| |
AEIP | |
$ | 31,250 | | |
$ | 1,250,000 | | |
$ | 1,875,000 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
3/1/2022 |
|
2/23/2022 | |
Annual Equity | |
| | | |
| | | |
| | | |
| 3,389 | | |
| 33,886 | | |
| 59,301 | | |
| | | |
| | | |
| | | |
$ | 2,999,995 | |
| |
3/1/2022 |
|
2/11/2022 | |
Annual Equity | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 12,380 | | |
| | | |
| | | |
$ | 1,024,816 | |
| |
3/1/2022 |
|
2/11/2022 | |
Annual Equity | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 54,038 | | |
$ | 92.33 | | |
$ | 1,800,006 | |
| Stokes | |
|
|
| |
AEIP | |
$ | 35,000 | | |
$ | 1,400,000 | | |
$ | 2,100,000 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
3/1/2022 |
|
2/23/2022 | |
Annual Equity | |
| | | |
| | | |
| | | |
| 2,146 | | |
| 21,461 | | |
| 37,557 | | |
| | | |
| | | |
| | | |
$ | 1,899,985 | |
| |
3/1/2022 |
|
2/11/2022 | |
Annual Equity | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 7,841 | | |
| | | |
| | | |
$ | 649,078 | |
| |
3/1/2022 |
|
2/11/2022 | |
Annual Equity | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 34,224 | | |
$ | 92.33 | | |
$ | 1,140,001 | |
Estimated Future Payouts
Under Non-Equity Incentive Plan Awards
Amounts shown are the threshold, target and maximum
potential payouts under the AEIP for 2022. The payout under the 2022 AEIP can range from zero for below threshold performance against all financial performance measures
to a maximum of 150% of target, based on the maximum level of achievement of all financial performance measures. The actual 2022 AEIP payouts
for our named executives are reported in the Summary Compensation Table in the Non-Equity Incentive Plan Compensation column.
For more information on the AEIP, see Annual Executive Incentive Plan on
page 31.
Estimated Future Payouts
Under PSUs
Amounts shown are the threshold, target and maximum
number of PSUs that could be earned under awards granted in 2022. The payout of the 2022 PSU awards can range from zero for below
threshold performance against both performance measures to a maximum of 175% of target, based on the maximum level of achievement
of both performance measures. The payout of Mr. Arduini’s New Hire PSU Award can range from zero for below threshold performance
against all performance measures to a maximum of 150% of target, based on the maximum level of achievement of all performance
measures. For more information on 2022 PSU awards and Mr. Arduini’s New Hire PSU Award, see pages 36 and 38, respectively.
Option Exercise Price
Stock option exercise prices reflect the closing
price of GE stock on the grant date.
Grant Date Fair Value of
Awards
Generally, the aggregate grant date fair value of
an award is the amount that the company expects to expense in its financial statements over the award’s vesting schedule.
| ● |
For stock option awards, fair value is
calculated using the Black-Scholes value of each option on the grant date (resulting in a $33.31 per unit value for the March
2022 stock option grants). |
| |
|
| ● |
For RSU awards, fair value is generally calculated based on
the closing stock price on the date of grant, reduced by the present value of dividends expected to be paid on GE common stock
before the RSUs vest (resulting in a $82.78 per unit value for the March 2022 grants) because dividend equivalents on unvested
RSUs are accrued and paid out only if and when the award vests. |
| |
|
| ● |
For PSU awards, the actual value of units received will depend
on the company’s performance, as described above. Fair value is calculated by multiplying the per unit value of the
award ($83.18 for Mr. Arduini’s February New Hire PSU Award, and $88.53 for the March 2022 grants, except for awards
granted to Mr. Culp which were $90.21) by the number of units at target. The per unit value is based on the closing price
of the company’s stock price on the grant date, adjusted to reflect a projected impact of the TSR modifier using a Monte
Carlo simulation. |
44 GE 2023 PROXY STATEMENT
Table of Contents
2022 Outstanding Equity
Awards at Fiscal Year-End Table
The following table shows the named executives’
stock and option grants as of year-end. It includes unexercised stock options awards (vested and unvested), RSUs, performance
shares and PSUs for which vesting conditions were not yet satisfied as of December 31, 2022. The table does not include PSU awards
granted in 2020 and 2022, which were cancelled without payout as a result of below-threshold performance.
This table does not take into account the treatment of outstanding equity awards in 2023 in connection with the GE HealthCare spin-off. See Treatment of Outstanding Equity Awards with GE HealthCare Spin-Off on page 38 for additional details.
NAME
OF
EXECUTIVE | |
GRANT
DATE | |
AWARD
TYPE | |
NUMBER
OUTSTANDING | | |
PORTION
EXERCISABLE | | |
EXERCISE
PRICE | | EXPIRATION
DATE | |
MARKET
VALUE | | VESTING
SCHEDULE |
| Culp | |
8/18/2020 | |
Performance Shares | |
| 1,742,879 | | |
| | | |
| | | |
| |
$ | 146,035,831 | | |
100% in 2024, subject to performance |
| |
3/1/2021 | |
PSUs | |
| 256,429 | | |
| | | |
| | | |
| |
$ | 21,486,186 | | |
100% in 2024, subject to performance |
| Dybeck Happe | |
3/2/2020 | |
Options | |
| 51,090 | | |
| 25,545 | | |
$ | 89.68 | | |
3/2/2030 | |
$ | 0 | | |
100% in 2023 |
| |
3/2/2020 | |
Options | |
| 257,732 | | |
| 0 | | |
$ | 89.68 | | |
3/2/2030 | |
$ | 0 | | |
100% in 2024 |
| |
3/2/2020 | |
RSUs | |
| 5,102 | | |
| | | |
| | | |
| |
$ | 427,497 | | |
100% in 2023 |
| |
9/3/2020 | |
PSUs | |
| 205,110 | | |
| | | |
| | | |
| |
$ | 17,186,167 | | |
100% in 2025, subject to performance |
| |
3/1/2021 | |
Options | |
| 36,266 | | |
| 0 | | |
$ | 104.88 | | |
3/1/2031 | |
$ | 0 | | |
50% in 2023 and 2024 |
| |
3/1/2021 | |
PSUs | |
| 42,739 | | |
| | | |
| | | |
| |
$ | 3,581,101 | | |
100% in 2024, subject to performance |
| |
3/1/2021 | |
RSUs | |
| 10,513 | | |
| | | |
| | | |
| |
$ | 880,884 | | |
50% in 2023 and 2024 |
| |
3/1/2022 | |
Options | |
| 45,032 | | |
| 0 | | |
$ | 92.33 | | |
3/1/2032 | |
$ | 0 | | |
50% in 2024 and 2025 |
| |
3/1/2022 | |
RSUs | |
| 10,317 | | |
| | | |
| | | |
| |
$ | 864,461 | | |
50% in 2024 and 2025 |
| Arduini | |
2/23/2022 | |
PSUs | |
| 17,316 | | |
| | | |
| | | |
| |
$ | 1,450,908 | | |
100% in 2025, subject to performance |
| |
3/1/2022 | |
Options | |
| 63,044 | | |
| 0 | | |
$ | 92.33 | | |
3/1/2032 | |
$ | 0 | | |
50% in 2024 and 2025 |
| |
3/1/2022 | |
RSUs | |
| 14,443 | | |
| | | |
| | | |
| |
$ | 1,210,179 | | |
50% in 2024 and 2025 |
| Slattery | |
7/13/2020 | |
Options | |
| 67,446 | | |
| 44,964 | | |
$ | 53.60 | | |
7/13/2030 | |
$ | 2,036,195 | | |
100% in 2023 |
| |
9/2/2020 | |
Options | |
| 42,938 | | |
| 21,469 | | |
$ | 51.52 | | |
9/2/2030 | |
$ | 1,385,609 | | |
100% in 2023 |
| |
9/2/2020 | |
RSUs | |
| 5,796 | | |
| | | |
| | | |
| |
$ | 485,647 | | |
100% in 2023 |
| |
3/1/2021 | |
Options | |
| 43,520 | | |
| 0 | | |
$ | 104.88 | | |
3/1/2031 | |
$ | 0 | | |
50% in 2023 and 2024 |
| |
3/1/2021 | |
PSUs | |
| 51,286 | | |
| | | |
| | | |
| |
$ | 4,297,254 | | |
100% in 2024, subject to performance |
| |
3/1/2021 | |
RSUs | |
| 12,616 | | |
| | | |
| | | |
| |
$ | 1,057,095 | | |
50% in 2023 and 2024 |
| |
3/1/2022 | |
Options | |
| 54,038 | | |
| 0 | | |
$ | 92.33 | | |
3/1/2032 | |
$ | 0 | | |
50% in 2024 and 2025 |
| |
3/1/2022 | |
RSUs | |
| 12,380 | | |
| | | |
| | | |
| |
$ | 1,037,320 | | |
50% in 2024 and 2025 |
| Stokes | |
9/13/2013 | |
Options | |
| 16,256 | | |
| 16,256 | | |
$ | 182.88 | | |
9/13/2023 | |
$ | 0 | | |
Fully Vested |
| |
9/05/2014 | |
Options | |
| 32,512 | | |
| 32,512 | | |
$ | 200.72 | | |
9/5/2024 | |
$ | 0 | | |
Fully Vested |
| |
9/11/2015 | |
Options | |
| 15,216 | | |
| 15,216 | | |
$ | 191.92 | | |
9/11/2025 | |
$ | 0 | | |
Fully Vested |
| |
9/9/2016 | |
Options | |
| 19,508 | | |
| 19,508 | | |
$ | 231.60 | | |
9/9/2026 | |
$ | 0 | | |
Fully Vested |
| |
9/6/2017 | |
Options | |
| 26,010 | | |
| 26,010 | | |
$ | 191.68 | | |
9/6/2027 | |
$ | 0 | | |
Fully Vested |
| |
1/29/2018 | |
Options | |
| 65,024 | | |
| 65,024 | | |
$ | 125.20 | | |
1/29/2028 | |
$ | 0 | | |
Fully Vested |
| |
3/19/2019 | |
Options | |
| 36,972 | | |
| 36,972 | | |
$ | 81.52 | | |
3/19/2029 | |
$ | 83,926 | | |
Fully Vested |
| |
3/2/2020 | |
Options | |
| 35,763 | | |
| 17,881 | | |
$ | 89.68 | | |
3/2/2030 | |
$ | 0 | | |
100% in 2023 |
| |
3/2/2020 | |
RSUs | |
| 3,571 | | |
| | | |
| | | |
| |
$ | 299,214 | | |
100% in 2023 |
| |
9/3/2020 | |
RSUs | |
| 96,451 | | |
| | | |
| | | |
| |
$ | 8,081,629 | | |
50% in 2023 and 2024 |
| |
3/1/2021 | |
Options | |
| 25,386 | | |
| 0 | | |
$ | 104.88 | | |
3/1/2031 | |
$ | 0 | | |
50% in 2023 and 2024 |
| |
3/1/2021 | |
PSUs | |
| 29,918 | | |
| | | |
| | | |
| |
$ | 2,506,829 | | |
100% in 2024, subject to performance |
| |
3/1/2021 | |
RSUs | |
| 7,360 | | |
| | | |
| | | |
| |
$ | 616,694 | | |
50% in 2023 and 2024 |
| |
3/1/2022 | |
Options | |
| 34,224 | | |
| 0 | | |
$ | 92.33 | | |
3/1/2032 | |
$ | 0 | | |
50% in 2024 and 2025 |
| |
3/1/2022 | |
RSUs | |
| 7,841 | | |
| | | |
| | | |
| |
$ | 656,997 | | |
50% in 2024 and 2025 |
GE 2023 PROXY STATEMENT 45
Table of Contents
MARKET VALUE. The
market value of awards of RSUs, performance shares and PSUs is calculated by multiplying the closing price of GE stock as of
December 31, 2022 ($83.79) (the last trading day for the year) by the number of shares underlying each award. With respect to
the Leadership Performance Shares granted to Mr. Culp on August 18, 2020, and the Leadership PSUs granted to Ms. Dybeck Happe
on September 3, 2020, this value assumes satisfaction of the maximum-level payout for the awards. With respect to the 2021
PSU awards, this value assumes satisfaction of the maximum-level payout for the awards. With respect to Mr. Arduini’s
New Hire PSU Award, this value reflects target-level payout for the awards. For options, the market value is calculated by
multiplying the number of shares underlying each award by the spread between the awards exercise price and the closing price
of GE stock as of December 31, 2022.
VESTING SCHEDULE.
Options vest on the anniversary of the grant
date in the years shown in the table. See Potential Termination Payments on page 51
regarding events which may result in acceleration of unvested options.
RSUs vest on the anniversary of the grant
date in the years shown in the table. See Potential Termination Payments on page 51
regarding events which may result in acceleration of unvested RSUs.
Leadership Performance Shares and Leadership
PSUs vest on the anniversary of the grant date in the years shown in the table, solely to the extent that the performance
conditions have been achieved at a level to be paid out, as certified by the committee. See Potential
Termination Payments on page 51 for additional details regarding events which may result in acceleration of the Leadership
Performance Shares and Leadership PSUs.
Other PSUs vest at the beginning of the year
indicated when the committee certifies the level at which the performance metrics have been achieved, unless otherwise stated.
For further detail on the terms and conditions of the PSU awards, see Long-Term
Incentive Compensation on page 36. See Potential Termination Payments on page
51 regarding events which may result in earlier service-based vesting for the 2021 PSU awards and Mr. Arduini’s New Hire
PSU Award, subject to satisfaction of performance conditions.
Option Exercises and Stock
Vested Table
The following table shows the number of shares the
named executives acquired and the values they realized upon the vesting of RSU awards during 2022. During the year, none of the named
executives exercised stock options and none had PSU or performance share awards that were earned, and all of the named executives,
other than Messrs. Culp and Arduini, had RSU awards that vested. Values are shown before payment of any applicable withholding
taxes or brokerage commissions.
Executives that remain employed by GE are required
to hold the stock that they receive following the exercise of stock options (less those shares that are withheld to satisfy the
exercise price and pay taxes) for at least a year following exercise, regardless of whether their stock ownership requirements
have been met. Continuing executives also cannot sell any stock they receive as the result of the vesting of awards of RSUs or
PSUs (less those shares that are withheld to pay taxes) until they have satisfied their stock ownership requirement. See Stock
Ownership and Equity Grant Policies on page 57. The 2021 PSU grants and the 2022 RSU grants are also subject to a one-year
holding requirement following settlement, regardless of whether the executive has met his or her stock ownership requirements.
| | |
OPTION
AWARDS | | |
PSUs
& RSUs* | |
| NAME | |
NUMBER
OF SHARES
ACQUIRED ON
EXERCISE | | |
VALUE
REALIZED
ON EXERCISE | | |
NUMBER
OF SHARES
ACQUIRED ON
VESTING | | |
VALUE
REALIZED
ON VESTING | |
| Culp | |
| 0 | | |
$ | 0 | | |
| 0 | | |
$ | 0 | |
| Dybeck Happe | |
| 0 | | |
$ | 0 | | |
| 5,103 | | |
$ | 479,784 | |
| Arduini | |
| 0 | | |
$ | 0 | | |
| 0 | | |
$ | 0 | |
| Slattery | |
| 0 | | |
$ | 0 | | |
| 5,796 | | |
$ | 424,441 | |
| Stokes | |
| 0 | | |
$ | 0 | | |
| 9,717 | | |
$ | 908,389 | |
| * |
Subject to stock ownership requirement for continuing
executives; dollar amount represents pre-tax value realized on vesting. |
46 GE 2023 PROXY STATEMENT
Table of Contents
Equity Compensation Plan Information
The following table provides information regarding outstanding
equity awards and shares available for future issuance under all of GE’s equity plans. The number of shares available for
future issuance increased compared to the prior year, primarily due to the expiration of unexercised stock options that had an
exercise price above our stock price in recent years, and the forfeiture of unvested equity awards upon employee departures, each
of which were returned to the pool. This table does not take into account the treatment of outstanding equity awards or
GE’s equity plans in 2023 in connection with the GE HealthCare spin-off. See Treatment of Outstanding Equity Awards with GE HealthCare Spin-Off on page 38 for additional details.
(IN THOUSANDS EXCEPT PER SHARE
$ AMOUNTS,
AS OF 12/31/2022) | |
SHARES TO
BE ISSUED
UPON
EXERCISE OR
SETTLEMENT | |
WEIGHTED
AVERAGE
EXERCISE
PRICE | |
SHARES
AVAILABLE
FOR
FUTURE
ISSUANCE |
| Plans approved by shareholders (2007 LTIP and 2022 LTIP) | |
| |
|
| | |
| |
| Options | |
31,016 | |
|
$ | 142.68 | | |
| | (a) |
| RSUs | |
9,687 | |
|
| | (b) | |
| | (a) |
| PSUs | |
2,505 | |
|
| | (b) | |
| | (a) |
| Performance Shares | |
1,162 | |
|
| | | |
| | |
| Plans not approved by shareholders (Consultants Plan) | |
| |
|
| | | |
| | |
| Options | |
7 | |
|
$ | 182.16 | | |
| | (c) |
| RSUs | |
— | |
|
| | (b) | |
| | (c) |
| PSUs | |
— | |
|
| | (b) | |
| | (c) |
| Total | |
44,377 | |
|
$ | 142.68 | | |
| 74,106 | |
| (a) |
Total shares available for future issuance under
the 2022 LTIP amounted to 74.1 million shares as of December 31, 2022. Following approval of the 2022 LTIP, no shares remained
available for future issuance under the 2007 LTIP. |
| (b) |
Not applicable. |
| (c) |
Following approval of the 2022 LTIP, no shares remain available for
future issuance under the GE Stock-Based Compensation and Incentive Plan for Consultants, Advisors and Independent Contractors
(the Consultants Plan). |
Deferred Compensation
We offer certain deferred compensation programs and
arrangements for executives.
Bonus Deferrals
ELIGIBILITY AND DEFERRAL OPTIONS.
For 2022 and prior performance years, U.S. employees in our executive
band and above, including the named executives, could elect to defer all or a portion of their annual bonus payment and be credited
with earnings (or losses) on those deferrals under the options shown below. Participants may change their earnings option up to
four times per year. The company makes all decisions regarding the earnings options that are offered and the measures for calculating
earnings under those options.
TIME AND FORM OF PAYMENT. Participants
can elect to receive their deferred amounts upon separation from service either in a lump sum or in 10 to 20 annual installments.
Participants may not withdraw any deferred amounts prior to separating from service.
| EARNINGS OPTION |
|
TYPE
OF EARNINGS |
|
ACCOUNT
BALANCE FOR
EARNINGS CALCULATION |
|
EARNINGS AMOUNT* |
|
WHEN EARNINGS
CREDITED |
GE Stock Units
(based on GE stock value)
S&P 500 Index Units
(based on S&P 500) |
|
Dividend-equivalent income |
|
Units in account on NYSE ex-dividend date |
|
Quarterly dividend declared for GE stock or the S&P 500, as applicable
|
|
Quarterly |
Deferred Cash Units
(cash units) |
|
Interest income |
|
Daily outstanding account
balance |
|
Prior calendar months average yield for U.S. Treasury Notes and Bonds
issued with maturities of 10 years and 20 years |
|
Monthly |
| * |
None of the bonus deferral options provide for
above-market interest as defined by the SEC. |
Salary Deferrals
ELIGIBILITY. In
prior years, we periodically offered eligible employees in our executive band and above the opportunity to defer their salary
payments (the last such plan was offered in 2010 for 2011 salary). Individuals who were named executives at the time a deferred
salary program was offered were not eligible to participate. Among our named executives, only Mr. Stokes has participated in our
salary deferral programs.
INTEREST INCOME. These
programs provide accrued interest on deferred amounts (including an above-market interest rate as defined by the SEC) ranging
from 6% to 14% compounded annually.
TIME AND FORM OF PAYMENT. Our
deferred salary programs have required participants to elect to receive deferred amounts either in a lump sum or in 10 to 20 annual
installments. Participants may not withdraw any deferred amount prior to separating from service.
GE 2023 PROXY STATEMENT 47
Table of Contents
GE Restoration Plan
ELIGIBILITY. U.S.
employees who become U.S. executives on or after January 1, 2021, accrue benefits under the GE Restoration Plan, instead of any
benefits under the GE Supplementary Pension Plan (including the Executive Retirement Benefit) (see Pension
Benefits on page 49 for information regarding the GE Supplementary Pension Plan). As of December 31, 2022, only Mr. Arduini
accrued benefits under the GE Restoration Plan. (See Impact of GE HealthCare Spin-Off on Deferred Compensation Programs, below,
for information regarding the impact of the GE HealthCare Spin-Off on Mr. Arduini’s benefit under the GE Restoration Plan.)
BENEFIT FORMULA. GE
Restoration Plan participants are credited with 7% of their annual earnings, which include base salary and up to one-half of eligible
bonus payments, which exceed the IRS-prescribed limit applicable to tax-qualified plans ($305,000 for 2022).
EARNINGS OPTIONS AND VESTING. The
annual credits are notionally invested as elected by the participant in earnings options that generally mirror the investment
options available under the broad-based tax qualified GE RSP. Participants may change their election up to 12 times per quarter.
The company makes all decisions regarding the earnings options that are offered and the measures for calculating earnings under
those options. Earnings are currently credited daily. Participants generally vest in their GE Restoration Plan accounts after
three years of service.
TIME AND FORM OF PAYMENT. Vested
amounts under the GE Restoration Plan are paid in a lump sum, generally in July of the year following the year of a participant’s
separation from service.
Nonqualified Deferred Compensation
Table
The table below shows amounts credited to the named
executives’ accounts under nonqualified deferred compensation plans and plan balances as of December 31, 2022. No withdrawals
or distributions from these plans were made in 2022.
| |
| |
| |
| | AGGREGATE
EARNINGS
IN LAST FISCAL YEAR | | AGGREGATE
BALANCE
AT LAST FISCAL YEAR-END |
| NAME |
| EXECUTIVE
CONTRIBUTIONS
IN 2022 | |
COMPANY
CREDITS
IN 2022 | | DEFERRED
BONUS
PROGRAM | |
DEFERRED
SALARY
PROGRAM | | GE
RESTORATION
PLAN | | DEFERRED
BONUS
PROGRAM | | DEFERRED
SALARY
PROGRAM | | GE
RESTORATION
PLAN |
| Culp |
| |
| $0 | |
| N/A | | |
–$ | 376,275 | |
| N/A | | |
| N/A | | |
$ | 1,693,625 | | |
| N/A | | |
| N/A |
| Dybeck Happe |
| |
| $0 | |
| N/A | | |
$ | 0 | |
| N/A | | |
| N/A | | |
$ | 0 | | |
| N/A | | |
| N/A |
| Arduini |
| |
| $0 | |
$ | 74,970 | | |
$ | 0 | |
| N/A | | |
$ | 0 | | |
$ | 0 | | |
| N/A | | |
$ | 74,970 |
| Slattery |
| |
| $0 | |
| N/A | | |
$ | 0 | |
| N/A | | |
| N/A | | |
$ | 0 | | |
| N/A | | |
| N/A |
| Stokes |
| |
| $0 | |
| N/A | | |
$ | 107 | |
$ | 8,210 | | |
| N/A | | |
$ | 3,716 | | |
$ | 104,799 | | |
| N/A |
EXECUTIVE CONTRIBUTIONS IN 2022.
Amounts represent compensation deferred during 2022.
COMPANY CREDITS IN 2022. Amounts
represent accrued company credits in the GE Restoration Plan in 2022.
AGGREGATE EARNINGS IN 2022. Reflects
earnings on each type of deferred compensation listed in this section that were credited to the named executives’ deferred compensation
account during 2022. The earnings may be positive or negative, depending on the named executive’s investment choice, and
are calculated based on the account balance attributable to each earnings option as of December 31, 2022; minus that amount as
of December 31, 2021; minus any contributions during the year. See the Summary Compensation Table
on page 42 for the above-market portion of these earnings in 2022.
AGGREGATE BALANCE AT DECEMBER 31,
2022. The fiscal year-end balance reported in the table above
includes $2.1 million for deferred bonus for Mr. Culp that was previously reported in the Summary Compensation Table and $3,610 for deferred
bonus and $96,589 for deferred salary for Mr. Stokes that were previously reported in the Summary Compensation Table.
Impact of GE HealthCare Spin-Off
on Deferred Compensation Programs
In anticipation of
the spin-off of GE HealthCare, each of the deferred bonus and salary plans were split into three continuing mirror plans, effective
January 1, 2023, to be maintained by GE Aerospace, GE Vernova, and GE HealthCare, respectively. Mr. Culp and Mr. Stokes’
deferred salary and bonus plan benefits, as applicable, were allocated to plans to be maintained by GE Aerospace after the planned
GE Vernova spin-off.
Similarly, the Restoration Plan was split into two plans
effective January 1, 2023 – one maintained by GE HealthCare, and one maintained by GE. Mr. Arduini’s Restoration Plan
benefits were allocated to the GE HealthCare Restoration Plan.
We anticipate splitting the GE Restoration Plan again in anticipation of the planned spin-off of GE Vernova.
48 GE 2023 PROXY STATEMENT
Table of Contents
Pension Benefits
The company provides retirement benefits to certain
named executives based in the United States under the same GE Pension Plan and GE Supplementary Pension Plan in which other eligible
U.S. employees participate. The GE Pension Plan is a funded, tax-qualified plan. The Supplementary Pension Plan is an unfunded,
unsecured obligation of the company and is not qualified for tax purposes.
GE Pension Plan
ELIGIBILITY AND VESTING. The
GE Pension Plan is a broad-based retirement program for U.S.-based employees that has been closed to new participants since 2012
(2011 for salaried new hires). Effective January 1, 2023, the plan has been renamed the GE Aerospace Pension Plan. Employees who
began working at GE after the plan was closed, including Messrs. Culp and Slattery and Ms. Dybeck Happe, are not eligible for
this plan. Those employees who are eligible generally vest in the plan after five years of qualifying service. The plan also requires
employee contributions, which vest immediately. Effective January 1, 2021, participants with salaried benefits stopped accruing
benefits (and making contributions) under this plan and became eligible for the automatic contributions available to new hires
under the GE RSP equalling 3% of eligible pay (up to the caps imposed under IRS rules), plus two years of transition credits equalling
2% of eligible pay per year. Mr. Arduini was previously employed by GE from 1990 to 2005, and accrued benefits under the GE Pension Plan during that time.
BENEFIT FORMULA. For
Messrs. Stokes and Arduini, the plan provides benefits based primarily on a formula that takes into account their earnings for
each fiscal year (through 2020) during which they were employed by GE. Since 1989, this formula has provided an annual benefit
accrual equal to 1.45% of a named executive’s earnings for the year up to covered compensation and 1.9% of his or her earnings
for the year in excess of covered compensation. Covered compensation was $60,000 for 2020 and has varied over the years based
in part on changes in the Social Security taxable wage base. For purposes of the formula, annual earnings include base salary
and up to one-half of bonus payments, but may not exceed an IRS-prescribed limit applicable to tax-qualified plans ($285,000 for
2020). As a result, the maximum incremental annual benefit a named executive could have earned for service in 2020 was $5,145,
and in 2021 and subsequent years is $0 due to the stoppage of accruals. Over the years, we have made special one-time adjustments
to this plan that increased eligible participants pensions, but no adjustment was made in 2022.
TIME AND FORM OF PAYMENT. The
accumulated benefit an employee earns is payable after retirement on a monthly basis for life with a guaranteed minimum benefit
of five years. The normal retirement age as defined in this plan is 65; however, employees who began working at GE prior to 2005,
including Messrs. Stokes and Arduini, may retire at age 60 without any reduction in benefits. In addition, the plan provides for
Social Security supplements and spousal joint and survivor annuity options.
TAX CODE LIMITATIONS ON BENEFITS.
The tax code limits the benefits payable under the Pension Plan.
For 2022, the maximum single life annuity a named executive could have received under these limits was $245,000 per year. This
ceiling is actuarially adjusted in accordance with IRS rules to reflect employee contributions, actual forms of distribution and
actual retirement dates.
GE Supplementary Pension Plan
ELIGIBILITY AND VESTING. The
GE Supplementary Pension Plan is an unfunded and non-tax-qualified retirement program that provides retirement benefits to eligible
U.S.-based employees in the executive
band and above, including the named executives. Effective
January 1, 2023, the plan has been renamed the GE Aerospace Supplementary Pension Plan. Employees generally must remain continuously
employed until age 60 in order to vest in a benefit under the plan. For those who became U.S. executives prior to January 1, 2011,
including Mr. Stokes, the plan provides an annuity benefit above amounts available under the GE Pension Plan (a Supplementary
Pension benefit). For those who became U.S. executives on or after January 1, 2011 (and before January 1, 2021), including Messrs.
Culp and Slattery and Ms. Dybeck Happe, the plan provides a retirement benefit paid in 10 annual installments (an Executive Retirement
Benefit). Effective January 1, 2021, participants eligible for the Supplementary Pension benefit, including Mr. Stokes, stopped
accruing that benefit and began accruing an Executive Retirement Benefit for their future credited service. The Executive Retirement
Benefit was also closed to new participants and, effective January 1, 2021, new and rehired U.S. executives, including Mr. Arduini,
are instead participating in the GE Restoration Plan (described above). Mr. Arduini forfeited the Supplementary Pension he previously
accrued when he left GE in 2005, prior to satisfying the vesting conditions.
Supplementary Pension Benefit
BENEFIT
FORMULA. A named executive’s annual Supplementary Pension
benefit, when combined with certain amounts payable under the company’s other pension programs and Social Security, will
equal 1.75% of his or her earnings credited for retirement benefits multiplied by the number of years of credited service (through
2020), up to a maximum of 60% of such earnings credited for retirement benefits. The earnings credited for retirement benefits
are the named executive’s average annual compensation (base salary and bonus) for the highest 36 consecutive months out
of the last 120 months prior to retirement (or December 31, 2020, if earlier).
TIME AND FORM OF PAYMENT. The
Supplementary Pension benefit would be provided to eligible employees, including Mr. Stokes, after retirement as monthly payments
for life (with a guaranteed minimum benefit of five years), and could not be received in a lump sum. The plan also provides for
spousal joint and survivor annuity options. The normal retirement age under the plan is 65; however, executives eligible for this
benefit who began working at GE prior to 2005, including Mr. Stokes, may retire at age 60 without any reduction in benefits.
Executive Retirement Benefit
BENEFIT FORMULA. A
named executive’s Executive Retirement Benefit will equal 18% of his or her earnings credited for retirement benefits for
each year of credited service as a GE Officer (as defined in the GE Supplementary Pension Plan), plus 14% of such earnings for
each year of credited service as an Executive Director or Senior Executive Director and 10% of such earnings for each year of
credited service as an Executive. The earnings credited for retirement benefits are the named executive’s average annual
compensation (base salary and bonus) for the highest 36 consecutive months out of the last 120 months prior to retirement.
TIME AND FORM OF PAYMENT. The
Executive Retirement Benefit would be provided to Messrs. Culp and Slattery and Ms. Dybeck Happe after retirement as 10 equal
annual installment payments and could not be received in a lump sum. Mr. Stokes also began accruing an Executive Retirement Benefit
beginning January 1, 2021, when he stopped accruing additional Supplementary Pension benefits. Executives eligible for this benefit
may retire at age 60 but are subject to a reduction in benefits of up to 25% for retirement prior to age 65.
GE 2023 PROXY STATEMENT 49
Table of Contents
GE Excess Benefits Plan
ELIGIBILITY. The
GE Excess Benefits Plan is an unfunded and non-tax-qualified retirement program that is offered to employees whose benefits under
the GE Pension Plan are limited by certain tax code provisions. Beginning January 1, 2021, no further benefit accruals are permitted
for any participants under this plan. Effective January 1, 2023, the plan has been renamed the GE Aerospace Excess Benefits Plan.
BENEFIT FORMULA. Benefits
payable under this plan are equal to the amount that would be payable under the terms of the GE Pension Plan disregarding the
limitations imposed by certain tax code provisions minus the amount actually payable under the GE Pension Plan taking those limitations
into account.
TIME AND FORM OF PAYMENT. Benefits
are generally payable at the same time and in the same manner as permitted under the Pension Plan.
Pension Benefits Table
The table below shows the present value of the accumulated
benefit as of December 31, 2022, for the named executives under each plan, as calculated based upon the assumptions described
below. Although SEC rules require us to show this present value, the named executives are not entitled to receive these amounts
in a lump sum. None of the named executives received a payment under these plans in 2022.
| | |
| | |
PRESENT
VALUE OF ACCUMULATED BENEFIT | |
|
| NAME | |
NUMBER
OF YEARS
CREDITED SERVICE | | |
PENSION
PLAN | | |
SUPPLEMENTARY
PENSION PLAN | | |
EXECUTIVE
RETIREMENT
BENEFIT | | |
EXCESS
BENEFITS
PLAN | | |
PAYMENT
DURING LAST
FISCAL YEAR |
| Culp | |
| 4 | | |
| N/A | | |
| N/A | | |
$ | 2,614,456 | | |
| N/A | | |
| $0 |
| Dybeck Happe | |
| 3 | | |
| N/A | | |
| N/A | | |
$ | 499,591 | | |
| N/A | | |
| $0 |
| Arduini* | |
| 15 | | |
$ | 488,539 | | |
| N/A | | |
| N/A | | |
| $0 | | |
| $0 |
| Slattery | |
| 2 | | |
| N/A | | |
| N/A | | |
$ | 485,146 | | |
| N/A | | |
| $0 |
| Stokes** | |
| 24 | | |
$ | 846,376 | | |
$ | 8,150,048 | | |
$ | 409,652 | | |
| $0 | | |
| $0 |
| * |
Mr. Arduini’s pension
benefits reflect his accrued benefits from his prior employment with GE. Mr. Arduini’s credited service is limited to
15 years under the Pension Plan, from his prior employment with GE before future accruals stopped effective January 1, 2021.
Mr. Arduini forfeited the Supplementary Pension he previously accrued when he left GE in 2005, prior to satisfying the vesting
conditions. |
| ** |
Mr. Stokes’s credited service is limited to 24 years under
the Pension Plan and the Supplementary Pension benefit, as no future accruals of those benefits are permitted effective January
1, 2021. For purposes of the Executive Retirement Benefit, Mr. Stokes’s credited service is limited to his service on
and after January 1, 2021 (two years as of December 31, 2022). |
PRESENT VALUE OF ACCUMULATED BENEFIT.
The accumulated benefit is based on years of service and earnings
(base salary and bonus) considered by the plans for the period through December 31, 2022. It also includes the value of contributions
made by the named executives throughout their careers. For purposes of calculating the present value, we assume that the named
executives will remain in service until the age at which they may retire without any reduction in benefits. For Messrs. Culp and
Slattery and Ms. Dybeck Happe this is age 65, for Mr. Stokes, this is age 60 for the Pension Plan and the Supplementary Pension
benefit and age 65 for the Executive Retirement Benefit, and for Mr. Arduini, this is age 60 for the Pension Plan. The present
value calculation for Mr. Arduini’s Supplementary Pension does not include the amount he previously accrued and forfeited
when he left GE in 2005, prior to satisfying the vesting conditions. We also assume that benefits are payable under the available
forms of annuity consistent with the assumptions described in the Postretirement Benefit Plans notes in GE’s financial statements
in our Annual Report on Form 10-K 2022, including the statutory discount rate assumption of 5.53% for the GE Pension Plan and
5.50% for the GE Supplementary Pension Plan and GE Excess Benefits Plan. The postretirement mortality assumption used for present
value calculations for U.S. beneficiaries is the Pri-2012 Healthy Retiree mortality table projected to 2016, adjusted for GE’s
experience and factoring in projected generational improvements.
Impact of GE HealthCare Spin-Off
on Pension Plans
In anticipation of the spin-off of GE HealthCare, the
GE Pension Plan, the GE Supplementary Pension Plan and the GE Excess Benefits plans were each split into three continuing plans,
effective January 1, 2023, to be maintained by GE Aerospace, GE Vernova, and GE HealthCare, respectively. Mr. Arduini’s
pension was allocated to the Pension Plan maintained by GE HealthCare. Benefits for Mr. Culp, Ms. Dybeck Happe and Mr. Slattery
remained in the Executive Retirement Benefit portion of the Supplementary Pension Plan to be maintained by GE Aerospace after
the GE Vernova spin-off. Mr. Stokes’s benefits remained in the Pension Plan and Supplementary Pension Plan to be maintained
by GE Aerospace after the planned GE Vernova spin-off.
50 GE 2023 PROXY STATEMENT
Table of Contents
Potential Termination Payments
In this section, we describe and quantify certain compensation
that would have been payable under existing compensation plans and arrangements had a named executive’s employment terminated
on December 31, 2022. For this hypothetical calculation, we have used each named executive’s compensation and service levels
as of this date (and, where applicable, GE’s closing stock price on December 31, 2022). Since many factors (e.g., the time
of year when the event occurs, GE’s stock price and the named executive’s age) could affect the nature and amount
of benefits a named executive could potentially receive, any amounts paid or distributed upon a future termination may be different
from those shown in the tables below. The amounts described below are in addition to benefits generally available to salaried
employees, such as distributions under the GE RSP.
EMPLOYMENT AGREEMENTS FOR EMPLOYEES.
As we have hired new executive talent from outside the company,
we have entered into certain employment agreements with those individuals, generally at their request. Mr. Culp and Ms. Dybeck
Happe each entered into employment agreements and Mr. Slattery and Mr. Arduini each entered into an offer letter agreement upon
joining GE. Mr. Culp’s employment agreement and Mr. Arduini’s offer letter have subsequently been amended, as described
below. The agreements for Messrs. Culp, Slattery, and Arduini and Ms. Dybeck Happe entitle them to certain post-termination benefits,
in each case as further described below. Messrs. Arduini, Slattery and Stokes are also entitled to certain post-termination benefits
as provided in the GE US Executive Severance Plan below.
EMPLOYMENT
AGREEMENT WITH MR. CULP. We entered into an employment
agreement with Mr. Culp upon his employment with GE in 2018, which was amended in August 2020 to extend the term to August
17, 2024, or such later date as mutually agreed by the parties up to and through August 17, 2025 (such date is referred to as
the Expiration Date). His agreement provides for an annual base salary of $2.5 million, an annual bonus target at 150% of his
salary, and an annual PSU award with a grant date fair value of $15 million, and was further amended on March 15, 2022, to
reduce the 2022 annual grant of PSUs from $15 million to $5 million. His original employment agreement provided for a PSU
inducement award, which he voluntarily relinquished in August 2020. In connection
with the amendment in August 2020, he received a one-time Leadership Performance Share Award, with a target of 1,161,919
shares (as adjusted for the reverse stock split). Under his employment agreement, Mr. Culp receives other benefits given to
senior executives of the company. Mr. Culp is also subject to a non-compete agreement, which terminates 24 months after his
termination if his employment is terminated on or before the Expiration Date, and which terminates 12 months after
termination of his employment if his employment terminates between the Expiration Date and 12 months thereafter. Mr. Culp is
not subject to a non-compete agreement if his employment terminates after the date that is 18 months following the Expiration
Date. He is also subject to a non-solicitation clause covering the same periods as his non-compete agreement.
Under the terms of this agreement, if Mr. Culp is terminated
for any reason other than cause or due to a resignation without good reason, he would be entitled to the balance of his prior
year’s annual bonus (to the extent earned, but not paid). Assuming a termination date of December 31, 2022, Mr. Culp would
not have been entitled to any amount with respect to these benefits. Additionally, if Mr. Culp is terminated without cause or
voluntarily leaves for good reason, he would be entitled to cash severance equal to two times his annual salary plus target bonus,
payable in bi-weekly installments over a two-year period, subject to any delay required by tax regulations. Assuming a termination
date of December 31, 2022, Mr. Culp would have been entitled to a severance payment in the amount of $12,500,000. This severance
would be subject to his providing a release to the company and his ongoing compliance with perpetual confidentiality and non-disparagement
provisions and 24-month non-compete and non-solicitation provisions under his employment agreement.
Under the award agreement for Mr. Culp’s one-time
Leadership Performance Share Award, Mr. Culp is entitled to accelerated vesting of the performance shares as described below for
such events that occur prior to the end of the performance period:
| ● |
Retirement on August 17, 2024 (coinciding with
the end of his employment agreement): the performance shares for which performance was actually achieved during the portion
of the performance period that has already elapsed as of August 17, 2024. |
| |
|
| ● |
Death or Disability: Prior to the end of the performance period,
the greater of (i) the performance shares for which performance was actually achieved during the portion of the performance
period that has already elapsed as of the date of such termination or (ii) the performance shares for which performance was
actually achieved during the entire performance period, prorated based on length of service during the performance period. |
| |
|
| ● |
Termination without Cause or Resignation for Good Reason: the greater
of (i) the performance shares for which performance was actually achieved during the portion of the performance period that
has already elapsed as of the date of such termination or (ii) the threshold number of performance shares, prorated based
on length of service during the performance period. |
| |
|
| ● |
Change in Control: the greatest of (i) the performance shares for
which performance was actually achieved during the portion of the performance period that has elapsed prior to the date of
such change in control; (ii) the performance shares for which performance was actually achieved during the portion of the
performance period that has elapsed prior to the date of such change in control, with the relevant stock price based on the
per-share consideration received by shareholders in connection with the change in control; or (iii) the threshold number of
performance shares. The spin-off of GE HealthCare did not, and the planned spin-off of GE Vernova will not, constitute a “change
in control” for purposes of Mr. Culp’s Leadership Performance Share Award. |
See Equity Awards on
page 54 regarding the value of the equity treatment.
GE 2023 PROXY STATEMENT 51
Table of Contents
Under Mr. Culp’s employment agreement and Leadership
Performance Share Award agreement, the following terms have the meanings set forth below:
| ● |
Cause generally means (i) the willful and continued
failure of Mr. Culp to substantially perform his assigned duties for more than 30 days after the company notifies Mr. Culp
of such failure, (ii) willfully engaging in conduct that is materially injurious to the company, including violating company
policies, or (iii) the commission of a felony or crime involving dishonesty related to the company. |
| |
|
| ● |
Change in control generally means (i) the acquisition of more than
30% of the company’s stock or voting power by any person, or (ii) the reorganization, merger, consolidation, sale or
disposition of all or substantially all of the assets of the company, unless more than 50% of the surviving entity is controlled
by the shareholders immediately prior to such event, in substantially the same proportions as their ownership immediately
prior to the event. The spin-off of GE HealthCare did not, and the planned spin-off of GE Vernova will not, constitute a “change
in control” for purposes of Mr. Culp’s agreements. |
| |
|
| ● |
Disability generally means that, as a result of Mr. Culp’s
incapacity due to physical or mental illness, he is absent from his duties on a full-time basis for six consecutive months
and does not return to the performance of his duties within 30 days after written notice is provided. |
| |
|
| ● |
Good reason generally means (i) a reduction in Mr. Culp’s compensation
rights, other than the agreed reduction in base salary, commencing April 2020, (ii) failure to renominate Mr. Culp to the
Board or removing him from the position of CEO, (iii) materially reducing Mr. Culp’s duties and responsibilities, (iv)
assigning Mr. Culp duties that are materially inconsistent with his position or duties that materially impair his ability
to function as CEO, (v) relocation of the company’s headquarters by more than 50 miles, or (vi) a material breach of
Mr. Culp’s employment agreement by the company. |
EMPLOYMENT AGREEMENT WITH MS. DYBECK
HAPPE. We entered into an employment agreement with Ms. Dybeck
Happe upon her employment with GE. The agreement provides for an annual salary of $1.5 million, an annual bonus target at 125%
of her salary, and long-term equity incentive awards with a grant date fair value of $4.9 million for 2020 and with a target grant
date fair value of not less than $5.0 million for subsequent years. Upon commencement of her employment, she also received an
award of stock options with a grant date fair value of $8.0 million (257,732 options, as adjusted for the reverse stock split)
to compensate Ms. Dybeck Happe for value forfeited by her for leaving her prior employer. Ms. Dybeck Happe is subject to a non-compete
and non-solicitation agreement, which terminates 12 months after her termination (for whatever reason).
Under the terms of her employment agreement, if Ms.
Dybeck Happe is terminated without cause or voluntarily leaves for good reason at any time, subject to her providing a release
to the company, she would be entitled to accelerated vesting of her new hire stock options which would remain exercisable through
the end of the second calendar year following the year in which termination occurs. In addition, if such termination or departure
occurs on or before December 31, 2023, she would be entitled to: (i) accelerated vesting of all then-outstanding long-term incentive
awards, with the options remaining exercisable through the end of the second calendar year following the year in which termination
or departure occurs, (ii) a lump sum cash payment equal to 12 months of base salary and target bonus and (iii) if she relocates
back to Sweden within six months, reimbursement for certain relocation expenses. If such termination or departure occurs after
December 31, 2023, Ms. Dybeck Happe will be eligible to receive the standard severance package provided to similarly situated
officers of the company (which as of the signing date consisted of 12 months of base salary, but now consists of 18 months of
base salary, as described below). Assuming a termination of employment as of December 31, 2022, the cash portion of this severance
amount, excluding any relocation reimbursements, would be $3,375,000. See Equity Awards on
page 54 regarding the value of the equity treatment.
Under the award agreement for Ms. Dybeck Happe’s
one-time award of Leadership PSUs, Ms. Dybeck Happe is entitled to accelerated vesting of the PSUs on the same terms as described
above with respect to Mr. Culp’s Leadership Performance Shares.
Under Ms. Dybeck Happe’s employment agreement
and Leadership PSU award agreement, the following terms have the meanings set forth below:
| ● |
Cause generally means (i) the willful failure
of Ms. Dybeck Happe to perform her duties or to comply with a valid and legal directive of the company or the Board, (ii)
engaging in dishonesty, illegal conduct or misconduct that materially harms or is reasonably likely to materially harm the
company, (iii) conviction of, or nolo contendere plea to, a felony or of a misdemeanor involving moral turpitude, (iv) willful
or grossly negligent unauthorized disclosure of confidential information, (v) material breach of any material obligation under
the employment agreement or other agreement with the company, which harms or is reasonably likely to materially harm the company,
or (vi) willful material failure to comply with company policies (and in the case of (i), (iv), (v) and (vi), the failure
to cure such circumstances within 30 days of receiving notice). |
| |
|
| ● |
Change in control generally has the same meaning described above
with respect to Mr. Culp’s employment agreement and Leadership Performance Share Award agreement. The spin-off of GE
HealthCare did not, and the planned spin-off of GE Vernova will not, constitute a “change in control” for purposes
of Ms. Dybeck Happe’s agreements. |
| |
|
| ● |
Good reason generally means (i) a material reduction in Ms. Dybeck
Happe’s compensation, (ii) a material breach by the company of any material provision of the employment agreement or
other agreement with the company, or (iii) a material, adverse change in Ms. Dybeck Happe’s title, authority, duties,
responsibilities or reporting relationship, provided Ms. Dybeck Happe provides notice to the company and Board of the circumstances
giving rise to the good reason and the circumstances are not cured within 30 days. |
52 GE 2023 PROXY STATEMENT
Table of Contents
OFFER LETTER AGREEMENT WITH MR. SLATTERY.
We entered into an offer letter agreement with Mr. Slattery upon
the commencement of his employment with GE. The agreement provides for an annual salary of $1.25 million, an annual bonus target
at 100% of his salary, long-term equity incentive awards with a grant date fair value of $3.0 million for 2020 and with a target
grant date fair value of not less than $6.0 million for subsequent years. Upon commencement of his employment, he also received
a new hire cash bonus of $1.0 million, and an award of stock options with a grant date fair value of $1.5 million (67,446 options,
as adjusted for the reverse stock split) to compensate Mr. Slattery for value forfeited by him for leaving his prior employer.
He is subject to a non-compete and non-solicitation agreement, which terminates 12 months after his termination (for whatever
reason). Upon Mr. Slattery’s termination of employment, he will be eligible to receive the standard severance package provided
to similarly situated officers of the company (which as of the signing date consisted of 12 months of base salary, but now consists
of 18 months of base salary, as described below).
OFFER LETTER AGREEMENT WITH MR. ARDUINI.
We entered into an offer letter agreement with Mr. Arduini upon
the commencement of his employment with GE. The agreement provides for an annual salary of $1.25 million, an annual bonus target
at 125% of his salary, and long-term equity incentive awards with a target grant date fair value of $7.0 million beginning with
the annual 2022 grant (of which 50% was in PSUs, 30% was in stock options, and 20% was in RSUs). Upon the initial commencement
of his employment, he also received an award of PSUs with a grant date fair value of $5.0 million to further incentivize, and
align his compensation with, the performance of GE HealthCare. He is subject to a non-compete and non-solicitation agreement, which terminates 12 months after his termination
(for whatever reason). Upon Mr. Arduini’s termination of employment (i) by GE HealthCare without cause or by Mr. Arduini
for good reason, (ii) due to death or disability, or (iii) in connection with a change in control that does not result in him
receiving a comparable offer, he would be eligible to receive the standard severance package provided to similarly situated officers
of the company (which as of the signing date consisted of 18 months of his base salary).
Under Mr. Arduini’s offer letter agreement, the
following terms have the meanings set forth below:
| ● |
Cause generally has the same meaning as described
above with respect to Ms. Dybeck Happe’s employment agreement and Leadership Performance Share Award agreement, except
the 30-day cure period described for Ms. Dybeck Happe does not apply for Mr. Arduini. |
| |
|
| ● |
Good reason generally means (i) a reduction in Mr. Arduini’s
target compensation or any failure to pay compensation when due, (ii) a material breach by the company of any material provision
of the offer letter agreement or other agreement with the company, or (iii) a material, adverse change in Mr. Arduini’s
title, authority, duties, responsibilities or reporting relationship. |
| |
|
| ● |
Change in control generally means (i) the acquisition of at least
50% of the company’s or GE HealthCare’s stock or voting power by any person, or (ii) the sale of substantially
all of the assets of the company or GE HealthCare. The spin-off of GE HealthCare did not constitute a “change in control”
for purposes of Mr. Arduini’s offer letter. |
In connection with the GE HealthCare spin-off, Mr. Arduini’s
offer letter was subsequently amended, effective as of January 3, 2023, this amendment did not impact his compensation from GE during 2022.
US EXECUTIVE SEVERANCE PLAN. In
order to standardize the severance payments available to U.S. executives who are not otherwise subject to an employment agreement
providing a different amount, we adopted the GE US Executive Severance Plan effective January 1, 2021. Eligible executives who
experience an employer-initiated termination of employment that is not for cause, and who are not offered a suitable position,
receive between 6 to 18 months of base salary (based on their career band), which is paid in a lump sum. Outplacement services
are also provided for the same period. To receive a benefit under the plan, the executive must enter into a separation agreement
and release in a form acceptable to GE, which may also include cooperation, confidential information, non-disparagement, non-competition,
non-solicitation and other covenants. With respect to our named executives, Messrs. Slattery and Stokes are eligible to participate
under the plan at the 18-month level. Mr. Arduini was also eligible to participate in this plan at the 18-month level, prior to
the spin-off of GE HealthCare. Assuming a termination date of December 31, 2022, the amount each eligible named executive would be entitled to receive under
the US Executive Severance Plan is: Arduini ($1,875,000), Slattery ($1,875,000) and Stokes ($2,100,000).
Under the plan, the following terms have the meanings
set forth below:
| ● |
Cause generally means: (i) breach of any confidentiality,
non-solicitation, non-competition or other material provision of an agreement with the company, (ii) conduct that has the
potential to cause material harm to the company, (iii) an act of dishonesty, fraud, embezzlement or theft, (iv) conviction
of, or plea of guilty or no contest to, a felony or crime involving moral turpitude, or (v) failure to comply with the company’s
policies and procedures. |
| |
|
| ● |
Suitable position generally means a position providing at least 80%
of the executive’s base salary and annual incentive award opportunity. If the position is with the company, rather than
a successor employer in a business disposition or other third-party in an outsourcing arrangement, the position must also
be within 50 miles of the executive’s job location and in the same career band. |
GE 2023 PROXY STATEMENT 53
Table of Contents
SHAREHOLDER APPROVAL OF SEVERANCE AND DEATH BENEFITS.
If the Board were to agree to pay certain severance benefits or
unearned death benefits to a named executive, we would seek shareholder approval. For severance benefits, this policy applies
only when the executive’s employment had been terminated before retirement for performance reasons and the value of the
proposed severance benefits exceeded 2.99 times the sum of his or her base salary and bonus. For this purpose, severance benefits
would not include: (1) any payments based on accrued pension benefits; (2) any payments of salary or bonus amounts that had accrued
at the time of termination; (3) any RSUs paid to a named executive who was terminated within two years prior to age 60; (4) any
stock-based incentive awards that had vested or would otherwise have vested within two years following the named executive’s
termination; and (5) any retiree health, life or other welfare benefits. See the Boards Governance Principles (see Helpful
Resources on page 77) for the full policies.
Equity Awards
The following table shows the intrinsic value of equity awards that would
have vested or become exercisable if the named executive had died, become disabled, retired or separated from the company as of
December 31, 2022. Intrinsic value is based upon the company’s stock price (minus the exercise price in the case of stock
options). Amounts shown assume the achievement of all applicable performance objectives at the target level. Our named
executives generally are not entitled to benefits if they leave voluntarily (without good reason) or are terminated for
cause (other than benefits already accrued) unless they satisfy the conditions for retirement eligibility.
POTENTIAL TERMINATION PAYMENTS TABLE (EQUITY
BENEFITS)
| | |
UPON
DEATH | | |
UPON
DISABILITY | | |
UPON
RETIREMENT | |
UPON
INVOLUNTARY
TERMINATION* | | |
UPON
CHANGE OF
CONTROL** | |
| NAME | |
STOCK
OPTIONS | | |
RSUs/PSUs/
PERFORMANCE
AWARDS | | |
STOCK
OPTIONS | | |
RSUs/PSUs/
PERFORMANCE
AWARDS | | |
STOCK
OPTIONS | |
RSUs/PSUs/
PERFORMANCE
AWARDS | |
STOCK
OPTIONS | | |
RSUs/PSUs/
PERFORMANCE
AWARDS | | |
STOCK
OPTIONS | | |
RSUs/PSUs/
PERFORMANCE
AWARDS | |
| Culp | |
| N/A | | |
$ | 88,475,369 | | |
| N/A | | |
$ | 88,475,369 | | |
N/A | |
N/A | |
| N/A | | |
$ | 57,680,785 | | |
| N/A | | |
$ | 97,357,193 | |
| Dybeck Happe | |
$ | 0 | | |
$ | 14,227,458 | | |
$ | 0 | | |
$ | 14,227,458 | | |
N/A | |
N/A | |
$ | 0 | | |
$ | 5,330,049 | | |
$ | 0 | | |
$ | 11,457,445 | |
| Arduini | |
$ | 0 | | |
$ | 8,251,555 | | |
$ | 0 | | |
$ | 8,251,555 | | |
N/A | |
N/A | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | |
| Slattery | |
$ | 1,371,536 | | |
$ | 14,689,979 | | |
$ | 1,371,536 | | |
$ | 14,689,979 | | |
N/A | |
N/A | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | |
| Stokes | |
$ | 0 | | |
$ | 14,503,798 | | |
$ | 0 | | |
$ | 14,503,798 | | |
N/A | |
N/A | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | |
| * |
Addresses separation without cause or where the executive leaves for good reason, as defined under
the applicable employment agreement. Benefits are not otherwise payable in the event of voluntary separation. |
| ** |
In each case as defined under Mr. Culp’s employment agreement and Ms. Dybeck Happe’s Leadership PSU award
agreement, as detailed above. |
DEATH/DISABILITY. Unvested
options, RSUs and PSUs/performance shares would generally vest, depending on the award terms. Vested options would generally remain
exercisable until their expiration date, and PSUs (other than Mr. Arduini’s New Hire PSU Award) and performance shares
would remain subject to the achievement of the performance objectives. Mr. Arduini’s New Hire PSU Award would vest based
on the average of target performance for uncompleted years of the performance period and actual performance for any completed
years of the performance period. For these purposes, disability generally means the executive being unable to perform his or her
job.
RETIREMENT. Unvested
options, RSUs and PSUs/performance shares (other than Mr. Arduini’s New Hire PSU Award) held for at least one year would
generally vest, depending on the award terms. Vested options would generally remain exercisable until their expiration date, and
PSUs and performance shares would remain subject to the achievement of the performance objectives. For these purposes, retirement
generally means reaching the applicable retirement age, typically age 60, and completing 5 years of service.
INVOLUNTARY TERMINATION. Under
the terms of the Leadership Performance Share and Leadership PSU Award Agreements with Mr. Culp and Ms. Dybeck Happe, respectively,
and Ms. Dybeck Happe’s
employment agreement, amounts shown reflect the value of their Leadership
Awards if they had been terminated without cause or left for good reason. Under the terms of Mr. Arduini’s New Hire PSU
Award, if a termination without cause or resignation for good reason occurs following December 31, 2023 but prior to the vesting
date, the New Hire PSU Award would vest based on the average of target performance for the uncompleted years for the performance
period and actual performance for any completed years of the performance period. None of the other named executives were entitled
to any potential payments upon separation from the company, except for vesting of certain equity awards in the event that the
executive transfers to a successor employer in a business disposition.
CHANGE OF CONTROL. Under
the terms of the Leadership Performance Share and Leadership PSU Award Agreements with each of Mr. Culp and Ms. Dybeck Happe,
they would have been eligible for the accelerated vesting of their Leadership Awards in the event of a change of control. The
spin-off of GE HealthCare did not constitute a change in control. For additional detail, see Employment
Agreement with Mr. Culp on page 51 and Employment Agreement with Ms. Dybeck Happe on
page 52. None of our other named executives are entitled to the acceleration or payment of benefits in the event of a change
of control.
54 GE
2023 PROXY STATEMENT
Table of Contents
Pension Benefits
Pension Benefits on
page 49 describes the general terms of each pension plan in which the named executives participate, the years of credited service
and the present value of their accumulated pension benefit (assuming payment begins at age 60 or 65, as noted above). The table
below shows the pension benefits that would have become payable if the named executives had died, become disabled, voluntarily
terminated or retired as of December 31, 2022.
In the event of death before retirement, for Messrs. Culp, Slattery
and Stokes and Ms. Dybeck Happe, each of their respective beneficiaries may receive the following benefit:
| ● |
Executive Retirement Benefit. 10 equal
annual installments of his or her accrued benefit, reduced by up to 25% for commencement before attaining age 65. |
For Messrs. Stokes and Arduini, their surviving spouse may receive the
following pension benefits:
| ● |
Pension Plan. Because Messrs. Stokes and
Arduini (accounting for Mr. Arduini’s prior service) have more than 15 years of service, either an annuity, as if they
had retired and elected the spousal 50% joint and survivor annuity option prior to death, or an immediate lump-sum payment
based on five years of pension distributions, in each case based upon the accrued benefit. (See Impact of GE HealthCare Spin-Off
on Pension Plans for information regarding the impact of the GE HealthCare Spin-Off on Mr. Arduini’s benefit under the
Pension Plan.) |
For Mr. Stokes, his surviving spouse may receive the following pension
benefits:
| ● |
Supplementary Pension Benefit. Because
Mr. Stokes has more than 15 years of service, a lump-sum payment based on whichever of the following has a higher value: (1)
the 50% survivor annuity that the spouse would have received under this plan if Mr. Stokes had retired and elected the spousal
50% joint and survivor annuity option prior to death, or (2) five years of pension distributions under this plan. |
The amounts payable depend on several factors, including employee contributions
and the ages of the named executive and surviving spouse.
In the event a disability occurs before retirement:
For Messrs. Culp and Slattery and Ms. Dybeck Happe, they may receive 10
equal annual installments of their accrued Executive Retirement Benefit, reduced by up to 25% for commencement before attaining
age 65, but only once they have attained 15 years of service.
For Mr. Arduini, having more than 15 years of service (accounting for
his prior service), he could have received an annuity payment of accrued GE Pension benefits.
Mr. Stokes, having more than 15 years of service, may receive an annuity
payment of accrued GE Pension and Supplementary Pension benefits, and 10 equal annual installments of his Executive Retirement
Benefit.
POTENTIAL TERMINATION PAYMENTS TABLE (PENSION
BENEFITS)
| NAME | |
LUMP
SUM
UPON DEATH | | |
ANNUAL
BENEFIT*
UPON
DEATH | | |
ANNUAL
BENEFIT*
UPON
DISABILITY | | |
ANNUAL
BENEFIT*
UPON
VOLUNTARY
TERMINATION | | |
ANNUAL
BENEFIT*
UPON
RETIREMENT |
| Culp | |
| N/A | | |
$ | 331,018 | | |
| N/A | | |
$ | 0 | | |
N/A |
| Dybeck
Happe | |
| N/A | | |
$ | 104,273 | | |
| N/A | | |
$ | 0 | | |
N/A |
| Arduini | |
| N/A | | |
$ | 17,938 | | |
| 38,709 | | |
$ | 35,610 | | |
N/A |
| Slattery | |
| N/A | | |
$ | 82,471 | | |
| N/A | | |
$ | 0 | | |
N/A |
| Stokes | |
$ | 6,501,541 | | |
$ | 130,432 | | |
$ | 1,116,170 | | |
$ | 90,676 | | |
N/A |
| * |
Annual amounts shown for Messrs. Culp and Slattery and Ms. Dybeck Happe are payable in 10 installments
as the Executive Retirement Benefit. Annual amounts shown upon death or disability for Mr. Stokes are annuity payments applicable
to GE Pension Plan and Supplementary Pension participants, except that $81,047 of such amount is payable in 10 installments
as the Executive Retirement Benefit. Annual amounts shown upon death or disability for Mr. Arduini are annuity payments applicable
to GE Pension Plan participants. Annual amounts shown upon voluntary termination for Messrs. Stokes and Arduini are annuity
payments applicable to GE Pension Plan participants. |
LUMP SUM UPON DEATH. Lump
sum payable to the surviving spouse after death. A lump sum is not available to the surviving spouse of Messrs. Culp and Slattery
and Ms. Dybeck Happe under the terms of the Executive Retirement Benefit. For Mr. Stokes, the lump sum represents the Supplementary
Pension benefit payable in the event of death. There is no lump sum for Mr. Arduini since he is not eligible for the Supplementary
Pension.
ANNUAL BENEFITS UPON DEATH. For
Messrs. Culp and Slattery and Ms. Dybeck Happe, 10 annual installment payments as the Executive Retirement Benefit. For Mr. Arduini,
the annual amount is payable for the life of the surviving spouse as the GE Pension Plan benefit. For Mr. Stokes, the annual amount
is payable for the life of the surviving spouse as the GE Pension Plan benefit, except that $81,047 of such amount is payable
in 10 annual installments as the Executive Retirement Benefit.
ANNUAL BENEFITS UPON DISABILITY. Messrs.
Culp and Slattery, and Ms. Dybeck Happe would not be eligible for disability benefits because they do not yet have 15 years of
service. For Mr. Arduini, the annual amount includes the 50% joint and survivor annuity as the GE Pension Plan benefits. For Mr.
Stokes, the annual amount includes the 50% joint and survivor annuity as the GE Pension Plan and Supplementary Pension benefits,
except that $81,047 of such amount is payable in 10 annual installment payments as the Executive Retirement Benefit, in each case
commencing after disability.
ANNUAL BENEFITS UPON VOLUNTARY TERMINATION. For Messrs. Stokes and Arduini, the annual amount includes the 50% joint and
survivor annuity payable at age 60 under the GE Pension Plan; this does not include any payments under the GE Supplementary Pension
Plan (either the Supplementary Pension benefit or the Executive Retirement Benefit) because they are forfeited upon voluntary
termination before age 60.
ANNUAL BENEFITS UPON RETIREMENT. None
of the named executives are eligible to retire.
GE 2023 PROXY STATEMENT
55
Table of Contents
Deferred Compensation
The named executives are entitled to receive the vested amount in their
deferred compensation accounts if their employment terminates. Between the termination event and the date that distributions are
made, these accounts would continue to increase or decrease in value based on changes in the value of the named executive’s
earnings option. Therefore, amounts received by the named executives would differ from those shown in the Nonqualified Deferred
Compensation Table on page 48. See Deferred Compensation on page 47 for information
on the available distribution types under each plan.
Life Insurance Benefits
For a description of the
supplemental life insurance plans that provide coverage to the named executives, see Life
Insurance Premiums on page 43. Messrs. Culp, Slattery, and Arduini, and Ms. Dybeck Happe do not qualify for these
supplemental life insurance plans, as they were discontinued for executives joining the company (or being promoted to the
relevant band of seniority) on or after January 1, 2018. If the named executives had died on December 31, 2022, the survivors
of the named executives would have received the following under these arrangements.
| NAME | |
DEATH
BENEFIT | |
| Culp | |
$ | 0 | |
| Dybeck Happe | |
$ | 0 | |
| Arduini | |
$ | 0 | |
| Slattery | |
$ | 0 | |
| Stokes | |
$ | 9,883,378 | |
The company would continue to pay the premiums in the event of a disability
for Executive Life, until the maturity date, and under Leadership Life, until the later of age 65 or 10 years in the plan.
Other Executive Compensation Policies &
Practices
Roles and Responsibilities in Succession Planning
and Compensation
MANAGEMENT DEVELOPMENT & COMPENSATION COMMITTEE.
The committee has primary responsibility for helping the Board develop
and evaluate potential candidates for executive positions and for overseeing the development of executive succession plans. As
part of this responsibility, the committee oversees the compensation program for the CEO and the other named executives.
MANAGEMENT. Our
CEO and our Chief Human Resources Officer help the committee administer our executive compensation program. The Chief Human Resources
Officer also advises the committee on matters such as past compensation, total annual compensation, potential accrued benefits,
GE compensation practices and guidelines, company performance, industry compensation practices and competitive market information.
Our Policies on Compensation Consultants
STRATEGIC USE OF COMPENSATION CONSULTANTS. From
time to time, the committee and the company’s human resources function have sought the views of Semler Brossy Consulting
Group, LLC (Semler Brossy) about market intelligence on compensation trends and on particular compensation programs designed by
our human resources function. For 2022, the Management Development & Compensation Committee and the company’s human
resources function consulted with Semler Brossy on market practices relating to senior executive compensation. In addition, the
Governance Committee and the company’s legal function consulted with Semler Brossy on market practices relating to compensation
and benefits for non-employee directors.
COMPENSATION CONSULTANT
INDEPENDENCE POLICY. Any compensation consultant that advises
the Board on executive or director compensation will not at the same time advise the company on any other human resources
matter, and the committee has determined that Semler Brossy’s work with the committee, the Governance Committee and the
company’s human resources and legal functions does not raise any conflict of interest.
Clawbacks and Other Remedies for Potential Misconduct
CLAWBACKS. The
Board may seek reimbursement of any portion of incentive compensation in connection with an executive officer’s fraudulent
or illegal misconduct, or if an executive officer’s conduct resulted in a material inaccuracy in the company’s financial
statements or in performance metrics affecting the executive officer’s compensation. If the Board determines that an executive
officer engaged in fraudulent or illegal misconduct that resulted in a material inaccuracy in the company’s financial statements
or in performance metrics affecting the executive officer’s compensation, the Board will seek reimbursement of any portion
of incentive compensation paid or awarded to the executive that is greater than would have been paid or awarded if calculated
based on the accurate financial statements or performance metric. We intend to amend our clawback policy or adopt a new clawback policy that is consistent with the NYSE listing standards adopted
under Exchange Act Rule 10D-1. For more information, see our Governance
Principles (see Helpful Resources on page 77).
OTHER REMEDIES. In
cases of detrimental misconduct by an executive officer, the Board may also take a range of other actions to remedy the misconduct,
prevent its recurrence, and discipline the individual as appropriate, including terminating the individual’s employment.
These remedies would be in addition to, and not in lieu of, any actions imposed by law enforcement agencies, regulators or other
authorities.
Compensation Risk Assessment
The committee oversees an annual risk assessment of the company’s
executive compensation policies and practices. For 2022, the assessment was led by management, with review and input from the company’s independent compensation consultant. Based on results of the assessment, the committee concluded that the company’s executive
compensation design does not encourage excessive risk taking.
56 GE
2023 PROXY STATEMENT
Table of Contents
Stock Ownership and Equity Grant Policies
STOCK OWNERSHIP REQUIREMENTS. We
require our named executives to own significant amounts of GE stock as shown below. The required amounts are set at multiples
of base salary. Executives have five years from the time they are first hired or promoted into a position at the senior vice president
level or above to meet the requirement. All named executives are in compliance with our stock ownership requirements. For details
on these requirements, see our Governance Principles (see Helpful
Resources on page 77). The named executive’s ownership is shown in the Beneficial Ownership Table on page 25.
| |
STOCK OWNERSHIP REQUIREMENTS
(MULTIPLES OF BASE SALARY) |
| |
| 10X
for CEO |
|
4X
for senior vice presidents |
| |
|
|
HOLDING PERIOD REQUIREMENTS. Our
executive officers must hold the net shares of GE stock they received from PSUs and RSUs until satisfaction of the stock ownership
requirements. In addition, the net shares of GE stock received through all stock option exercises must be held for one year, and
the net shares of GE stock received upon settlement of PSUs granted in 2020 and thereafter, and of RSUs granted in 2022 and thereafter,
must also be held for one year.
NO HEDGING. We
believe our executive officers and directors should not speculate or hedge their interests in our stock. We therefore prohibit
them from entering into any derivative transactions in GE stock, including any short sale, forward, equity swap, option or collar
that is based on GE’s stock price. These restrictions are contained in our Governance Principles
(see Helpful Resources on page 77). These restrictions are not applicable to other GE employees.
NO PLEDGING. We
prohibit executive officers and directors from pledging GE stock. These restrictions are contained in our Governance
Principles (see Helpful Resources on page 77).
NO OPTION BACKDATING OR SPRING-LOADING. The
exercise price of each stock option is based on the closing price of GE stock on the grant date.
NO OPTION REPRICING. We
prohibit the repricing of stock options. This includes amending outstanding options to lower their exercise price, substituting
new awards with a lower exercise price or executing a cash buyout.
NO UNEARNED DIVIDEND EQUIVALENTS. Performance
shares, PSUs and RSUs granted to our named executives do not pay dividends or dividend equivalents on shares that are not yet
owned. Instead, dividends and dividend equivalents are accrued during the vesting or performance period and paid out only on shares
actually received. For more information, see our Governance Principles (see Helpful
Resources on page 77).
Tax Deductibility of Compensation
The Internal Revenue Code generally imposes a $1 million limit on the
amount that a public company may deduct for compensation paid to the company’s applicable named executives, subject to an
exception for qualifying performance-based compensation provided pursuant to a binding written contract in effect as of November
2, 2017. We generally expect that compensation paid to our applicable named executives in excess of $1 million will not be deductible.
Compensation Committee Interlocks and Insider
Participation
During 2022, no member of the Management Development & Compensation
Committee had a relationship that requires disclosure as a compensation committee interlock.
Management Development & Compensation Committee
Report
The Management Development & Compensation Committee has reviewed
the Compensation Discussion & Analysis (pages 26 through 57, which, pursuant to SEC rules, does not include the CEO
Pay Ratio and Pay Versus Performance discussions) and discussed that analysis
with management. Based on its review and discussions with management, the committee recommended to the Board that the
Compensation Discussion & Analysis be included in the company’s annual report on Form 10-K for 2022 and this proxy
statement. This report is provided by the following independent directors, who comprise the committee:
| Stephen Angel (Chair) |
Francisco D’Souza |
| Sébastien Bazin |
Edward Garden |
GE 2023 PROXY STATEMENT
57
Table of Contents
CEO Pay Ratio
HOW WE IDENTIFIED THE MEDIAN EMPLOYEE. After
determining that, as of December 31, 2022, there had been no changes to our employee population or employee compensation arrangements
that we believe would reasonably be expected to result in a significant change to our pay ratio disclosure, we determined to use
the same median employee identified for purposes of our 2021 pay ratio disclosure. To identify the median employee, we identified
our total employee population as of December 31, 2021, and, in accordance with SEC rules, excluded the CEO and employees from
certain countries representing in aggregate less than 5% of our employee base*, to arrive at the initial median employee. We then
used annualized salary data converted to U.S. dollars, including target bonus award payments to identify the 20 employees with
salaries directly above and below the initial median employee. Once we identified this narrowed pool, we re-ranked the consideration
pool of employees to find the median employee. We then calculated the median employee’s total compensation in accordance
with SEC rules to use as the basis for the pay ratio. Foreign exchange rates were translated to the U.S. dollar equivalent based
on rates as of December 31, 2021.
RATIO OF CEO PAY TO MEDIAN EMPLOYEE PAY. Our
median employee earned $49,947 in total compensation for 2022. The total 2022 compensation reported for Mr. Culp as reported under
SEC Total in the Summary Compensation Table on page 42
was $8,198,024. Based upon total compensation for 2022, we calculated that our ratio of CEO to median employee pay was 164 to
1. Our median employee is employed in France in our Power business.
| * |
These 76 countries and their headcounts as of the calculation
date were: Algeria (321), Angola (23), Argentina (310), Austria (444), Azerbaijan (4), Bahrain (45), Bangladesh (56), Belgium
(215), Benin (8), Bermuda (2), Bulgaria (17), Cambodia (3), Cameroon (7), Chad (1), Chile (190), Colombia (274), Côte
d’Ivoire (49), Croatia (515), Czechia (536), Denmark (647), Ecuador (2), Egypt (420), Estonia (12), Ethiopia (9), Georgia
(2), Ghana (33), Greece (179), Hong Kong (123), Iraq (101), Jordan (28), Kazakhstan (56), Kenya (96), Kosovo (7), Kuwait (70),
Kyrgyzstan (3), Latvia (7), Lebanon (39), Libya (12), Lithuania (10), Luxembourg (4), Mali (1), Mauritius (3), Mongolia (3),
Montenegro (5), Morocco (94), Mozambique (3), Myanmar (10), Nepal (5), Netherlands (625), New Zealand (53), Nigeria (159),
Oman (16), Pakistan (152), Panama (19), Peru (95), Philippines (105), Portugal (127), Qatar (112), Romania (619), Senegal
(4), Serbia (36), Slovakia (38), South Africa (473), Sri Lanka (10), Sweden (583), Tajikistan (8), Tanzania (1), Thailand
(275), Trinidad and Tobago (3), Tunisia (77), Turkmenistan (10), Ukraine (41), Uruguay (1), Uzbekistan (3), Venezuela (1),
and Zambia (1), for a total of 8,651 employees. As of December 31, 2021, using the methodology required by the rule governing
this disclosure, GE had approximately 58,000 U.S. employees and approximately 123,000 employees in other countries, for a
total of approximately 181,000 employees globally factored into the sample before the country exclusions listed above. |
Pay
Versus Performance
In accordance with Section 953(a)
of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, we are providing the following
information about the relationships between compensation actually paid to named executives and company performance. In this section,
we refer to “compensation actually paid” and other terms used in the applicable SEC rules. For information concerning
the company’s compensation philosophy and how the company aligns executive compensation with its financial and operational
performance, refer to the Overview of Our Incentive Compensation Program
section of this proxy statement. We refer collectively to awards of RSUs, PSUs, performance shares and stock options as
equity awards in this Pay versus Performance section.
| | | | | | | | | AVERAGE SUMMARY | | | AVERAGE | | | VALUE OF INITIAL FIXED $100
INVESTMENT BASED ON: | | | | | | |
| YEAR (a)(1) | | SUMMARY
COMPENSATION
TABLE FOR PEO
(b)(1) | | | COMPENSATION
ACTUALLY PAID
TO PEO (c)(1)(2) | | | COMPENSATION
TABLE TOTAL FOR
NON-PEO NAMED
EXECUTIVES (d)(1) | | | COMPENSATION
ACTUALLY PAID TO
NON-PEO NAMED
EXECUTIVES (e)(1)(2) | | | TOTAL
SHAREHOLDER
RETURN (f) | | | PEER GROUP
TOTAL
SHAREHOLDER
RETURN (g)(6) | | | NET
INCOME
($M) (h) | | | COMPANY-SELECTED
PERFORMANCE
MEASURE: FREE
CASH FLOW* ($M) (i)(7) | |
| 2022 | | | $8,198,024 | | | | $(23,798,500 | ) | | | $8,969,318 | | | | $3,579,820 | (3) | | | $95 | | | | $127 | | | | $292 | | | | $4,758 | |
| 2021 | | | $22,663,449 | | | | $21,302,944 | (4) | | | $8,584,656 | | | | $7,655,599 | (4) | | | $107 | | | | $134 | | | | $(6,591 | ) | | | $1,889 | |
| 2020 | | | $73,192,032 | | | | $115,891,919 | (5) | | | $14,595,432 | | | | $15,948,471 | (5) | | | $97 | | | | $111 | | | | $5,546 | | | | $635 | |
58 GE
2023 PROXY STATEMENT
Table of Contents
GE 2023
PROXY STATEMENT 59
Table of Contents
RELATIONSHIPS
BETWEEN COMPENSATION ACTUALLY PAID AND FINANCIAL PERFORMANCE MEASURES
In accordance with Item 402(v) of Regulation S-K, the
company is providing the following descriptions of the relationships between information presented in the Pay versus Performance
table. The calculation of compensation actually paid in each of the years shown reflects required adjustments
to equity award valuations under SEC rules, which were in turn impacted by our stock price performance and cancellation of performance-based
awards that did not meet their established thresholds. When the committee selected performance measures in support of the design
of our 2022 executive compensation programs, it focused on factors that it believes will further the company’s and business
units’ goals for the year, align with GE’s long-term strategic objectives and contribute to the creation of long-term
shareholder value, including our ability to generate free cash flow, organic revenue growth, profit or adjusted profit (as applicable)
and organic margin expansion, as well as our adjusted earnings per share and operational measures such as safety performance. For more information about these factors
and decisions that informed the 2022 compensation of our named executive officers, see the Compensation
Discussion & Analysis section of this proxy statement.
The chart below depicts compensation actually paid and the cumulative TSR of GE and the S&P 500 Industrials
Index for the three years shown. A significant portion of our executive compensation program is comprised of equity awards,
and compensation actually paid for such years was most strongly affected by our stock price performance, as reflected in the equity
award valuations required by SEC rules. In addition, our TSR performance being below that of the peer group, the S&P 500 Industrials
Index, adversely affected our named executives’ equity award compensation in two of the years shown. Under those awards’ respective
terms, our TSR performance resulted in the cancellation of the 2020 PSU awards, which had no payout due to three-year TSR performance,
and a downward adjustment to the value of the 2021 PSU awards, for which three-year TSR performance is a modifier.
COMPENSATION ACTUALLY PAID VS. TOTAL SHAREHOLDER RETURN (TSR)
Net income is not a financial
performance measure that we use in the compensation program design for our named executives. Accordingly, there is not a
direct relationship between the compensation actually paid to our named executives and net income. In addition, a meaningful
portion of incentive compensation for our named executives who are leaders of business units is tied to the financial
performance of their respective individual business units, rather than enterprise-wide performance measures such as net
income.
A significant portion of our compensation
program is linked to our free cash flow performance for the total company and the business units, as described in the Compensation
Discussion & Analysis section of this proxy statement. While our free cash flow performance improved sequentially in each of the three years shown, there is not a direct relationship with compensation actually paid because compensation actually paid more strongly reflects
the required adjustments for equity award valuations under SEC rules.
MOST IMPORTANT FINANCIAL
PERFORMANCE MEASURES
The financial performance measures to the right represent
the most important financial performance measures that were used to determine the compensation actually paid to our named executives
in 2022.
| Most Important Financial Performance Measures |
| Free Cash Flow* |
| Organic Revenue Growth* |
| Profit or Adjusted Profit* (as applicable) |
| Organic Margin Expansion* |
| Adjusted Earnings per Share* |
60 GE 2023 PROXY STATEMENT
Table of Contents
|
MANAGEMENT
PROPOSAL
NO. 3
Advisory Vote on the Frequency of Future Advisory Votes to Approve Our Named Executives’ Compensation
What are
you voting on?
We are asking
shareholders to vote, on a non-binding basis, to indicate their preference on the frequency of future say-on-pay votes.
Your Board recommends holding future
say-on-pay votes every ONE YEAR
Why the Board recommends a vote for
holding future say-on-pay votes annually.
We have engaged shareholders on this
issue and, based on their feedback, we believe that a significant portion of our investors would prefer an annual opportunity
to vote to approve our named executives’ compensation.
|
|
Say-On-Frequency Vote
Pursuant to Section 14A of the Exchange Act, we are
asking shareholders to recommend, in an advisory vote, whether future shareholder advisory approval of our named executives’
compensation should occur every one, two or three years.
At our 2017 Annual Meeting, our shareholders voted
to hold say-on-pay votes annually and our Board adopted this practice. Under SEC rules, we are required to conduct this advisory
vote again in 2023 (and the next such vote will occur in 2029). After careful consideration, the Board recommends that future say-on-pay votes continue to be held annually.
Our Board believes that holding a vote every year is the most appropriate option because it would continue to enable our shareholders
to provide us with timely input regarding the compensation of named executives.
Shareholders are not voting to approve or disapprove
the Board’s recommendation. Instead, shareholders may indicate their preference regarding the frequency of future say-on-pay
votes by selecting one year, two years, or three years or abstaining.
Although the vote is non-binding, the Management Development &
Compensation Committee and the Board value your opinion and will consider the outcome of the vote in establishing the frequency
with which future say-on-pay votes will be held.
|
GE 2023
PROXY STATEMENT 61
Table of Contents
MANAGEMENT
PROPOSAL
NO. 4
Ratification of Deloitte
as Independent Auditor for 2023
We are asking shareholders to
ratify the selection of Deloitte as our independent auditor for 2023.
Why are we asking you to vote?
Although ratification is not
required by our by-laws or otherwise, the Board is submitting this proposal as a matter of good corporate practice.
Your Board recommends a vote
for ratification of the Audit Committee’s selection of Deloitte as our independent auditor for 2023 |
|
Independent
Auditor
Review and Engagement
The Audit Committee is directly responsible
for the appointment, compensation (including advance approval of the audit fee), retention and oversight of the independent
registered public accounting firm that audits our financial statements and our internal control over financial reporting.
In accordance with its charter, the Audit Committee has selected the firm of Deloitte & Touche LLP (Deloitte),
an independent registered public accounting firm, to be our auditor for the year 2023. The Audit Committee believes that
this selection is in the best interests of GE and its shareholders and, therefore, recommends to shareholders that they
ratify that appointment. Deloitte has served as our independent auditor since 2021.
A representative of Deloitte will be present
at the annual meeting, will have the opportunity to make a statement if they desire to do so and will be available to
respond to shareholder questions.
Audit Committee
Report
ROLES AND RESPONSIBILITIES.
The Audit Committee reviews GE’s
financial reporting process on behalf of the Board. Management has the primary responsibility for establishing and maintaining
adequate internal financial controls, for preparing the financial statements and for the public reporting process. Our
company’s independent auditor, Deloitte, is responsible for expressing opinions on the conformity of the company’s
audited financial statements, in all material respects, with generally accepted accounting principles and on the company’s
internal control over financial reporting.
REQUIRED DISCLOSURES AND
DISCUSSIONS. The Audit Committee has
reviewed and discussed with management and Deloitte the audited financial statements for the year ended December 31, 2022,
and Deloitte’s evaluation of the company’s internal control over financial reporting. The Audit Committee
has also discussed with Deloitte the matters that are required to be discussed under applicable PCAOB and SEC requirements.
Deloitte has provided to the Audit Committee the written disclosures and the PCAOB-required letter regarding its communications
with the Audit Committee concerning independence, and the committee has discussed with Deloitte that firm’s independence.
The Audit Committee has concluded that Deloitte’s provision of audit and non-audit services to GE and its affiliates
during 2022 was compatible with Deloitte’s independence.
AUDIT COMMITTEE RECOMMENDS
INCLUDING THE FINANCIAL STATEMENTS IN THE ANNUAL REPORT. Based
on the review and discussions referred to above, the Audit Committee recommended to the Board that the audited financial
statements for the year ended December 31, 2022, be included in our annual report on Form 10-K for 2022 for filing with
the SEC. This report is provided by the following independent directors, who comprise the committee: |
|
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| |
|
|
|
|
| |
|
|
 |
|
 |
|
 |
|
 |
|
 |
|
| |
|
|
LESLIE
SEIDMAN |
|
FRANCISCO
D’SOUZA |
|
ISABELLA
GOREN |
|
CATHERINE
LESJAK |
|
PAULA
ROSPUT
REYNOLDS |
|
| |
|
|
(Chair) |
|
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62 GE 2023 PROXY STATEMENT
Table of Contents
Fees Paid to Independent
Registered
Public Accounting Firm
The Audit Committee oversees the audit and non-audit
services provided by the independent auditor, participates in the pre-approval of fees with the independent auditor, reviews and
approves the audit plan and associated fees, and receives periodic reports on the fees paid.
The Audit Committee in some cases authorizes Deloitte
(along with other accounting firms) to provide non-audit services. We understand the need for Deloitte to maintain objectivity
and independence as the auditor of our financial statements and our internal control over financial reporting. Accordingly, the
Audit Committee has established the following policies and processes related to non-audit services.
WE LIMIT THE NON-AUDIT SERVICES
THAT DELOITTE CAN PROVIDE. To minimize relationships
that could appear to impair Deloitte’s objectivity, the Audit Committee will only pre-approve permissible, selected types
of non-audit services that Deloitte may provide to us (and that otherwise would be permissible under SEC rules) and requires that
the company engage Deloitte only when it is best suited for the job. For more detail, see the Audit
Committee Charter (see Helpful Resources on page 77).
WE HAVE A PRE-APPROVAL PROCESS
FOR NON-AUDIT SERVICES. The Audit
Committee has adopted policies and procedures for pre-approving all non-audit work that Deloitte performs for us.
Specifically, the Audit Committee has pre-approved the use of Deloitte for specific types of services related to tax
compliance, planning and consultations; acquisition/disposition services; consultations regarding accounting and reporting
matters; and reviews and consultations on internal control and other related services. The Audit Committee has set a specific
annual limit on the amount of non-audit services (audit-related and tax services) that the company can obtain from Deloitte.
It has also required management to obtain specific pre-approval from the Audit Committee for any single engagement over $2
million or any types of services that have not been pre-approved. The Audit Committee chair is authorized to pre-approve any
audit or non-audit service on behalf of the Audit Committee, provided these decisions are presented to the full committee at
its next regularly scheduled meeting. In 2022, the Audit Committee pre-approved all services provided to the company pursuant
to the policies and procedures described above.
WE HAVE HIRING RESTRICTIONS
FOR DELOITTE EMPLOYEES.
To avoid potential conflicts of interest, the Audit
Committee has adopted restrictions on our hiring of any Deloitte partner, director, manager, staff member, advising member of
the department of professional practice, reviewing actuary, reviewing tax professional and any other individuals responsible for
providing audit assurance on any aspect of Deloitte’s audit and review of our financial statements. These restrictions are
contained in our Governance Principles (see Helpful Resources
on page 77).
The following table summarizes the fees for professional
audit services provided by Deloitte for audit services provided for, and other services provided in, the years shown:
TYPES
OF FEES
(IN MILLIONS) |
|
AUDIT |
|
AUDIT-
RELATED |
|
TAX |
|
ALL
OTHER |
|
TOTAL |
| 2022 |
|
$57.6 |
|
$ |
40.3 |
|
$0.6 |
|
$0.1 |
|
$98.6 |
| 2021 |
|
$51.6 |
|
$ |
2.1 |
|
$0.5 |
|
$0.3 |
|
$54.5 |
AUDIT FEES. Fees
for the audit of GE’s annual financial statements included in our annual report on Form 10-K for 2022; the review of financial
statements included in our quarterly reports on Form 10-Q; the audit of our internal control over financial reporting, with the
objective of obtaining reasonable assurance about whether effective internal control over financial reporting was maintained in
all material respects; and services routinely provided by the auditor in connection with statutory and regulatory filings or engagements.
AUDIT-RELATED FEES. Fees
for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements
and internal control over financial reporting. For 2022, our audit-related fees primarily consisted of fees for financial statement
carve-out procedures associated with GE’s separation strategy, including the spin-off of GE HealthCare.
TAX FEES.
Fees related to tax compliance and tax advice and tax planning. Tax compliance involves preparation of original and amended tax
returns and claims for refund. Tax planning and tax advice encompass a diverse range of services, including assistance with tax
audits and appeals, tax advice related to mergers and acquisitions and employee benefit plans, and requests for rulings or technical
advice from taxing authorities.
ALL OTHER FEES. Includes
fees for services that are not contained in the above categories and includes permissible advisory services.
GE
2023 PROXY STATEMENT 63
Table of Contents
Shareholder
Proposals
What
are you voting on?
The
following shareholder proposals will be voted on at the Annual Meeting only if properly presented by or on behalf of the shareholder
proponent. In accordance with the applicable proxy regulations, the text of the shareholder proposals and supporting statements,
for which we accept no responsibility, are set forth below.
How to find more information about
the proponents
To obtain the addresses of any of the
shareholder proponents, or their GE stock holdings, email shareholder.proposals@ge.com or write to Corporate Secretary, GE, at
the address listed on the inside front cover of this proxy statement, and you will receive this information promptly.
Your
Board recommends a vote AGAINST shareholder proposals 1, 2, 3, and 4 for the reasons that we provide following each proposal
| | Shareholder Proposals
Shareholder Proposal No.
1 — Independent Board Chairman
Kenneth Steiner has
notified us that he intends to submit the following proposal at this year’s meeting:
Shareholders request that the Board of Directors
adopt an enduring policy, and amend the governing documents as necessary in order that 2 separate people hold the office
of the Chairman and the office of the CEO.
Whenever possible, the Chairman of the Board
shall be an Independent Director.
The Board has the discretion to select a Temporary
Chairman of the Board, who is not an Independent Director, to serve while the Board is seeking an Independent Chairman
of the Board on an expedited basis.
This policy could be phased in when there is
a contract renewal for our current CEO or for the next CEO transition.
This proposal topic won 52% support at Boeing
and 54% support at Baxter International in 2020. Boeing then adopted this proposal topic.
The so-called lead director role does not seem
to be working at GE. Lead director Thomas Horton received 153 million against vote in 2022 compared to 5 million against
votes each for certain other GE directors. Plus management pay was rejected by an alarming 34% of shares in 2022 when
a 5% rejection is
often the norm at well performing
companies.
Perhaps there should be a rule against a person
who has been a CEO and a Chairman at the same time being named as Lead Director. Mr. Horton had years in the dual jobs
of CEO and Chairman at American Airlines. Past and present holders of both jobs at the same time would seem to have a
special affinity with the GE person who now has both GE jobs. Affinity is inconsistent with the oversight role of a Lead
Director.
A lead director is no substitute for an independent
board chairman. A lead director cannot call a special shareholder meeting and cannot even call a special meeting of the
board. A lead director can delegate most of his lead director duties to others and then simply rubber-stamp it. There
is no way shareholders can be sure of what goes on.
A lead director can be given a list of duties
but there is no rule that prevents the Chairman from overriding the lead director in any of the so-called lead director
duties and ignore the advice of the lead director.
It is time for an Independent Board Chairman
since the bottom has fallen out of GE stock since it was at $242 in 2016
Please vote yes: Independent Board Chairman
– Proposal 1
|
64 GE
2023 PROXY STATEMENT
Table of Contents
Your Board recommends a
vote AGAINST this proposal.
WE BELIEVE DETERMINING BOARD LEADERSHIP ON A CASE-BY-CASE
BASIS IS IN THE BEST INTERESTS OF GE AND ITS SHAREHOLDERS. Our Board believes that providing strong and independent oversight
of the company is central to its role and to good governance. By dictating a rigid policy on the structure of Board leadership,
regardless of the circumstances or the individuals involved, this proposal could limit the Board’s ability to establish
the leadership structure that is in the best interests of the company and its shareholders at a particular point in time. Because
circumstances change over time, we believe it is important for our directors to maintain flexibility to select the most appropriate
Board leadership structure. This is especially important as the company executes on its plan to form three independent public
companies, each of which will have its own board and board leadership structure. Additionally, according to the 2022 Spencer Stuart
Board Index, only 36% of companies in the S&P 500 currently have an independent board chair. The Board will continue to evaluate
the suitability of its leadership structure and make changes when those will best serve the interests of GE and its shareholders.
THE BOARD HAS DETERMINED THAT ITS CURRENT LEADERSHIP
STRUCTURE, WHICH INCLUDES A STRONG LEAD DIRECTOR, BEST SERVES GE AT THIS TIME. The Board believes that its current leadership
structure, which has a combined role of Chairman and CEO, counterbalanced by a strong independent Board led by a lead director
and independent directors chairing each of the Board committees, is in the best interests of GE and its shareholders. At the time
of GE’s most recent CEO transition in September 2018, the independent directors determined that appointing Mr. Culp, one
of our existing directors, to serve as CEO and simultaneously appointing him as Chairman was in the best interests of the company
and its shareholders. After deliberation which included whether to appoint an independent Board chair in connection with the CEO
transition, the independent directors determined that Mr. Culp was the best candidate to drive the strategy for the company as
CEO and lead the Board’s agenda as Chairman. The independent directors concluded that combining these roles was important
to provide clarity on decision-making and accountability, particularly at a time of considerable change for the company, and that
appointing a strong lead director, as described below, would provide for continuing independent leadership and oversight of the
Board. We believe that the company’s successful performance and execution of its strategic transformation has been, and
will continue to be, assisted considerably by Mr. Culp’s fulfilling the roles of both CEO and Chairman and that this most
recent leadership transition is a good example of the case-by-case Board evaluation that the proposal would restrict. We remain
open to the possibility of appointing separate individuals to each of the roles in the future, in light of the needs of the Board
and the company at any given time. For instance, when the Board in 2020 agreed to extend the term of Mr. Culp’s employment
as CEO through at least 2024, the Board provided for the possibility that Mr. Culp may transition from CEO to executive chairman
in August 2023, and that he may serve as a non-employee director or consultant from August 2024 to 2025. This reflects the Board’s
openness to different leadership structures, and demonstrates that the Board will evaluate the best leadership structure for GE
in the future, as it has done and will continue to do as it executes on GE’s planned separation into three independent public
companies. For example, with the spin-off of GE HealthCare in January 2023, the Board determined the best leadership structure
for GE HealthCare was to have a separate CEO and board chairman. As we work toward the planned spin-off of GE Vernova, the Board
will similarly evaluate and determine the leadership structures that work best for GE Vernova and GE Aerospace, considering each
planned company’s specific circumstances.
OUR LEAD DIRECTOR WORKS WITH THE OTHER INDEPENDENT
DIRECTORS TO PROVIDE MEANINGFUL INDEPENDENT OVERSIGHT OF MANAGEMENT. Our Board recognizes the importance of independent board
oversight of management and believes that it is an essential component of strong corporate performance. The lead director role
at GE is designed to empower the independent directors to serve as an independent check on management. Our lead director is selected
solely by independent directors, taking into account a variety of factors, including the director’s qualifications and attributes,
leadership experience, understanding of our businesses and industries, and willingness to commit the time necessary to fulfill
the role. Our current lead director, Mr. Horton brings a valuable perspective through his experience as both a former CEO and
an independent director on other boards. The lead director leads regular meetings of the independent directors and meets with
the Chair for discussion of matters arising from these meetings. He also is empowered to call additional meetings of the independent
directors or the entire Board, serves as a liaison on Board-related issues between the Chair and the independent directors, and
performs other functions as the Board may direct. As described in the Board’s Governance Principles, these other functions
include (1) advising the Governance & Public Affairs Committee on the selection of committee chairs, (2) approving the
agenda, schedule and information sent to the directors for Board meetings, (3) working with the Chair to propose an annual schedule
of major discussion items for the Board’s approval, (4) guiding the Board’s governance processes, including the annual
Board self-evaluation, succession planning and other governance-related matters, and (5) providing leadership to the Board if
circumstances arise in which the role of the Chair may be, or may be perceived to be, in conflict, and otherwise act as chair
of Board meetings when the Chair is not in attendance. The lead director oversees the Board’s periodic review of its leadership
structure to evaluate whether it remains appropriate for the company. The lead director also frequently meets with our largest
shareholders. Through these actions and responsibilities, the lead director serves as a powerful mechanism for the Board overall
to exercise its independent oversight.
For the foregoing reasons, the Board recommends a vote
AGAINST this proposal.
GE
2023 PROXY STATEMENT 65
Table of Contents
Shareholder
Proposal No. 2 —
Sale of the Company
Martin Harangozo
has notified us that he intends to submit the following proposal at this year’s meeting:
The shareholders
recommend General Electric hire an investment bank to explore the sale of the company.
Whereas: General
Electric had lost nearly all its valuation in the last two decades, during a time when the stock market popular Standard and Poor’s
500 performance about tripled in valuation. The dividend is all but gone and less than when Mr. Jack Welch became CEO in 1981.
Promised benefits to retirees have been broken. Rolling heads around as Mr. John Flannery replacing Mr. Jeffrey Immelt, or Mr.
Lawrence Culp Jr. replacing Flannery has had no substantial positive effect in restoring the company valuation, or growing it
to the broader market. In fact, all three of these leaders reduced company valuation. It is clear that a new approach is needed
to drive the General Electric Company so that it performs for the shareholders consistent with general stock market performance.
This proposal
has been on previous proxy statements. General Electric argued:
“General
Electric is one of the most valuable and respected companies in the world. Our businesses are bound together by common operating
systems, technologies and initiatives and a common culture with strong values. Throughout the company, we focus on infrastructure
markets, because they utilize General Electric capabilities in technology, globalization, financing and customer relationships.
General Electric is the only company listed
in the Dow
Jones Industrial Index today that was also included in the original index in 1896, and since 1899, General Electric has paid a
quarterly dividend without interruption. In addition, contrary to the assertions in the proposal’s supporting statement,
General Electric is committed to product safety and consumer protection, takes a number of precautions to ensure the safety of
our products, and has made the Ethisphere Institute’s list of the world’s most ethical companies for the last eight
years. Our management approach emphasizes stable growth through diversification across several business segments. To maximize
long-term shareowner value, we continually reevaluate our businesses and make adjustments when warranted. This review process
led to recent significant decisions like the sale of General Electric’s remaining stake in NBC Universal and certain of
our machining and fabrication businesses. General Electric’s strong management allowed the company to weather the recent
economic downturn and has led to a rebound in stock price, an increase in dividend paid per share and a market capitalization
of over $280 billion. General Electric’s new resurgence over the past few years has placed it back on Fortune’s most
admired companies list. We believe it is in the best long- term interests of our shareowners to continue this course. Therefore,
the Board recommends a vote AGAINST this proposal”.
Clearly, the
arguments General Electric has made above pertaining to “the best long-term interests of our shareowners to continue this
course”, proved to be flat wrong. History proves General Electric cannot be trusted with any argument against this proposal.
Your
Board recommends a vote AGAINST this proposal.
THE BOARD BELIEVES OUR PLAN TO FORM THREE INDEPENDENT PUBLIC COMPANIES REMAINS THE BEST STRATEGY TO DRIVE LONG-TERM
GROWTH AND INCREASE SHAREHOLDER VALUE. The Board has led a significant transformation of GE since 2014, when this
proposal was last voted on by shareholders, including by selling or spinning off a number of businesses. When evaluating
the next steps forward, the Board conducted a rigorous portfolio and business strategy review that culminated with the
November 2021 announcement of our strategic plan to form three industry-leading, global, investment-grade public companies
from (i) our Aerospace business, (ii) our Renewable Energy, Power, Digital and Energy Financial Services businesses, which
we plan to combine and refer to as GE Vernova, and (iii) our former HealthCare business. As independently run companies,
we believe these business will be better positioned to deliver long-term growth and create value for customers, investors,
and employees. Our strategic transformation has also been well received by the market and many shareholders. Consistent
with its fiduciary duties, the Board continues to provide oversight and guidance on the overall strategy for the company
and its portfolio of businesses, including with respect to our ongoing strategic transformation. The Board continues to
believe that our plan to form three independent public companies is in the best interest of the company and its shareholders,
and that the alternative plan suggested by this shareholder proposal is not.
For the foregoing reasons, the Board recommends a vote AGAINST this
proposal. |
66 GE
2023 PROXY STATEMENT
Table of Contents
Shareholder
Proposal No. 3 —
Fiduciary Carbon-Emission Relevance Report
The National
Center for Public Policy Research has notified us that it intends to submit the following proposal at this year’s meeting:
RESOLVED:
Shareholders request General Electric’s Board of Directors provide an audited report evaluating the material factors
relevant to decisions about whether a 2050 net-zero carbon goal, or other similar decarbonization goals, is appropriate, including
factors that mitigate against the adoptions of such goals. These factors might reasonably include technological feasibility (or
its absence), the economic consequences of adoption, the possibility that the climate models that underlie such goals are incorrect,
the possibility that failure to adopt such goals in other countries will render adoption by General Electric meaningless, the
possibility that U.S. governments will not mandate such decarbonization, unending adoption-favoring “stranded asset”
assumptions, and relevant considerations. The report should be produced at reasonable cost and omitting proprietary information.
Claims about
the need for decarbonization at all, but especially by some activist-generated date certain, are based on a long series of assumptions
that are either counterfactual or insufficiently examined. For decades, for instance, claims have been made that action must be
taken before some date, or it will be too late.2 If those claims were right, it’s too late for decarbonization
to matter now, so we should be building up economic resources to deal with climate change. If they were wrong, then the odds are
high that current claims are also wrong.
General Electric’s
decarbonization will be meaningless if other countries do not follow the same decarbonization schedules, and there is abundant
evidence that they will not.3 The United States government has never mandated net-zero by statute or authorized regulatory
action4, and is unlikely ever to do so; this contravenes the assumptions of “stranded asset” analysis.
If decarbonization is neither required nor technologically feasible, General Electric will lose significant markets and revenues
to private equity firms and (less clean-producing) state actors, thus harming shareholders while also harming the environment.
These and all relevant considerations should be fully and objectively examined.
Supporting
Statement
General Electric has touted its commitment to achieving net-zero carbon emissions by 2050.1 It does not appear
from publicly available information, however, that General Electric has fully considered the risk that decarbonization on activist
schedules might entail.
| 1 |
https://www.ge.com/about-us/energy-transition |
| 2 |
https://nypost.com/2021/11/12/50-years-of-predictions-that-the-climate-apocalypse-is-nigh/ |
| 3 |
https://www.theepochtimes.com/across-the-world-coal-power-is-back_4671888.html; https://www.realclearenergy.org/articles/2022/06/03/india_and_china_
coal_production_surging_by_700m_tons_per_year_thats_greater_than_all_us_coal_output_835483.html; https://www.realclearenergy.org/articles/2022/06/03/
india_and_china_coal_production_surging_by_700m_tons_per_year_thats_greater_than_all_us_coal_output_835483.html; https://www.breitbart.com/
environment/2022/04/21/worlds-worst-polluter-china-increases-coal-production-by-three-hundred-million-tons/; https://mishtalk.com/economics/global-net-zero-climate-change-targets-are-pie-in-the-
sky |
| 4 |
https://www.npr.org/2022/06/30/1103595898/supreme-court-epa-climate-change |
Your
Board recommends a vote AGAINST this proposal.
INNOVATING TECHNOLOGY TO ADDRESS THE PRESSING CHALLENGES OF DECARBONIZATION AND
CLIMATE CHANGE IS CENTRAL TO OUR BUSINESSES’ STRATEGIES; GE’S SENIOR MANAGEMENT AND BOARD OF DIRECTORS HAVE
TAKEN CONSIDERABLE CARE IN ANALYZING AND ARTICULATING GE’S AMBITIONS FOR GREENHOUSE GAS EMISSION REDUCTIONS, AND THE
REPORT REQUESTED BY THIS PROPOSAL IS THEREFORE UNNECESSARY. GE recognizes the challenges and risks posed by climate
change, and we support the Paris Agreement and other ambitious targets to reduce emissions. As a company whose equipment
helps provide one-third of the world’s electricity across 170 countries, GE aims to play a unique role in providing our
customers with power generation equipment and services to make electricity more sustainable, affordable, and reliable, in a
context where global electricity demand and risks are expected to grow considerably in the decades to come. Our Aerospace
business, whose engines together with our partners power three-quarters of commercial flights worldwide, will also play a key
role in creating a smarter and more efficient future of flight. These are central strategic considerations for our
businesses, especially as our customers and investors are increasingly adopting their own greenhouse gas reduction goals, and
are looking to GE to innovate and help develop the technologies needed to achieve these goals.
Because these dynamics are so central to our business strategies
and to addressing the needs of our customers, GE’s role in helping to decarbonize power generation and commercial aviation
has been a key area of focus at the company’s most senior management levels and with the GE Board of Directors. That focus
extends to decisions about our asset and business portfolios and the types of opportunities that we pursue, as well as the technology
and innovation that we provide today and invest in for the future. For example, in recent years GE has chosen to exit its new
coal business while (i) innovating renewable energy and other emissions reduction technology, (ii) providing highly efficient
gas turbines that can be a force multiplier for reducing power sector emissions and (iii) investing in breakthrough technologies
such as small modular nuclear reactors and technologies to reduce gas turbine emissions, including hydrogen as a fuel and carbon
capture and sequestration.
This focus also extends to decisions about the company’s greenhouse gas
emission reduction strategy. Senior management and the GE Board of Directors have invested substantial time assessing
and articulating GE’s own ambitions to reduce greenhouse gas emissions across our operations and from customers’
use of our products. We have articulated a goal of carbon neutrality by 2030 for our operations (Scope 1 and 2 emissions)
and an ambition to be a net zero company by 2050, including the Scope 3 emissions from the use of sold products. These long-range
decarbonization objectives have been the product of significant analysis and deliberative processes, and we continue to
refine our interim targets and report on our progress over time, as we have described more fully in our annual Sustainability
Report. The assertion in Shareholder Proposal #3 that GE has not adequately considered its decarbonization objectives
before establishing them is incorrect. Contrary to this shareholder proposal’s premise, we believe these goals are
appropriate for the company and well-aligned with the expectations of the majority of our customers, shareholders and
other stakeholders, and that the report requested by Shareholder Proposal #3 is therefore unnecessary.
For the foregoing
reasons, the Board recommends a vote AGAINST this proposal. |
GE
2023 PROXY STATEMENT 67
Table of Contents
Shareholder
Proposal No. 4 —
Assess Energy-Related Asset Resilience
Henry H. Barrett
and MKT Forces Trading Limited have notified us that they intend to submit the following proposal at this year’s meeting:
RESOLVED:
Shareholders ask the Board of General Electric Company (“GE”) to provide an audited report to address how application
of the International Energy Agency’s Net Zero Emissions by 2050 pathway would affect the assumptions and estimates that
underlie GE’s valuation and expected cash flow assessments. The report should address GE’s existing assets as well
as planned investments in renewable energy, nuclear, and thermal power; and include asset lives, asset retirement obligations,
and capital expenditures (including new material capital expenditures), as well as potential impairments. The report should be
produced at reasonable cost and omit proprietary information.
Supporting
Statement
In 2021, a
majority of shareholders voted for a similar proposal that sought disclosure regarding GE’s alignment with a net zero pathway.
The Company has not meaningfully responded, and the time to do so is now.
The International
Energy Agency’s Net Zero Emissions by 2050 Scenario1 (“NZE2050”) makes clear that achieving net zero
emissions by 2050 implies an extremely limited and narrowing role for fossil fuels in electricity generation. Despite having its
own net zero by 2050 target, GE has reported involvement in almost 25 gigawatts of new LNG to power projects in Vietnam and Bangladesh
and two LNG import facilities in Bangladesh, planned to operate to 2050 and beyond.
Recognizing
there are transition risks associated with meeting the Paris Agreement’s climate goals and NZE2050, investors are increasingly
demanding disclosure of how climate action scenarios would affect key assumptions – including those related to asset lives.
Climate Action 100+2 has identified companies – including GE – who fail to back their net zero commitments
with clear plans, noting particular inadequacies in decarbonization strategy and capital allocation alignment.3
GE continues
to rely on gas demand scenarios4 that fail to meet net zero emissions by 2050 and, therefore, risk leaving assets stranded.
Given GE’s
plans to spin off its power businesses into a new entity, GE Vernova, investors need more disclosure from the company regarding
the risks to its assets.
A majority
of GE’s shareholders voted for a similar proposal in 2021 that sought disclosure on the company’s alignment with a
net zero pathway. This proposal builds upon the 2021 resolution, and seeks decision-critical information for investors that we
hope will demonstrate the resilience of GE’s energy-related assets within the context of a credible net zero by 2050 pathway.
Therefore:
Vote FOR GE’s future resilience and profitability by supporting
this proposal. Thank you.
| 1 |
www.iea.org/reports/world-energy-outlook-2022 |
| 2 |
www.climateaction100.org/wp-content/uploads/2022/01/Climate-Action-100-2021-Progress-Update-Final.pdf |
| 3 |
www.climateaction100.org/company/general-electric-company |
| 4 |
www.ge.com/content/dam/gepower-new/global/en_US/downloads/gas-new-site/future-of-energy/ge-future-of-energy- white-paper.pdf |
68 GE
2023 PROXY STATEMENT
Table of Contents
|
Your
Board recommends a vote AGAINST this proposal.
GE IS HELPING LEAD THE GLOBAL ENERGY TRANSITION BY INNOVATING TECHNOLOGY
TO ADDRESS THE PRESSING CHALLENGES OF DECARBONIZATION AND ELECTRIFICATION. As a company whose equipment helps provide one-third
of the world’s electricity across 170 countries, GE aims to play a unique role in providing our customers with power generation
equipment and services to make electricity more sustainable, affordable, and reliable, in a context where global electricity demand
and risks are expected to grow considerably in the decades to come. These are central strategic considerations for our businesses,
especially as our customers and investors are increasingly adopting their own greenhouse gas reduction goals, and are looking to
GE to innovate and help develop the technologies needed to achieve these goals. Because these dynamics are so central to our business
strategy and to addressing the needs of our customers, GE’s role in helping to decarbonize power generation has been a key
area of focus at the company’s most senior management levels and the GE Board of Directors. That focus extends to decisions
about our asset and business portfolios and the types of opportunities that we pursue, as well as the technology and innovation
that we provide today and invest in for the future. For example, in recent years GE has chosen to exit its new coal business while
(i) innovating renewable energy and other emissions reduction technology, (ii) providing highly efficient gas turbines that can
be a force multiplier for reducing power sector emissions and (iii) investing in breakthrough technologies such as small modular
nuclear reactors and technologies to reduce gas turbine emissions, including hydrogen as a fuel and carbon capture and sequestration.
AS WE WORK TOWARD SEPARATING GE VERNOVA, OUR PORTFOLIO OF ENERGY
BUSINESSES, INTO AN INDEPENDENT PUBLIC COMPANY, WE EXPECT TO PROVIDE EXTENSIVE NEW REPORTING ABOUT THE FINANCIAL PROFILE OF THOSE
BUSINESSES AND RELATED RISKS AND OPPORTUNITIES, INCLUDING DYNAMICS RELATED TO DECARBONIZATION. Shareholder Proposal #4 asserts
that as GE prepares for the GE Vernova spin-off, investors “need more disclosure from the company regarding the risks to
its assets”; investors will indeed receive significant additional disclosure in connection with the SEC reporting required
before and after the planned GE Vernova spin-off, making a separate report like the one that this shareholder proposal requests
unnecessary at this time. As we announced in November 2021, we have been working to execute a strategic plan to form three industry-leading,
global, investment-grade public companies from GE businesses. In January 2023, we completed the separation of our HealthCare business
from GE through the spin-off of GE HealthCare Technologies Inc., and we are working toward a second planned spin-off of GE Vernova.
As with the GE HealthCare spin-off, the spin-off of GE Vernova will require the preparation and filing with the Securities and
Exchange Commission of a registration statement on Form 10. This detailed filing will include audited financial statements of the
GE Vernova businesses, on a carve-out, standalone basis that GE Vernova will report on following separation from GE. In addition,
the Form 10 will be required to disclose material information about, among other things: (i) trends in market demand and competitive
conditions; (ii) the status of development efforts for new or enhanced products; (iii) effects that compliance with government
regulations, including environmental regulations, may have upon capital expenditures, earnings, and the competitive position of
GE Vernova; (iv) material factors that make an investment in the company speculative or risky; (v) critical accounting estimates;
(vi) trends in the company’s capital resources, including any reasonably likely material changes in the mix and relative
cost of such resources; and (vii) other material information relevant to an assessment of the financial condition and results of
operations of GE Vernova, including any known material events and uncertainties that are reasonably likely to cause reported financial
information to not be necessarily indicative of future operating results or financial condition. This Form 10 reporting, since
it will focus on a company with more limited operations than GE has today on a consolidated basis, will necessarily entail a more
granular level of financial reporting and accompanying discussion than has been provided to date for GE Renewable Energy and GE
Power as reporting segments within GE.
WE BELIEVE THAT THE REPORT SOUGHT BY THIS PROPOSAL SHOULD NOT BE
PRIORITIZED AT THIS TIME, AND THAT THE GE VERNOVA SEPARATION ACTIVITIES AND OUR EXISTING AND ONGOING CLIMATE AND SUSTAINABILITY
REPORTING BETTER SERVE THE INTERESTS OF SHAREHOLDERS TODAY. We do not believe the report requested by Shareholder Proposal #4
should be prioritized by GE or by our shareholders today. The number of requests for climate-related reporting continues to grow,
and shareholder proposals in this area are often animated by particular groups’ own interests, rather than the best interest
of all shareholders. That is evident with Shareholder Proposals #3 and #4, which reflect sharply differing perspectives about climate-change
related risks and actions that should be taken. In this context, we believe it is important to focus the company leadership’s
time and resources on the most important priorities for all shareholders.
Readying the GE Vernova businesses for the planned spin-off is a top priority for GE
today. There is significant operational work required to prepare for the business separation, and this requires the attention of
management and significant resources internally. As noted above, preparation for the spin-off will also require detailed new
reporting about GE Vernova in a Form 10 registration statement that will be reviewed and need to be declared effective by the SEC
before the spin-off. In addition to the spin-off-related work, GE in recent years has articulated a goal of carbon neutrality by
2030 for our operations (Scope 1 and 2 emissions) and an ambition to be a net zero company by 2050, including the Scope 3 emissions
from the use of sold products. We have provided a roadmap for our technology portfolio to help achieve net zero for the power
sector, as described more fully in our Sustainability Report. These reporting efforts have been well received in many of our
engagements with shareholders and other stakeholders for sharing information in a credible way, which we will continue to refine
over time. We are committed to updating this information through a process of continuous learning and anticipate further updates in
our 2022 Sustainability Report. These are areas of climate-related reporting that GE, and ultimately GE Vernova as a standalone
company, also plan to carry forward, and we believe that continuing to enhance this ongoing reporting is better aligned with our
current priorities and efforts than the report that this shareholder proposal requests. Moreover, as the U.S. and E.U. adopt
anticipated climate-related disclosure obligations, this type of reporting will continue to evolve over time to better meet the
information needs of investors and other stakeholders.
As compared to GE’s priorities of both (i) working toward the
spin-off of GE Vernova and preparing the Form 10 disclosures that spin-off will require, and (ii) continuing to deepen and
refine our existing framework of climate and decarbonization-related reporting in our Sustainability Reports, we do not believe
that the particular report requested by Shareholder Proposal #4 is necessary or that it should be prioritized at this time.
Accordingly, we do not believe it is in shareholders’ best interests to support this proposal.
For the foregoing reasons, the Board recommends a vote AGAINST
this proposal. |
GE 2023
PROXY STATEMENT 69
Table of Contents
Submitting
2024 Proposals
The table below
summarizes the requirements for shareholders who wish to submit proposals, including director nominations, for next year’s
Annual Meeting. Shareholders are encouraged to consult SEC Rule 14a-8 or our by-laws, as applicable, to see all applicable requirements.
| |
|
PROPOSALS
FOR INCLUSION IN
2024 PROXY |
|
DIRECTOR
NOMINEES FOR INCLUSION
IN 2024 PROXY (PROXY ACCESS) |
|
OTHER
PROPOSALS/NOMINEES TO BE
PRESENTED AT 2024 MEETING* |
| Type of proposal |
|
SEC rules permit shareholders to submit proposals for inclusion in our proxy statement by satisfying the requirements
specified in SEC Rule 14a-8 |
|
A shareholder (or a group of up to 20 shareholders) owning at least 3% of GE stock for at least 3 years may submit director
nominees (up to 20% of the Board) for inclusion in our proxy statement by satisfying the requirements specified in Article
VII, Section F of our by-laws |
|
Shareholders may present proposals or director nominations directly at the Annual Meeting (and not for inclusion in our
proxy statement) by satisfying the requirements specified in Article VII, Section D of our by-laws |
| When proposal must be received by GE |
|
No later than close of business (5 p.m. ET) on November 23, 2023 |
|
No earlier than October 24, 2023, and no later than close of business (5 p.m. ET) on November 23, 2023 |
| Where to send |
|
By mail: Corporate Secretary, at the address set forth on the inside front cover of this proxy statement
By email: shareholder.proposals@ge.com |
| What to include |
|
The information required by SEC Rule 14a-8 |
|
The information required by our by-laws** |
| * |
With respect to proposals not submitted pursuant to SEC Rule 14a-8 and nominees
presented directly at the 2024 Annual Meeting, SEC rules permit management to vote proxies in its discretion in certain cases
if the shareholder does not comply with this deadline or, if this deadline does not apply, a deadline of the close of business
(5 p.m. ET) on February 6, 2024, and in certain other cases notwithstanding the shareholder’s compliance with these deadlines. |
| |
In addition to satisfying the deadlines and other requirements under Article VII, Section D of our by-laws, SEC rules
require shareholders to provide notice under SEC Rule 14a-19 of the intent to solicit proxies in support of director
nominees (other than the company’s nominees) by notifying the company no later than the close of business (5 p.m.
ET) on March 4, 2024. |
| ** |
Our by-laws are available on GE’s website (see Helpful Resources
on page 77). |
70 GE
2023 PROXY STATEMENT
Table of Contents
Voting and Meeting Information
Voting Standards and
Board Recommendations
The following table summarizes the Board’s
voting recommendations for each proposal, the vote required for each proposal to pass and the effect of abstentions and broker non-votes
on each proposal.
| VOTING
ITEM |
BOARD
RECOMMENDATION |
VOTING
STANDARDS |
TREATMENT
OF ABSTENTIONS & BROKER NON-VOTES |
| Election of Directors |
FOR |
Majority of Votes Cast |
Not counted as votes cast and therefore no effect, if any |
| Say-on-Pay |
FOR |
| Say-on-Frequency |
ONE YEAR |
| Auditor Ratification |
FOR |
| Shareholder Proposal No. 1 |
AGAINST |
| Shareholder Proposal No. 2 |
| Shareholder Proposal No. 3 |
| Shareholder Proposal No. 4 |
WE HAVE A MAJORITY VOTING
STANDARD FOR DIRECTOR ELECTIONS. Each director nominee
who receives a majority of the votes cast will be elected. Any current director who does not meet this standard is subject to the Board’s
policy regarding resignations by directors who do not receive a majority of “For” votes, which is described in the Board’s
Governance Principles (see Helpful Resources on page 77). All other matters are approved if supported
by a majority of votes cast.
Meeting Information
HOW DO I ATTEND THE VIRTUAL
ANNUAL MEETING? To participate in the meeting, you
must have your 16-Digit Control Number that is shown on your Notice of Internet Availability of Proxy Materials (Notice) or, if you received
a printed copy of the proxy materials, on your proxy card or the voting instruction form that accompanied your proxy materials. If the
Notice or voting instruction form that you received does not indicate that you may vote your shares through the http://www.proxyvote.com
website, you should contact your bank, broker or other nominee (preferably at least 5 days before the Annual Meeting) and obtain a “legal
proxy” (which will contain a 16-digit control number that will allow you to attend, participate in or vote at the meeting). You
may access the Annual Meeting by visiting www.virtualshareholdermeeting.com/GE2023. If you encounter any difficulties accessing the virtual
Annual Meeting during the check-in or meeting time, please call the technical support number that will be posted on the virtual Annual
Meeting log-in page. Technical support will be available starting 15 minutes prior to the meeting. The virtual meeting format for the
Annual Meeting is designed to enable full and equal participation by all of our shareholders from any place in the world at little to
no cost.
CAN I ASK A QUESTION
AT THE VIRTUAL ANNUAL MEETING?
Shareholders of record will be able to submit
questions either before (by going to www.proxyvote.com) or during the virtual meeting (by going to the Annual Meeting Website) by typing
the question into the “Ask a Question” field and clicking “Submit.” We will answer questions that comply with
the meeting rules of conduct during the Annual Meeting, subject to time constraints. If we receive substantially similar questions, we
may group such questions together. Questions related to personal matters, that are not pertinent to Annual Meeting matters, or that contain
derogatory references to individuals, use offensive language, or are otherwise out of order or not suitable for the conduct of the Annual
Meeting will not be addressed during the meeting. If there are questions pertinent to Annual Meeting matters that cannot be answered
during the Annual Meeting due to time constraints, management will post answers to such questions at www.ge.com/investor-relations.
WHAT DO I DO IF I NEED
TECHNICAL ASSISTANCE DURING THE MEETING?
If you encounter any difficulties accessing
the meeting during the check-in or meeting time, please call the technical support number that will be posted on the virtual shareholder
meeting log-in page.
GE
2023 PROXY STATEMENT 71
Table of Contents
Voting Information
WHO IS ENTITLED TO VOTE?
Shareholders of record at the close of business
on March 7, 2023, are eligible to vote at the meeting. Our voting securities consist of our $0.01 par value common stock (holders of
our preferred stock are not entitled to vote at the annual meeting), and there were 1,090,282,930 shares outstanding on the record date.
HOW DO I VOTE MY SHARES
IF I AM A RECORD HOLDER?
If your name is registered on GE’s
shareholder records as the owner of shares, you are the “record holder.” If you hold shares as a record holder, there are
four ways that you can vote your shares.
| ● |
Over the Internet. Vote at www.proxyvote.com. The internet voting system is available 24 hours a day until 11:59 p.m. Eastern Time on Tuesday, May 2, 2023. Once you enter the internet voting system, you can record and confirm (or change) your voting instructions. |
| |
● |
You will need the 16-digit number included on your proxy card (if you received a paper copy of the proxy materials) to obtain
your records and to vote. |
| ● |
By telephone. You can vote by calling 1-800-690-6903. The telephone voting system is available 24 hours a day in the United States until 11:59 p.m. Eastern Time on Tuesday, May 2, 2023. Once you enter the telephone voting system, a series of prompts will tell you how to record and confirm (or change) your voting instructions. |
| |
● |
You will need the 16-digit number included on your Notice or your proxy card (if you received a paper copy of the proxy materials)
in order to vote by telephone. |
| ● |
By mail. If you received a paper copy of the proxy materials, mark your voting instructions on the proxy card and sign, date and return it in the postage-paid envelope provided. If you received only a Notice but want to vote by mail, the Notice includes instructions on how to request a paper proxy card. For your mailed proxy card to be counted, we must receive it before 11:59 p.m. Eastern Time on Tuesday, May 2, 2023. |
| ● |
Online at the Annual Meeting. You may vote and submit questions while attending the Annual Meeting online via live audio webcast. Shares held in your name as the shareholder may be voted by you, while the polls remain open, at www.virtualshareholdermeeting.com/GE2023 during the meeting. |
| |
|
| |
● |
You will need the 16-digit number included on your Notice or your proxy card (if you received a paper copy of the proxy materials) in order to be able to vote and enter the meeting. |
| |
● |
Even if you plan to attend the Annual Meeting online, we encourage you to vote in advance by internet, telephone or mail so that your vote will be counted even if you later decide not to attend the Annual Meeting. |
HOW DO I VOTE MY SHARES
IF MY SHARES ARE HELD BY A BROKER, BANK OR OTHER NOMINEE?
For those shareholders whose shares are
held by a broker, bank or other nominee, you must complete and return the voting instruction form provided by your broker, bank or nominee
in order to instruct your broker, bank or nominee on how to vote. If you do not provide the broker or nominee that holds your shares
with voting instructions, the broker or nominee will determine if it has the discretionary authority to vote on your behalf.
The determination of whether a proposal
is “routine” or “non-routine” will be made by the NYSE or by Broadridge Financial Solutions, our independent
agent to receive and tabulate shareholder votes, based on NYSE rules that regulate member brokerage firms. If a proposal is deemed “routine”
and you do not give instructions to your broker or nominee, they may, but are not required to, vote your shares with respect to the proposal.
If the proposal is deemed “non-routine” and you do not give instructions to your broker or nominee, they may not vote your
shares with respect to the proposal and the shares will be treated as broker non-votes.
Therefore, if you do not provide voting
instructions to your broker or nominee, your broker or nominee may only vote your shares on routine matters properly presented for a
vote at the Annual Meeting. To ensure that your shares are counted in the proposals to come before the Annual Meeting, we encourage you
to provide instructions on how to vote your shares. Please refer to information from your bank, broker or other nominee on how to submit
voting instructions.
In addition, if you attend the virtual Annual
Meeting and have a 16-digit control number, you will be able to cast your vote via the online meeting platform during a designated portion
of the meeting. Have your Notice, proxy card or proxy form with the 16-digit control number available when you access the virtual Annual
Meeting.
WHAT SHARES ARE INCLUDED
ON THE PROXY FORM?
If you are a shareholder of record, you
will receive only one Notice or proxy form for all the shares of common stock you hold in certificate form, in book-entry form and in
any company benefit plan.
Please vote proxies for all accounts to
ensure that all of your shares are voted. If you wish to consolidate multiple registered accounts, contact EQ Shareowner Services at
1-800-786-2543 or at www.shareowneronline.com.
HOW DO I VOTE FOR SHARES
HELD IN THE GE RETIREMENT SAVINGS PLAN?
If you are a RSP participant, the trustee
of the RSP trust will vote the shares allocable to your RSP account as of March 6, 2023 as you instruct (you should consider this date
the “record date” for purposes of the shares allocable to your RSP account). You may give instructions via telephone or the
internet or by mailing the proxy form. If your valid proxy form is received by April 30, 2023 and it does not specify a choice, the trustee
will vote the shares as the Board recommends.
72 GE 2023 PROXY STATEMENT
Table of Contents
If your proxy form is not received by April
30, 2023 and you did not submit a vote via telephone or the internet by that date, shares allocable to your RSP account will not be voted.
You may revoke a previously delivered proxy by either notifying the inspector of election in writing that you wish to revoke or by delivering
a subsequent proxy by April 30, 2023. The address for the inspector of election is First Coast Results, Inc., 200 Business Park Circle,
Suite 112, Saint Augustine, FL 32095. For more information about the voting process, you can call the RSP Service Center at 1-877-554-3777.
WHAT IS NOTICE AND ACCESS?
The SEC’s notice and access rule allows
companies to deliver a Notice to shareholders in lieu of a paper copy of the proxy statement and annual report. The Notice provides instructions
as to how shareholders can access the proxy statement and the annual report online, contains a listing of matters to be considered at
the Annual Meeting and sets forth instructions as to how shares can be voted. Instructions for requesting a paper copy of the proxy statement
and the annual report are set forth on the Notice.
Shares must be voted by internet, by phone
or by completing and returning a proxy form. Shares cannot be voted by marking, writing on and/or returning the Notice. Any Notices that
are returned will not be counted as votes.
HOW WILL PROXIES BE VOTED?
| ● |
Proxies will be voted as you specify for or, if you don’t specify, as recommended by the Board. Shareholders
should specify their choice for each matter on the proxy form. If no specific instructions are given, proxies which are signed and
returned will be voted in accordance with the Board’s recommendations. |
| ● |
What happens if other matters are properly presented at the Annual Meeting. If any matter not described in this proxy
statement is properly presented for a vote at the Annual Meeting, the persons named on the proxy will vote in accordance with their
judgment. |
| ● |
What happens if a director nominee is unable to serve. We do not know of any reason why any nominee would be unable to
serve as a director. If any nominee is unable to serve, the Board can either nominate a different individual or reduce the Board’s
size. If it nominates a different individual, the shares represented by all valid proxies will be voted for that nominee. |
CAN I CHANGE MY VOTE?
You may change your vote by revoking your
proxy at any time before it is exercised, which can be done by voting electronically during the meeting, by delivering a new proxy or
by notifying the inspector of election in writing. If your GE shares are held for you in a brokerage, bank or other institutional account,
you must contact that institution to revoke a previously authorized proxy. The address for the inspector of election is First Coast Results,
Inc., 200 Business Park Circle, Suite 112, Saint Augustine, FL 32095.
HOW ARE VOTES COUNTED?
Each share counts as one vote.
WHAT ARE BROKER NON-VOTES?
Broker non-votes occur on a matter up for
vote when a broker, bank or other holder of shares you own in “street name” is not permitted to vote on that particular matter
without instructions from you, you do not give such instructions and the broker, bank or other nominee indicates on its proxy form, or
otherwise notifies us, that it does not have authority to vote its shares on that matter. Whether a broker has authority to vote its
shares on uninstructed matters is determined by NYSE rules.
IS MY VOTE CONFIDENTIAL?
Individual votes of shareholders are kept
private, except as necessary to meet legal requirements. Only the independent inspector and certain employees of GE and its agents have
access to proxies and other individual shareholder voting records, and they must acknowledge in writing their responsibility to comply
with this confidentiality policy.
GE 2023 PROXY STATEMENT 73
Table of Contents
Other Information
WHO IS SOLICITING MY
PROXY AND WHO PAYS THE EXPENSE OF SUCH SOLICITATIONS?
Your proxy is being solicited on behalf
of the Board.
Proxies will be solicited by mail, telephone,
other electronic means or in person, and we will pay the solicitation costs. Copies of proxy materials will be supplied to brokers, dealers,
banks and voting trustees, or their nominees, to solicit proxies from beneficial owners, and we will reimburse these institutions for
their reasonable expenses. Morrow Sodali, LLC has been retained to assist in soliciting proxies for a fee of $45,000 plus distribution
costs and other expenses.
WHAT IS “HOUSEHOLDING”?
Shareholders sharing a single address may
receive only one copy of the proxy statement and annual report or the Notice, unless the transfer agent, broker, bank or other nominee
has received contrary instructions from any owner at that address. This practice, known as householding, is designed to reduce printing
and mailing costs.
| ● | To
receive separate copies. To request an individual copy of this proxy statement and our
annual report, or the materials for future meetings, write to sendmaterial@proxyvote.com
with the control number from your Notice in the subject line, or call 800-579-1639. We will
promptly deliver them to you. |
| ● | To stop receiving separate copies. If you currently receive separate copies of these materials
and wish to receive a single copy in the future, you will need to contact your broker, bank
or other institution where you hold your shares. |
HOW YOU CAN OBTAIN MORE
INFORMATION?
If you have any questions about the proxy
voting process, please contact the broker, bank or other institution where you hold your shares. The SEC also has a website (see Helpful
Resources on page 77) with more information about your rights as a shareholder. Additionally, you may contact our Investor Relations
team by following the instructions on our Investor Relations website (see Helpful Resources on page
77).
| |
|
|
| |
HOW YOU CAN ACCESS THE PROXY MATERIALS ELECTRONICALLY OR SIGN UP FOR ELECTRONIC DELIVERY ... AND DONATE TO AMERICAN FORESTS
Important Notice Regarding the Availability of GE’s Proxy Materials for the 2023 Annual Meeting:
This proxy statement and our annual report may be viewed online at GE’s Annual Meeting website (see Helpful Resources on page 77). Shareholders can also sign up to receive proxy materials electronically by following the instructions below. GE will make a $1.00 donation to American Forests to help restore national forests throughout the United States for every shareholder who signs up for electronic delivery.
If you hold your GE shares directly with the company and you would like to receive future proxy materials electronically, please visit our Shareholder Services page of our Investor Relations website (see Helpful Resources on page 77) and follow the instructions there. If you choose this option, you will receive an email with links to access the materials and vote your shares, and your choice will remain in effect until you notify us that you wish to resume mail delivery of these documents.
If you hold your GE shares through a bank, broker or other holder of record and you would like to receive future proxy materials electronically, please refer to the information provided by that entity for instructions on how to elect this option.
HOW RECORD SHAREHOLDERS AND RSP PARTICIPANTS CAN REQUEST COPIES OF OUR ANNUAL REPORT
If you hold your shares directly with us and previously elected not to receive an annual report for a specific account, you may request a copy by:
|
| |
● |
Calling 800-579-1639 |
| |
● |
Going online to www.proxyvote.com |
| |
● |
Emailing sendmaterial@proxyvote.com with the control number from your Notice in the subject line |
| |
In addition, participants in the RSP may request copies of our annual report by calling the RSP Service Center at 877-554-3777.
|
| |
|
|
74 GE 2023 PROXY STATEMENT
Table of Contents
Explanation of Non-GAAP
Financial Measures and Performance Metrics
As noted throughout, in this proxy statement we reference certain non-GAAP
financial measures. Information on why GE uses these non-GAAP financial measures and how these measures are calculated is presented
either in the Management’s Discussion and Analysis within our Form 10-K for 2022 on the pages of the 10-K indicated after
each measure (see Helpful Resources on page 77),
or as noted below.
| ● |
Organic revenue growth (pages 26 and 27) |
| ● |
Adjusted profit (page 28) |
| ● |
Organic margin expansion (pages 26 and 28) |
| ● |
Free cash flow (page 19) |
| ● |
Adjusted earnings per share (page 29) |
For adjusted earnings per share and free
cash flow for 2021, which are included in this proxy statement as financial metrics for the 2021 PSU awards, the calculations of these
amounts were based on past financial reporting before GE transitioned from three-column to one-column financial statement presentation
after we stopped reporting our financial services business (GE Capital) as a separate reporting segment in 2022. Adjusted earnings per
share and free cash flow for 2021, on a three-column basis, are calculated from the company’s unaudited financial statements and
reflect further adjustments for other items that are considered not representative of underlying trends of GE’s business.
For free cash flow for 2020, which is included
in this proxy statement as a company-selected performance measure for Pay versus Performance, this amount is presented on a one-column
reporting basis and is calculated from the company’s audited financial statements included in the Annual Report on Form 10-K for
the year ended December 31, 2021 and reflects further adjustments for other items that are considered not representative of
underlying trends of GE’s business.
GE 2023 PROXY STATEMENT 75
Table of Contents
This Page is Intentionally Left
Blank.
Table of Contents
Helpful Resources
| ANNUAL MEETING |
|
|
| Annual Meeting website |
|
www.ge.com/annualmeeting |
| Online voting for registered holders |
|
www.proxyvote.com |
| and RSP participants |
|
|
| Online voting for beneficial owners |
|
www.proxyvote.com |
| Questions regarding admission |
|
www.ge.com/annualmeeting |
| Webcast |
|
www.virtualshareholdermeeting.com/GE2023 |
| SEC website on proxy matters |
|
www.sec.gov/spotlight/proxymatters.shtml |
| Electronic delivery of future |
|
www.ge.com/investor-relations/shareholder-services |
| proxy materials |
|
|
| Information for RSP Participants |
|
www.oneHR.ge.com |
| |
|
|
| BOARD OF DIRECTORS |
|
|
| GE Board and Governance |
|
www.ge.com/investor-relations/governance |
| Documents |
|
|
| |
|
|
| FINANCIAL REPORTING |
|
|
| Annual report |
|
www.ge.com/investor-relations/annual-report |
| Forward-looking statements |
|
www.ge.com/investor-relations/important-forward-looking-
statement-information |
| |
|
|
| GE |
|
|
| Corporate website |
|
www.ge.com |
| Leadership |
|
www.ge.com/about-us/leadership/executives |
| Investor Relations |
|
www.ge.com/investor-relations |
| Ombudsperson process |
|
www.ge.com/sites/default/files/S&L_Booklet_English_0.pdf |
| ESG/Sustainability Information |
|
www.ge.com/sustainability |
| Diversity Information |
|
www.ge.com/about-us/diversity |
| |
|
|
| ACRONYMS USED |
|
|
| DSUs |
|
Deferred Stock Units |
| ESG |
|
Environmental, Social, Governance |
| GAAP |
|
Generally Accepted Accounting Principles |
| NYSE |
|
New York Stock Exchange |
| PCAOB |
|
Public Company Accounting Oversight Board |
| PSUs |
|
Performance Stock Units |
| RSP |
|
Retirement Savings Plan |
| RSUs |
|
Restricted Stock Units |
| S&P |
|
Standard & Poor’s |
| SEC |
|
Securities and Exchange Commission |
| TSR |
|
Total Shareholder Return |
| Web links throughout this document are inactive textual references provided for convenience only, and
the content on the referenced websites is not incorporated herein by reference and does not constitute a part of this proxy statement. |
 |
FRONT COVER
Pictured: GE Aerospace’s Angie Foli in Indiana, U.S.A.; GE Vernova’s Thomas Riggs in New York, U.S.A.; and GE
HealthCare’s Jerry Uzobuihe in Wisconsin, U.S.A. |
GE and the GE logo
are trademarks and service marks of General Electric Company. Other marks used throughout are trademarks and service marks of
their respective owners. |
|
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WHERE
YOU CAN FIND
MORE INFORMATION |
| |
|
|
| |
 |
2022 Annual Report
https://www.ge.com/investor-
relations/annual-report |
| |
|
|
| |
 |
2022 Sustainability Report
To be published later this year
https://www.ge.com/sustainability |
| |
|
|
| |
 |
2023 Proxy Statement
https://www.ge.com/proxy |
| |
|
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 |
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| |
|
The manufacturing facility that produced this
report is an EPA GreenPower Partner that is powered by renewable energy generated by GE wind turbines. |
| |
|
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|
Caution Concerning Forward-Looking Statements |
| |
|
|
| |
|
This document contains “forward-looking statements”
— that is, statements related to future events that by their nature address matters that are, to different degrees, uncertain.
For details on the uncertainties that may cause our actual future results to be materially different than those expressed in our
forward-looking statements, see the Forward-Looking Statements Information page on our Investor Relations website as well
as our annual reports on Form 10-K and quarterly reports on Form 10-Q. We do not undertake to update our forward-looking statements.
This document also includes certain forward-looking projected financial information that is based on current estimates and forecasts.
Actual results could differ materially. |
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GE 2023 PROXY STATEMENT 77
Table of Contents
General Electric Company
5 Necco Street
Boston, MA 02210
www.ge.com
Table of Contents
GE SHAREOWNER SERVICES
1 RIVER RD, BLDG 5-3W
SCHENECTADY, NY 12345
 |
SCAN TO
VIEW MATERIALS & VOTE |
 |
VOTE BY INTERNET
Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above
Use the internet to transmit your voting instructions and for electronic delivery of information.
Vote by 11:59 p.m. Eastern Time on May 2, 2023 for shares held directly and by 11:59 p.m.
Eastern Time on April 30, 2023 for shares held in a Plan. Have your proxy card in hand when
you access the web site and follow the instructions to obtain your records and to create an
electronic voting instruction form.
During The Meeting - Go to www.virtualshareholdermeeting.com/GE2023
You may attend the meeting via the internet and vote during the meeting. Have the information
that is printed in the box marked by the arrow available and follow the instructions.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m.
Eastern Time on May 2, 2023 for shares held directly and by 11:59 p.m. Eastern Time on
April 30, 2023 for shares held in a Plan. Have your proxy card in hand when you call and
then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have
provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood,
NY 11717.
| TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: |
|
|
| D98566-P85625-Z84264 |
|
KEEP THIS PORTION FOR YOUR RECORDS |
|
|
DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
| GENERAL ELECTRIC COMPANY |
|
| |
| |
The Board of Directors recommends you vote FOR each
of the following director nominees (1a through 1j): |
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1. |
Election of Directors |
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Nominees: |
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For |
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Against |
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Abstain |
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1a. |
Stephen Angel |
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☐ |
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☐ |
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☐ |
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1b. |
Sébastien Bazin |
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☐ |
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☐ |
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☐ |
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1c. |
H. Lawrence Culp, Jr. |
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☐ |
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☐ |
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☐ |
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1d. |
Edward Garden |
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☐ |
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☐ |
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☐ |
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1e. |
Isabella Goren |
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☐ |
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☐ |
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☐ |
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1f. |
Thomas Horton |
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☐ |
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☐ |
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☐ |
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1g. |
Catherine Lesjak |
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☐ |
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☐ |
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☐ |
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1h. |
Darren McDew |
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☐ |
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☐ |
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☐ |
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1i. |
Paula Rosput Reynolds |
|
☐ |
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☐ |
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☐ |
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1j. |
Jessica Uhl |
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Management Proposals
The Board of Directors recommends you vote FOR proposals 2 and 4 and 1 YEAR for proposal 3: |
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Against |
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Abstain |
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| 2. |
Advisory Approval of Our Named Executives’
Compensation |
☐ |
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1 Year |
2 Years |
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3 Years |
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Abstain |
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| 3. |
Advisory Vote on the Frequency of Future
Advisory Votes to Approve Our Named
Executives’ Compensation |
☐ |
☐ |
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☐ |
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☐ |
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Abstain |
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| 4. |
Ratification of Deloitte as Independent Auditor for
2023 |
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| Shareholder Proposals |
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| The Board of Directors recommends you vote AGAINST
proposals 5, 6, 7 and 8: |
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Abstain |
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| 5. |
Independent Board Chairman |
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| 6. |
Sale of the Company |
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| 7. |
Fiduciary Carbon-Emission Relevance Report |
☐ |
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☐ |
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☐ |
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| 8. |
Assess Energy-Related Asset Resilience |
☐ |
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☐ |
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☐ |
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint
owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
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Signature [PLEASE SIGN WITHIN BOX] |
Date |
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| Signature (Joint Owners) |
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Table of Contents
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
GENERAL ELECTRIC COMPANY
Annual Meeting of Shareholders
May 3, 2023 10:00 a.m. Eastern Time
This proxy is solicited by the Board of Directors
The shareholder(s) whose signature(s) appear(s) on the reverse side hereby appoint(s) H. Lawrence Culp, Jr. and Michael Holston, or
either of them, each with full power of substitution, as proxies, to vote all stock in General Electric Company which the shareholder(s)
would be entitled to vote on all matters which may properly come before the 2023 Annual Meeting of Shareholders and any
adjournments or postponements thereof. If this proxy is properly executed, the proxy shall vote subject to the directions indicated
on the reverse side of this form, and proxies are authorized to vote in their discretion upon other business as may properly come
before the meeting and any adjournments or postponements thereof. If this proxy is properly executed, the proxies will vote as
the Board of Directors recommends where a choice is not specified. In the event that any of the nominees named on the reverse
side of this form are unavailable for election or unable to serve, the shares represented by the proxy (and shares allocable to a
participant’s RSP account) may be voted for a substitute nominee selected by the Board of Directors.
SPECIAL INSTRUCTIONS FOR PARTICIPANTS IN THE GE RETIREMENT SAVINGS PLAN
In accordance with the terms of the GE Retirement Savings Plan (RSP), any shares allocable to the participant’s RSP account as
of March 6, 2023 will be voted by the trustee of the RSP trust in accordance with the instructions of the participant received via
telephone or the Internet or indicated on the reverse side of this form. IF THIS FORM IS RECEIVED OR A VOTE IS SUBMITTED VIA
THE INTERNET ON OR BEFORE APRIL 30, 2023, BUT A CHOICE IS NOT SPECIFIED, THE TRUSTEE WILL VOTE SHARES ALLOCABLE
TO THE PARTICIPANT’S RSP ACCOUNT AS THE BOARD OF DIRECTORS RECOMMENDS. IF THIS FORM IS NOT RECEIVED ON OR
BEFORE APRIL 30, 2023, AND NO VOTE WAS SUBMITTED VIA TELEPHONE OR THE INTERNET BY THAT DATE, SHARES ALLOCABLE
TO THE PARTICIPANT’S RSP ACCOUNT WILL NOT BE VOTED.
Continued and to be signed on reverse side