SCHEDULE 14A INFORMATION
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the Securities Exchange Act of 1934 (Amendment No. )
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/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
GENERAL ELECTRIC COMPANY
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(Name of Registrant as Specified In Its Charter)
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<PAGE>
[GE Logo]
NOTICE OF 1998 ANNUAL MEETING
AND PROXY STATEMENT
<PAGE>
CONTENTS
Notice of 1998 Annual Meeting of Share Owners .......... 5
Proxy Statement ........................................ 6
o Election of Directors .......................... 6
Information Relating to Directors, Nominees
and Executive Officers ....................... 12
Report of the Compensation Committee
of the Board of Directors .................... 16
Summary Compensation Table ..................... 20
Financial Performance Comparison Graphs ........ 22
Stock Options and Stock Appreciation Rights..... 24
Retirement Benefits ............................ 26
o Appointment of Independent Auditors ............ 27
Share Owner Proposals relating to:
o No. 1Term Limits for Outside Directors .. 28
o No. 2GE's Nuclear Energy Business ....... 28
o No. 3Environmental Report ............... 30
o No. 4Environmental Education Report ..... 31
o No. 5Military Contract Standards ........ 33
o No. 6Outside Director Retirement Benefits 34
o No. 7CEOCompensation .................... 35
o No. 8Political Contributions ............ 37
Additional Information ......................... 38
o To be voted on at the meeting
EVERY SHARE OWNER'S VOTE IS IMPORTANT
PLEASE COMPLETE, SIGN, DATE AND RETURN
YOUR PROXY FORM
[RECYCLING SYMBOL] Printed on recycled paper using soybean ink
<PAGE>
[GE LOGO]
General Electric Company
3135 Easton Turnpike, Fairfield, CT 06431
March 13, 1998
Dear Share Owner,
You are invited to attend the 1998 Annual Meeting to be held on Wednesday,
April 22, in Cincinnati, Ohio.
The Annual Meeting will begin with a report on Company operations, followed
by discussion and voting on the matters set forth in the accompanying Notice of
Annual Meeting and Proxy Statement and discussion on other business matters
properly brought before the meeting.
If you plan to attend the meeting, please complete and return the advance
registration form on the back page of this Proxy Statement. An admission card,
which will expedite your admission to the meeting, will be mailed to you about
three weeks prior to the meeting.
Whether or not you plan to attend, you can be sure your shares are
represented at the meeting by promptly completing, signing, dating and returning
your proxy form in the enclosed envelope.
Cordially,
John F. Welch, Jr.
Chairman of the Board
<PAGE>
5
NOTICE OF 1998 ANNUAL MEETING
OF SHARE OWNERS
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10:00 a.m. (EDT), April 22,1998
Aronoff Center
650 Walnut Street
Cincinnati, Ohio 45202
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March 13, 1998
To the Share Owners:
General Electric Company's 1998 Annual Meeting of Share Owners will be
held in the Procter and Gamble Hall of the Aronoff Center, 650 Walnut Street,
Cincinnati, Ohio, on Wednesday, April 22, 1998, at 10:00 a.m. (EDT), to address
all matters that may properly come before the meeting. Following a report on
GE's business operations, the share owners will vote on:
(a) Election of Directors for the ensuing year;
(b) Approval of the appointment of Independent
Auditors for 1998; and
(c) Share Owner proposals described in the accompanying Proxy Statement.
Share owners of record at the close of business on March 9, 1998, will be
entitled to vote at the meeting and any adjournments.
Benjamin W. Heineman, Jr.
Secretary
<PAGE>
6
PROXY STATEMENT
General Electric Company, Fairfield, Connecticut 06431
This Proxy Statement is furnished in connection with the solicitation of proxies
by General Electric Company on behalf of the Board of Directors for the 1998
Annual Meeting of Share Owners. Distribution of this Proxy Statement and a proxy
form to share owners is scheduled to begin on or about March 13, 1998.
You can ensure that your shares are voted at the meeting by completing,
signing, dating and returning the enclosed proxy form in the envelope provided.
Sending in a signed proxy will not affect your right to attend the meeting and
vote. A share owner who gives a proxy may revoke it at any time before it is
exercised by voting in person at the Annual Meeting, by submitting another proxy
bearing a later date, or by notifying the Inspectors of Election in writing of
such revocation.
ELECTION OF DIRECTORS
At the 1998 Annual Meeting, 15 directors are to be elected to hold office until
the 1999 Annual Meeting and until their successors have been elected and have
qualified. The nominees listed on pages 7 to 11 with brief biographies are all
now GE directors. Dr. James I. Cash, Jr., and Mr. Eugene F. Murphy joined the
Board in August 1997. Under the Board's retirement policy, Mrs. Barbara Scott
Preiskel, who has served as a director since 1982, will not be standing for
re-election. The Board knows of no reason why any nominee may be unable to serve
as a director. If any nominee is unable to serve, the shares represented by all
valid proxies will be voted for the election of such other person as the Board
may recommend.
<PAGE>
7
[PHOTO OF D. WAYNE CALLOWAY]
D. Wayne Calloway, 62, Director and Retired Chairman of the Board and Chief
Executive Officer, PepsiCo, Inc., beverages, snack foods and restaurants,
Purchase, N.Y. Director since 1991.
A graduate of Wake Forest University, Mr. Calloway joined PepsiCo in 1967,
became president and chief operating officer of Frito-Lay, Inc. in 1976 and
chairman of the board and chief executive officer of Frito-Lay in 1978. Mr.
Calloway became executive vice president, chief financial officer and a director
of PepsiCo in 1983, president and chief operating officer in 1985, and chairman
and chief executive officer in 1986. In 1996, he retired as chief executive
officer. He is also a director of Citicorp and Exxon and a trustee of Wake
Forest University.
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[PHOTO OF JAMES I. CASH, JR.]
James I. Cash, Jr., 50, James E. Robison Professor of Business Administration,
Harvard Business School, Cambridge, Mass. Director since 1997.
A graduate of Texas Christian University with MS and PhD degrees from Purdue
University, Dr. Cash joined the faculty of Harvard Business School in 1976,
where he served as chairman of the MBA program from 1992 to 1995. Dr. Cash is a
director of Cambridge Technology Partners, The Chubb Corporation, Knight-Ridder,
Inc., State Street Bank and Trust, Tandy Corporation and WinStar Corporation. He
also serves as a trustee of the Massachusetts Software Council and Massachusetts
General Hospital and as an overseer for The Gardner Museum and the Boston Museum
of Science.
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[PHOTO OF SILAS S. CATHCART]
Silas S. Cathcart, 71, Retired Chairman of the Board and Chief Executive
Officer, Illinois Tool Works, Inc., diversified products, Chicago, Ill. Director
1972-1987 and since 1990.
Following his graduation from Princeton in 1948, Mr. Cathcart joined
Illinois Tool Works, Inc., a manufacturer of tools, fasteners, packaging and
other products. He was named a vice president in 1954, executive vice president
in 1962, and president and director in 1964; and he served as chairman from 1972
to 1986. From 1987 to 1989, he served as chairman of the board of Kidder,
Peabody Group Inc. Mr. Cathcart is a director of Allegiance Corporation,
Montgomery Ward & Co., Inc. and Quaker Oats Company. He also serves on the board
of the Chicago Botanic Garden and is a trustee of the Buffalo Bill Historical
Society.
<PAGE>
8
[PHOTO OF DENNIS D. DAMMERMAN]
Dennis D. Dammerman, 52, Senior Vice President, Finance, and Chief Financial
Officer, General Electric Company. Director since 1994.
Mr. Dammerman joined GE after graduating from the University of Dubuque in 1967.
He had financial assignments in several GE businesses before being named vice
president and comptroller of General Electric Credit Corporation (now GE Capital
Corporation) in 1979. In 1981, he became vice president and general manager of
GE Capital's Commercial Financial Services Department and, later that year, of
GE Capital's Real Estate Financial Services Division. In 1984, he was elected
senior vice president for finance and became an executive officer of GE.
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[PHOTO OF PAOLO FRESCO]
Paolo Fresco, 64, Vice Chairman of the Board and Executive Officer, General
Electric Company. Director since 1990.
Mr. Fresco received a law degree from the University of Genoa. After
practicing law in Rome, he joined GE's Italian subsidiary, Compagnia
Generale di Elettricita (COGENEL), in 1962 as corporate counsel, becoming
president and general manager of that company in 1972. In 1976, he joined GE`s
International Group and was elected a vice president in 1977. Mr. Fresco became
vice president and general manager - Europe and Africa Operations in 1979. In
1985, he was named vice president and general manager - International
Operations. In 1987, he was elected senior vice president - GE International. He
became a member of the Board in 1990 and was elected vice chairman of the Board
and executive officer in 1992. He is a director of Fiat SpA.
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[PHOTO OF CLAUDIO X. GONZALEZ]
Claudio X. Gonzalez, 63, Chairman of the Board and Chief Executive Officer,
Kimberly-Clark de Mexico, S.A. de C.V., Mexico City, and Director,
Kimberly-Clark Corporation, consumer products. Director since 1993.
Mr. Gonzalez is a graduate of Stanford University. He was employed by
Kimberly-Clark in 1956 and by Kimberly-Clark de Mexico, S.A. in 1957. He was
elected vice president of operations of Kimberly-Clark de Mexico, S.A. in 1962
and executive vice president and managing director in 1966. He assumed his
present position in 1973. Mr. Gonzalez is a director of Kellogg Company, The
Mexico Fund, Inc., Planet Hollywood International, Inc., Banco Nacional de
Mexico, Grupo Carso, Grupo Industrial ALFA, Grupo Modelo, Grupo Televisa and
Telefonos de Mexico.
<PAGE>
9
[PHOTO OF GERTRUDE G. MICHELSON]
Gertrude G. Michelson, 72, Former Senior Vice President - External Affairs and
Former Director, R. H. Macy & Co., Inc., retailers, New York, N.Y. Director
since 1976.
Mrs. Michelson received a BA degree from Pennsylvania State University in 1945
and an LLB degree from Columbia University in 1947, at which time she joined
Macy's - New York. Mrs. Michelson was elected a vice president in 1963 and
senior vice president in 1979, and she was named senior vice president -
external affairs in 1980. She served as senior advisor to R. H. Macy & Co., Inc.
from 1992 to 1994. She is also a director of The Chubb Corporation and The
Goodyear Tire & Rubber Company. Mrs. Michelson is chairman emeritus of the Board
of Trustees of Columbia University and a governor of the American Stock
Exchange.
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[PHOTO OF EUGENE F. MURPHY]
Eugene F. Murphy, 61, Vice Chairman of the Board and Executive Officer, General
Electric Company. Director since 1997.
A graduate of Queens College with an LLD from Fordham Law School and an LLM from
Georgetown, Mr. Murphy joined RCA Global Communications as an attorney in 1964
after serving in the U.S. Marine Corps. He became vice president and general
counsel of that company in 1969. In 1985, he became RCA executive vice president
for Communications and Electronic Services. In 1986, following GE's acquisition
of RCA, Mr. Murphy became senior vice president and head of GE Communications
and Services. In 1991, Mr. Murphy became head of GE's Aerospace business and
then president and CEO of GE Aircraft Engines in 1993. He was elected vice
chairman of the Board and executive officer in 1997. He is a director of
Lockheed Martin Corporation.
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[PHOTO OF SAM NUNN]
Sam Nunn, 59, Partner, King & Spalding, law firm, Atlanta, Ga. Director since
1997.
After attending Georgia Institute of Technology and serving in the U.S. Coast
Guard, Mr. Nunn received an AB degree from Emory University in 1960 and an LLB
degree from Emory Law School in 1962. He then practiced law and served in the
Georgia House of Representatives before being elected to the United States
Senate in 1972, where he served as the chairman and ranking member on both the
Senate Armed Services Committee and the Senate Permanent Committee on
Investigations before retiring in 1997. Mr. Nunn is a director of The Coca-Cola
Company, National Service Industries, Inc., Scientific-Atlanta, Inc., Texaco,
Inc., and Total Systems Services, Inc. He also is involved in public policy work
at the Center for Strategic and International Studies (CSIS) and the Sam Nunn
School of International Affairs at the Georgia Institute of Technology.
<PAGE>
10
[PHOTO OF JOHN D. OPIE]
John D. Opie, 60, Vice Chairman of the Board and Executive Officer, General
Electric Company. Director since 1995.
Mr. Opie joined GE after graduating from Michigan College of Mining and
Technology with a BS degree in 1961. He has held key leadership positions in
several GE materials and electrical products businesses. He became vice
president of the Lexan Products Division in 1980, vice president of the
Specialty Plastics Division in 1982, vice president of the Construction
Equipment Business Operations in 1983, and senior vice president and head of GE
Lighting in 1986. He was elected vice chairman of the Board and executive
officer in 1995.
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[PHOTO OF ROGER S. PENSKE]
Roger S. Penske, 61, Chairman of the Board, Penske Corporation, Penske
Motorsports, Inc., Detroit Diesel Corporation and Penske Truck Leasing
Corporation, transportation and automotive services, Detroit, Mich. Director
since 1994.
A 1959 graduate of Lehigh (Pa.) University, Mr. Penske founded Penske
Corporation in 1969. He became chairman of the board of Penske Truck Leasing
Corporation in 1982, chairman and chief executive officer of Detroit Diesel
Corporation in 1988, and chairman of the board of Penske Motorsports, Inc., in
1996. Mr. Penske is also a director of Gulfstream Aerospace Corporation and
Philip Morris Companies Inc. He serves as a trustee of the Henry Ford Museum and
Greenfield Village, is a director of Detroit Renaissance, and is a member of the
Business Council.
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[PHOTO OF FRANK H. T. RHODES]
Frank H. T. Rhodes, 71, President Emeritus, Cornell University, Ithaca, N.Y.
Director since 1984.
An English-born naturalized U.S. citizen, Dr. Rhodes holds bachelor of science,
doctor of philosophy and doctor of science degrees from the University of
Birmingham (U.K.). He served as president of Cornell University from 1977 to
1995. Dr. Rhodes is a director of Tompkins County Trust Company. He is a trustee
of the Mellon Foundation and the Dyson Charitable Fund. He was appointed by
President Reagan as a member of the National Science Board, of which he is a
former chairman, and by President Bush as a member of the President's Education
Policy Advisory Committee.
<PAGE>
11
[PHOTO OF ANDREW C. SIGLER]
Andrew C. Sigler, 66, Retired Chairman of the Board and Chief Executive Officer,
Champion International Corporation, paper and forest products, Stamford, Conn.
Director since 1984.
A graduate of Dartmouth College with an MBA degree from its Amos Tuck School of
Business Administration, Mr. Sigler joined Champion Papers Inc., a predecessor
of Champion International, in 1956. He became executive vice president of
Champion International in 1972, a director in 1973, and president and chief
executive officer in 1974. He served as chairman from 1979 until his retirement
in 1996. Mr. Sigler is also a director of AlliedSignal, Inc., Bristol-Myers
Squibb Company and The Chase Manhattan Corporation and is a member of the Board
of Trustees of Dartmouth College.
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[PHOTO OF DOUGLAS A. WARNER III]
Douglas A. Warner III, 51, Chairman of the Board, Chief Executive Officer and
President, J.P. Morgan & Co. Incorporated and Morgan Guaranty Trust Company, New
York, N.Y. Director since 1992.
Following graduation from Yale University in 1968, Mr. Warner joined Morgan
Guaranty Trust Company, a wholly owned subsidiary of J.P. Morgan & Co.
Incorporated. He was named an executive vice president of the bank in 1987,
executive vice president of the parent in 1989, and managing director of the
bank and its parent in 1989. He was elected president and a director of the bank
and its parent in 1990 and became chairman and chief executive officer in 1995.
Mr. Warner is also a director of Anheuser-Busch Companies, Inc., chairman of the
Board of Managers of the Memorial Sloan-Kettering Cancer Center, vice chairman
of the Business Council and a trustee of the Pierpont Morgan Library.
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[PHOTO OF JOHN F. WELCH, JR.]
John F. Welch, Jr., 62, Chairman of the Board and Chief Executive Officer,
General Electric Company. Director since 1980.
A 1957 graduate of the University of Massachusetts with MS and PhD degrees from
the University of Illinois, Mr. Welch joined GE in 1960. Following managerial
assignments in the plastics and chemical and metallurgical businesses, he was
elected a vice president in 1972. In 1973, he was named vice president and group
executive of the Components and Materials Group. He became a senior vice
president and sector executive of the Consumer Products and Services Sector in
1977 and was elected a vice chairman and named an executive officer in 1979. Mr.
Welch was elected chairman and named chief executive officer in 1981.
<PAGE>
12
INFORMATION RELATING TO DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
The following table includes all GE stock-based holdings, as of February 13,
1998, of the Company's directors and five most highly compensated executive
officers. This table indicates the alignment of the named individuals' financial
interests with the interests of the Company's share owners because the value of
their total GE holdings will increase or decrease in line with the price of GE's
stock.
<TABLE>
<CAPTION>
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COMMON STOCK AND TOTAL STOCK-BASED HOLDINGS
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Name Stock(1) Total(2) Name Stock(1) Total(2)
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<S> <C> <C> <S> <C> <C>
D. Wayne Calloway 31,000 46,000 Sam Nunn 2,500 13,866
James I. Cash, Jr 700 6,700 John D. Opie 305,694 1,291,367
Silas S. Cathcart 256,796(3) 271,796 Roger S. Penske 17,000 37,054
Dennis D. Dammerman 217,178 1,314,463 Barbara Scott Preiskel 55,942(5) 79,204
Paolo Fresco 351,321 2,149,263 Frank H. T. Rhodes 39,800 75,082
Claudio X. Gonzalez 25,800 53,639 Andrew C. Sigler 35,000 50,000
Benjamin W. Heineman, Jr. 200,364 931,176 Douglas A. Warner III 30,200(6) 45,200
Gertrude G. Michelson 42,200(4) 114,108 John F. Welch, Jr. 1,163,779(7) 6,256,926
Eugene F. Murphy 84,914 1,098,081
<FN>
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Common stock holdings of all directors and executive officers as a group were 3,732,345(8)
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</TABLE>
NOTES:
(1) This column lists voting securities, including restricted stock held by
executive officers over which the officers have voting power but no
investment power. Otherwise, each director or officer has sole voting and
investment power over the shares reported, except as noted. This column
includes 27,000 shares for Mr. Calloway, 17,000 shares for Mr. Cathcart,
21,000 shares for Messrs. Gonzalez and Warner, 39,000 shares for Mrs.
Michelson and Dr. Rhodes, 1,500 shares for Mr. Nunn, 9,000 shares for Mr.
Penske, 45,000 shares for Mrs. Preiskel and 27,000 shares for Mr. Sigler
that may be acquired by them pursuant to stock options that are or will
become exercisable within 60 days. It also includes 85,000 shares for Mr.
Dammerman, 160,000 shares for Mr. Fresco, 45,000 shares for Mr. Heineman,
65,000 shares for Mr. Murphy, 65,000 shares for Mr. Opie and 320,000 shares
for Mr. Welch that may be acquired by them pursuant to stock options that
are or will be exercisable within 60 days. No director or executive officer
owns more than one-tenth of one percent of the total outstanding shares,
nor do all directors and executive officers as a group own more than one
percent of the total outstanding shares.
(2) This column shows the individual's total GE stock-based holdings, including
the voting securities shown in the "Stock" column (as described in note 1),
plus non-voting interests, including, as appropriate, the individual's
holdings of stock appreciation rights, restricted stock units, deferred
compensation accounted for as units of GE stock, and stock options that
will not become exercisable within 60 days.
(3) Includes 10,880 shares over which Mr. Cathcart has shared voting and
investment power.
(4) Includes 3,200 shares over which Mrs. Michelson shares voting and
investment power.
(5) Includes 4,000 shares over which Mrs. Preiskel has shared voting and
investment power but as to which she disclaims any other beneficial
interest.
(6) Includes 1,200 shares over which Mr. Warner has shared voting and
investment power but as to which he disclaims any other beneficial
interest.
(7) Includes 104,000 shares over which Mr. Welch has shared voting and
investment power but as to which he disclaims any other beneficial
interest.
(8) Includes 980,370 shares over which there are shared voting and/or
investment powers.
<PAGE>
13
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held 11 meetings during 1997. The average attendance by
directors at Board meetings, and Committee meetings they were scheduled to
attend, was over 95%, and each director except Mr. Calloway attended at least
75% of such meetings.
Among the committees of the Board of Directors are a Nominating Committee, a
Management Development and Compensation Committee, and an Audit Committee.
Members of the Nominating Committee are Directors Sigler (Chairman),
Calloway, Cathcart, Michelson and Warner. This committee's responsibilities
include the selection of potential candidates for director and the
recommendation of candidates to the Board. It also makes recommendations to the
Board concerning the structure and membership of the other Board Committees. The
Nominating Committee held three meetings during 1997. This committee will
consider share owner recommendations for director sent to the Nominating
Committee, c/o Benjamin W. Heineman, Jr., Secretary, General Electric Company,
Fairfield, CT 06431.
Members of the Management Development and Compensation Committee are
Directors Cathcart (Chairman), Gonzalez, Michelson, Rhodes and Sigler. This
committee has two primary responsibilities: (1) to monitor the Company's
management resources, structure, succession planning, development and selection
process as well as the performance of key executives; and (2) to review and
approve executive compensation and changes. It also serves as the committee
administering the GE 1990 Long-Term Incentive Plan and the Incentive
Compensation Plan. This committee met nine times during 1997.
Members of the Audit Committee are Directors Michelson (Chairman), Cathcart,
Penske, Preiskel and Rhodes. This committee is primarily concerned with the
effectiveness of the audits of GE by its internal audit staff and by the
independent auditors. Its duties include: (1) recommending the selection of
independent auditors; (2) reviewing the scope of the audit to be conducted by
them, as well as the results of their audit; (3) reviewing the organization and
scope of GE's internal system of audit and financial controls; (4) appraising
GE's financial reporting activities (including its Proxy Statement and Annual
Report) and the accounting standards and principles followed; and (5) examining
other reviews relating to compliance by employees with important GE policies and
applicable laws. There were four meetings of the Audit Committee during 1997.
Non-employee directors are paid an annual retainer of $50,000 plus a fee of
$1,400 for each Board meeting and for each Board Committee meeting attended. A
director may make an irrevocable election each year to defer all or a portion of
annual retainer and fees. At the director's option, his or her account is
credited with units accounted for as GE common stock or the dollar amount of the
deferral. Accounts are also credited with common stock dividend equivalents or
interest equivalents based on the yield for long-term U.S. government bonds.
Participants will receive payments from their account in cash, in either a lump
sum or annual installments, after termination of Board service. Non-employee
directors are also paid a travel allowance for attendance at Board meetings.
<PAGE>
14
Any non-employee director who has served as a director for at least five
years, is 65 years of age or older, and retires directly from the Board is
eligible to elect to receive: (1) an annual retirement benefit for the lives of
the director and eligible surviving spouse in the amount of the retainer fee in
effect at retirement; or (2) in lieu thereof, a life insurance benefit in the
amount of $450,000. The Board has decided that no director shall stand for
re-election after his or her 73rd birthday. GE also provides each non-employee
director with group life and accidental death insurance in the aggregate amount
of $150,000. The non-employee directors are not eligible to participate in GE's
Incentive Compensation Plan, employee stock option plans or in any pension plans
of GE or its subsidiaries.
GE has had directors' and officers' liability insurance in effect since 1968.
GE also has fiduciary liability insurance covering fiduciaries of GE's employee
benefit plans. Zurich Insurance Company and American International Specialty
Lines Company are the principal underwriters. The directors' and officers'
liability insurance covers directors and officers of GE and its subsidiaries.
The fiduciary liability insurance covers, among others, directors, officers and
employees who may be fiduciaries of any of GE's employee benefit plans. The
current policies expire on June 11, 2002. The total annual premium is
approximately $4.3 million.
As part of the Company's overall support for charitable institutions, and in
order to preserve its ability to attract directors with outstanding experience
and ability, the Company maintains a plan which permits each director to
recommend up to five charitable organizations that would share in a $1 million
contribution to be made by the Company upon the director's retirement or death.
The directors will not receive any financial benefit from this program since the
charitable deductions accrue solely to the Company. The overall program will not
result in a material cost to the Company.
To further align the non-employee directors' interests with the long-term
interests of the share owners, the 1996 Stock Option Plan for Non-Employee
Directors automatically provides yearly grants of options from 1997 through 2003
(with each grant becoming exercisable in four equal annual installments) to each
non-employee director who is serving on the Board at the time of such grant.
Each annual grant permits the holder to purchase from GE up to 6,000 shares of
GE's common stock at the fair market value of such shares on the date the option
was granted. Under the terms of the Plan, a grant was made on January 30, 1998,
at an exercise price of $77.50 per share, and annual grants will be made on the
last day of trading of GE stock in each January hereafter through the year 2003.
The options expire ten years after the date they were granted or at such earlier
date as may be provided by the Plan provisions upon retirement, disability,
death or other termination of service. The Plan is administered by a committee
of employee directors, none of whom is eligible to receive awards under the
Plan.
<PAGE>
15
The directors (other than Messrs. Calloway, Cash, Gonzalez, Murphy, Nunn,
Opie, Penske and Warner) and certain officers are defendants in a civil suit
purportedly brought on behalf of the Company as a share owner derivative action
(the McNeil action) in New York State Supreme Court, New York County, in 1991.
The suit alleges the Company was negligent and engaged in fraud in connection
with the design and construction of containment systems for nuclear power plants
and contends that, as a result, GE has incurred significant financial
liabilities and is potentially exposed to additional liabilities from claims
brought by the Company's customers. The suit alleges breach of fiduciary duty by
the directors and seeks unspecified compensatory damages and other relief. The
Company and the defendants believe these claims are without merit and are
defending the suit.
Pursuant to the indemnification provisions of the By-laws, the Company paid a
total of $8,796 in defense costs incurred since 1994 by the directors in two
civil suits purportedly brought on behalf of the Company as shareholder
derivative suits in connection with the false trading profits created by an
employee at Kidder, Peabody & Co., Incorporated. Those suits were dismissed in
1997. The Company similarly paid $16,073 in defense costs incurred by the
directors named as defendants in a 1996 civil suit purportedly brought as a
class action on behalf of all share owners and as a shareholder derivative
action on behalf of the Company in connection with the directors' recommendation
that the share owners approve the 1996 Stock Option Plan For Non-Employee
Directors. The 1997 dismissal of that suit was affirmed by the New York
appellate court in 1998.
CERTAIN TRANSACTIONS
Mr. Penske has an indirect financial interest in Penske Truck Leasing Co., L.P.,
a limited partnership formed in 1988 between a subsidiary of Penske Corporation
and a subsidiary of GE Capital Corporation (GE Capital) in order to operate a
truck leasing and rental business. In connection with a 1996 restructuring that
increased GE Capital's interest in the partnership from 50% to 79%, the Penske
Corporation subsidiary will receive annual payments, declining from $11.3
million to $9.3 million over a ten-year period, with the majority of such
payments contingent upon the partnership achieving certain revenue thresholds.
GE Capital has also extended acquisition and working capital loans and
guarantees to the partnership, which totaled about $2.3 billion at the end of
1997, all on terms substantially equivalent to those extended to similar
affiliates and joint ventures. Mr. Penske also has a direct financial interest
in and controls Penske Capital Partners, LLC, which in 1997 entered into an
investment agreement with GE Capital's Equity Capital Group and other investors.
The agreement permits GE Capital to invest up to $100 million of equity in
transactions involving selected transportation-related companies in return for
its agreement to pay Penske Capital Partners an annual fee of up to $1.5 million
for evaluating and, as appropriate, managing such investments. GE Capital also
agreed that, after it recovers its investments and receives a preferred return
on any such investments, Penske Capital Partners shall then receive a 20%
interest in the remaining profits from the GE Capital investments.
<PAGE>
GE has, for a number of years, used the services of the law firm of King &
Spalding, in which Mr. Nunn is a partner, for a variety of matters. Also, GE and
its subsidiaries have obtained investment banking and other financial services
from J.P. Morgan &Co., Incorporated, of which Mr. Warner is Chairman of the
Board and Chief Executive Officer, and from its subsidiaries. GE and its
subsidiaries also have purchase, lease, finance, insurance and other
transactions and relationships in the normal course of business with companies
and organizations with which GE directors are associated, but which are not
sufficiently significant to be reportable. Management believes that all of these
transactions and relationships during 1997 were on terms that were reasonable
and competitive. Additional transactions and relationships of this nature may be
expected to take place in the ordinary course of business in the future. In the
normal course of his employment by the Company, Mr. Opie's son earned
compensation in excess of $60,000 during 1997.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
COMPENSATION POLICIES FOR EXECUTIVE OFFICERS
The Management Development and Compensation Committee of the Board of Directors
(the Committee), consisting entirely of non-employee Directors, approves all of
the policies under which compensation is paid or awarded to the Company's
executive officers. The Company's basic compensation program for executive
officers currently consists of the following elements: annual payments of salary
and bonuses; annual grants of stock options; and periodic grants of restricted
stock units (RSUs) and other contingent long-term financial performance awards.
As described more fully below, each element of the Company's executive
compensation program has a somewhat different purpose. All stock option, RSU and
contingent long-term financial performance awards are made under the
share-owner-approved GE 1990 Long-Term Incentive Plan (the Plan), which limits
total annual awards to less than 1% of issued shares. In 1997, the share owners
approved the material terms of performance goals to be set by the Committee for
payments of bonuses, RSUs and long-term performance awards to the Company's
executive officers, and approved an amendment to the Plan to establish a limit
on the number of stock options that may be awarded to any individual, to enable
the Company to continue to obtain tax deductions for the full amount of such
payments and awards under pertinent tax law.
As in prior years, and in accordance with the material terms of the
performance goals approved by the share owners, all of the Committee's judgments
during 1997 regarding the appropriate form and level of executive compensation
payments and incentive awards were ultimately based upon the Committee's
assessment of the Company's executive officers, the increasingly competitive
demand for superior executive talent, the Company's overall performance, and
GE's future objectives and challenges. Although the Committee did not generally
<PAGE>
17
rely solely upon a guideline or formula based on any particular performance
measure or single event in 1997, key factors affecting the Committee's judgments
included, among other things: strong increases in the earnings of the Company;
solid productivity gains in a period of intense competition; development and
implementation of aggressive quality initiatives to achieve preeminent
leadership in all the Company's product and service offerings; increased
revenues generated outside the United States and further improvements in the
Company's global competitive position through a number of strategic transactions
and joint ventures with partners in developing markets; accelerated growth of
the Company's global service offerings; leadership in ensuring compliance with
applicable law and Company ethics policies; and continuation of productivity,
asset utilization and employee involvement initiatives that, among other things,
provided improved cash flow and increased return on share owner equity. The
Committee also considered the compensation practices and performances of other
major corporations that are most likely to compete with the Company for the
services of executive officers. Based upon all factors it deemed relevant,
including those noted above and the Company's superior overall long-term
performance, the Committee considered it appropriate, and in the best interest
of the share owners, to set the overall level of the Company's salary, bonus and
other incentive compensation awards above the average of companies in the
comparison group in order to enable the Company to continue to attract, retain
and motivate the highest level of executive talent possible.
Salary payments in 1997 were made to compensate ongoing performance
throughout the year. Bonuses for 1997 were based upon the Committee's
determination that the Company's 1997 financial results had exceeded the
performance goals previously established by the Committee and upon its judgment
regarding the significance of each executive officer's contributions during
1997. The number of stock options granted to the Company's five most highly
compensated executive officers, and the hypothetical potential value of the
awards, are shown in the table on page 25. Each stock option permits the holder,
generally for a period of ten years, to purchase one share of GE stock from the
Company at the market price of GE stock on the date of grant. Stock options
generally become exercisable in two installments, the first half after three
years and the other half after five years from the date of grant. Generally, the
restrictions on 25% of RSUs lapse three years after grant, an additional 25%
lapse in seven years, and the remaining 50% lapse at retirement. Stock options
and RSUs provide strong incentives for continued superior performance because,
under the terms of these awards, unexercised stock options and RSUs for which
restrictions have not lapsed are forfeited if the executive officer is
terminated by the Company for performance or voluntarily leaves the Company
before retirement.
The Committee's decisions concerning the specific 1997 compensation
elements for individual executive officers, including the Chief Executive
Officer, were made within this broad framework and in light of each executive
officer's level of responsibility, performance, current salary, prior-year bonus
and other compensation awards. As noted above, in all cases the Committee's
<PAGE>
18
specific decisions involving 1997 executive officer compensation were ultimately
based upon the Committee's judgment about the individual executive officer's
performance and potential future contributions, and about whether each
particular payment or award would provide an appropriate reward and incentive
for the executive to sustain and enhance the Company's long-term superior
performance.
BASIS FOR CHIEF EXECUTIVE OFFICER COMPENSATION
For 1997, Mr. Welch received total cash payments of $8,000,000 in salary
and bonus, as shown in the Summary Compensation Table on page 20. The Committee
considered this level of payment appropriate in view of Mr. Welch's leadership
of one of the world's top companies in terms of earnings, balance sheet
strength, creation of share owner value and management processes. In 1997, the
Committee also granted Mr. Welch 450,000 stock options, which are scheduled to
become exercisable in 2000. The primary basis for the Committee's determination
to grant such stock options to Mr. Welch in 1997 was to provide a strong
incentive for him to continue to increase the value of the Company during the
remainder of his employment. As reported in last year's Proxy Statement, the
Board of Directors entered into an employment contract with Mr. Welch in 1996,
which requires him to serve as the Chairman and Chief Executive Officer of the
Company until December 31, 2000, at the pleasure of the Board of Directors on
terms no less favorable than his then current conditions of employment. In
addition, after that date, the contract requires Mr. Welch, when requested by
the Company's then current Chief Executive Officer, to be available for up to 30
days a year for the remainder of his lifetime to provide consulting services or
to participate in external events or activities on behalf of the Company. In
return for these commitments by Mr. Welch, the Board agreed to pay him, during
the term of the consulting agreement, a daily consulting fee for the days he
renders services based on his daily salary rate in the year prior to his
retirement, the first five days of which will be paid in advance through an
annual retainer, and to provide him continued lifetime access to Company
facilities and services comparable to those which are currently made available
to him by the Company.
The specific bases for the Committee's determinations regarding Mr. Welch's
compensation in 1997 included his aggressive leadership, which drove the
Company's outstanding financial results and improved its overall global
competitive position; his vision and determination to achieve preeminent quality
in all of the Company's products and services; and his drive to reinforce a
culture of integrity, stretch targets, boundaryless behavior and employee
involvement throughout the Company. As in prior years, the key judgment the
Committee made in determining Mr. Welch's 1997 compensation was its assessment
of his ability and dedication to continue increasing the long-term value of the
Company for the share owners by continuing to provide the leadership and vision
that he has provided throughout his seventeen-year tenure as Chairman and Chief
<PAGE>
19
Executive Officer, during which GE's market value has increased by more than
$235,000,000,000. This performance is further highlighted by the performance
graph on page 23, which covers Mr. Welch's tenure as CEO and compares GE stock
performance with the stock performance of other companies, as measured by broad
market indices.
BROAD-BASED EMPLOYEE STOCK OPTION PLAN
In addition to granting 1.9 million stock options (about 14% of the total number
of stock options awarded in 1997) to the Company's 23 executive officers under
the program described above, the Committee also granted 11.6 million stock
options to more than 10,000 other GE employees under the Company's stock option
programs, including a broad-based program initiated in 1989. This broad-based
program is a vital element of the Company's drive to empower and motivate
outstanding long-term contributions by the high-performing employees who will
lead GE into the 21st century. It is designed to create in the Company the
entrepreneurial environment and spirit of a small company and to provide broad
incentives for the day-to-day achievements of these employees, particularly the
highly trained leaders of the Company's Six Sigma quality initiative, in order
to sustain and enhance GE's long-term performance. The Committee believes that
the superior performance of these individuals has contributed significantly to
the productivity gains that led to the solid financial performance of the
Company's operations in 1997. Currently, there are approximately 27,000
individuals below the executive officer level who have been awarded one or more
stock option grants under this broad-based program.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Management Development and Compensation Committee is composed of the
following non-employee directors: Silas S. Cathcart (Chairman), Claudio X.
Gonzalez, Gertrude G. Michelson, Frank H. T. Rhodes and Andrew C. Sigler. Mr.
Cathcart was reappointed to the Committee in 1992 and became Chairman in 1993.
He served as a member of the Committee from 1977 to 1987 and as a director of GE
since 1972, except for the period during 1987 to 1989 when he served as Chairman
and CEO of Kidder, Peabody Group Inc., a former operating subsidiary of the
Company.
*****
The foregoing report on executive compensation is provided by the following
non-employee directors, who constituted the Management Development and
Compensation Committee during 1997:
Silas S. Cathcart (Chairman) Frank H. T. Rhodes
Claudio X. Gonzalez Andrew C. Sigler
Gertrude G. Michelson
<PAGE>
20
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
- ----------------------------------------------------------------------------------------------
NAME AND OTHER ANNUAL TOTAL ANNUAL
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) COMPENSATION
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
JOHN F. WELCH, JR. 1997 $2,500,000 $5,500,000 $ 69,190 $8,069,190
Chairman of the Board and 1996 2,300,000 4,000,000 -- 6,300,000
Chief Executive Officer 1995 2,000,000 3,250,000 71,228 5,321,228
PAOLO FRESCO 1997 $1,350,000 $2,350,000 -- $3,700,000
Vice Chairman of the Board 1996 1,183,333 1,875,000 -- 3,058,333
and Executive Officer 1995 1,025,000 1,550,000 $ 60,059 2,635,059
JOHN D. OPIE 1997 $1,000,000 $1,600,000 -- $2,600,000
Vice Chairman of the Board 1996 875,000 1,150,000 -- 2,025,000
and Executive Officer 1995 716,700 800,000 -- 1,516,700
DENNIS D. DAMMERMAN 1997 $1,025,000 $1,300,000 -- $2,325,000
Senior Vice President, 1996 950,000 1,050,000 -- 2,000,000
Finance 1995 850,000 850,000 -- 1,700,000
BENJAMIN W. HEINEMAN, JR. 1997 $ 933,333 $1,100,000 -- $2,033,333
Senior Vice President, 1996 850,000 915,000 -- 1,765,000
General Counsel and Secretary 1995 800,000 775,000 $ 64,081 1,639,081
- ---------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
21
LONG-TERM COMPENSATION
- --------------------------------------------------------------------------------
AWARDS PAYOUTS
------------------------- -----------
RESTRICTED NUMBER
NAME AND STOCK OF STOCK LTIP
PRINCIPAL POSITION YEAR UNITS(2) OPTIONS(3) PAYOUTS(4)
- --------------------------------------------------------------------------------
JOHN F. WELCH, JR. 1997 -- 450,000 --
Chairman of the Board and 1996 -- 640,000 $15,105,000
Chief Executive Officer 1995 $11,425,000 640,000 --
PAOLO FRESCO 1997 -- 225,000 --
Vice Chairman of the Board 1996 -- 320,000 $ 7,370,416
and Executive Officer 1995 $ 5,712,500 320,000 --
JOHN D. OPIE 1997 -- 150,000 --
Vice Chairman of the Board 1996 -- 200,000 $ 4,477,271
and Executive Officer 1995 $ 3,427,500 170,000 --
DENNIS D. DAMMERMAN 1997 -- 115,000 --
Senior Vice President, 1996 -- 170,000 $ 4,916,250
Finance 1995 $ 3,427,500 170,000 --
BENJAMIN W. HEINEMAN, JR. 1997 -- 55,000 --
Senior Vice President, 1996 -- 90,000 $ 2,939,958
General Counsel and Secretary 1995 $ 1,713,750 90,000 --
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ALL OTHER COMPENSATION
- -------------------------------------------------------------------------------------------------
PAYMENTS
RELATING TO EARNINGS ON VALUE OF
EMPLOYEE DEFERRED SUPPLEMENTAL
NAME AND SAVINGS COMPEN- LIFE INSURANCE TOTAL ALL OTHER
PRINCIPAL POSITION YEAR PLAN(5) SATION(6) PREMIUMS(7) COMPENSATION
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
JOHN F. WELCH, JR. 1997 $157,500 $455,275 $118,832 $731,607
Chairman of the Board and 1996 137,375 314,961 134,749 587,085
Chief Executive Officer 1995 113,750 195,605 200,689 510,044
PAOLO FRESCO 1997 $80,025 $206,635 $ 27,280 $313,940
Vice Chairman of the Board 1996 41,417 136,316 31,600 209,333
and Executive Officer 1995 35,875 77,555 47,068 160,498
JOHN D. OPIE 1997 $55,100 $ 41,663 $ 33,091 $129,854
Vice Chairman of the Board 1996 44,625 29,208 36,430 110,263
and Executive Officer 1995 34,750 26,007 52,151 112,908
DENNIS D. DAMMERMAN 1997 $54,288 $ 39,209 $ 40,452 $133,949
Senior Vice President, 1996 48,125 26,269 43,411 117,805
Finance 1995 42,050 18,591 53,144 113,785
BENJAMIN W. HEINEMAN, JR. 1997 $48,675 $ 40,164 $ 48,534 $137,373
Senior Vice President, 1996 43,313 29,154 51,683 124,150
General Counsel and Secretary 1995 39,650 26,048 65,157 130,855
- -------------------------------------------------------------------------------------------------
</TABLE>
NOTES:
(1) This column includes the aggregate incremental cost to the Company of
providing various perquisites and personal benefits in excess of reporting
thresholds including, for Mr. Welch in 1997, $29,182 for financial
planning services and $20,966 for personal use of Company aircraft.
(2) This column shows the market value of restricted stock unit (RSU) awards
on date of grant. The Committee periodically grants restricted stock or
RSUs to senior officers of the Company. The aggregate holdings and market
value of restricted stock and RSUs held on December 31, 1997, by the
individuals listed in this table, are: Mr. Welch, 1,135,000 shares or
units/$83,280,625; Mr. Fresco, 407,000 shares or units/$29,863,625; Mr.
Opie, 306,000 shares or units/$22,452,750; Mr. Dammerman, 341,500 shares
or units/$25,057,563; and Mr. Heineman, 215,000 shares or
units/$15,775,625. The restrictions on these units lapse on a scheduled
basis over the executive officer's career, or upon death, with the
restrictions on 25% of the units generally scheduled to lapse three and
seven years after the date of grant, and the restrictions on the remaining
50% scheduled to lapse at retirement. Regular quarterly dividends or
dividend equivalents are paid on restricted stock and RSUs held by these
individuals.
(3) The numbers of stock options granted before 1997 were doubled to reflect
the Company's 2-for-1 stock split in 1997.
(4) These amounts represent the dollar value of payouts pursuant to long-term
financial performance incentive awards granted in 1994.
(5) These amounts represent Company payments of 3.5% of eligible pay made in
connection with the Company's Savings and Security Program.
(6) This compensation represents the difference between market interest rates
determined pursuant to SEC rules and the 10% to 14% interest contingently
credited by the Company on salary deferred by the executive officers under
various salary deferral plans in effect between 1987 and 1997. Under all
such plans, the executive officers must remain employed by the Company for
at least four years following the deferrals, or retire after the full year
of deferral, in order to obtain the stated interest rate.
(7) This column sets forth the maximum potential estimated dollar value of the
Company's portion of insurance premium payments for supplemental life
insurance. GE will recover all premiums paid by it, generally upon the
later of ten years after purchase of the policy or when the insured
executive reaches age 60. The maximum potential value is calculated, in
line with current SEC directions, as if the 1997 premiums were advanced to
the executive officers without interest until the time the Company expects
to recover the premium. Under the terms of the policies, the executive
officers would receive significantly reduced value from the premiums paid
by the Company if they were to leave the Company prior to retirement.
<PAGE>
22
FIVE-YEAR PERFORMANCE GRAPH: 1992 - 1997
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG GE, S&P 500 AND DOW JONES
INDUSTRIAL AVERAGE (DJIA)
The annual changes for the five- and seventeen-year periods shown in the graphs
on this and the following page are based on the assumption that $100 had been
invested in GE stock and each index on December 31, 1992 (as required by SEC
rules) and 1980, respectively, and that all quarterly dividends were reinvested
at the average of the closing stock prices at the beginning and end of the
quarter. The total cumulative dollar returns shown on the graphs represent the
value that such investments would have had on December 31, 1997.
Dow Jones
Year GE Industrial Average S&P 500
---- ------ ------------------ -------
1992 $ 100 $100 $100
1993 126 117 108
1994 126 123 112
1995 184 168 153
1996 258 217 189
1997 390 271 252
<PAGE>
23
SEVENTEEN-YEAR PERFORMANCE GRAPH: 1980 - 1997
COMPARISON OF SEVENTEEN-YEAR CUMULATIVE TOTAL RETURN AMONG GE, S&P 500 AND DOW
JONES INDUSTRIAL AVERAGE (DJIA)
The graph below shows the cumulative total return to GE share owners since
December 31, 1980, shortly before Mr. Welch became GE's Chairman and Chief
Executive Officer in April 1981, compared with the same indices shown on the
previous graph, thus illustrating the relative performance of the Company during
his tenure in that position.
Dow Jones
GE Industrial Average S&P 500
-- ------------------ -------
1980 $ 100 $ 100 $ 100
1981 97 96 95
1982 171 123 116
1983 219 155 142
1984 220 157 151
1985 293 209 198
1986 357 266 235
1987 375 281 248
1988 394 326 289
1989 587 432 380
1990 538 430 368
1991 739 534 480
1992 851 573 517
1993 1,073 671 569
1994 1,076 705 576
1995 1,563 965 793
1996 2,194 1,245 975
1997 3,315 1,555 1,300
<PAGE>
24
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
As discussed in the Compensation Committee Report beginning on page 16, stock
options were granted in 1997 as an incentive for future superior performance
leading to increased share owner value. Each stock option permits the holder,
generally for a period of ten years, to purchase one share of GE stock from the
Company at the market price of GE stock on the date of grant. The relationship
between the potential gains in share owner value and the stock options granted
to employees in 1997 is illustrated in the examples set forth in the first table
on the opposite page.
That table shows, among other data, hypothetical potential gains from stock
options granted in 1997 and the corresponding hypothetical potential gains in
total share owner value. These hypothetical gains are based entirely on assumed
annual growth rates of 5% and 10% in the value of the Company's stock price over
the ten-year life of the stock options granted in 1997 (which would equal a
total increase in stock price of 63% and 159%, respectively). These assumed
rates of growth were selected by the Securities and Exchange Commission for
illustration purposes only and are not intended to predict future stock prices,
which will depend upon market conditions and the Company's future performance
and prospects.
The stock options granted to Mr. Welch in 1997, for example, would produce
the pre-tax gain of $47,403,000 shown in the first table only if the Company's
stock price rises to more than $171 per share before Mr. Welch exercises the
stock options. Based on the number of shares of GE stock outstanding at the end
of 1997, such an increase in the Company's stock price would produce a
corresponding aggregate pre-tax gain of more than $343,000,000,000 for the
Company's share owners. In other words, Mr. Welch's potential gain from stock
options granted in 1997 would equal less than two-hundredths of one percent
(i.e., 0.014%) of the potential gain to all share owners resulting from the
assumed future stock price increases.
The second table on the opposite page provides information on previously
granted Stock Appreciation Rights (SARs) exercised by the five most highly
compensated executive officers during 1997, as well as information on their SAR
and stock option holdings at the end of 1997. In 1996, the Committee changed its
practice and began granting stock options instead of SARs to executive officers
and also replaced all outstanding SARs that had not become exercisable in 1996
with stock options. The replacement stock options have grant prices, forfeiture
provisions, and vesting and expiration dates identical to the SARs they replaced
in order to provide the same incentive values as the original SARs without
increasing the economic benefit to any executive officer. As shown in the table,
Mr. Welch received an actual pre-tax gain of $31,825,020 from SARs exercised in
1997. This gain was based solely upon increases in GE's stock price between the
date these SARs were granted and the date they were exercised. SARs expire ten
years after the date of grant and permit the executive officer to receive an
amount of cash, before tax, equal to the difference between the grant price of
<PAGE>
25
STOCK OPTIONS GRANTED IN 1997
- --------------------------------------------------------------------------------
INDIVIDUAL GRANTS
- --------------------------------------------------------------------------------
% OF TOTAL
NUMBER OPTIONS EXERCISE
OF GRANTED OR BASE EXPIRA-
NAME OF OPTIONS TO ALL PRICE TION
EXECUTIVE/GROUP GRANTED EMPLOYEES PER SHARE DATE
- --------------------------------------------------------------------------------
John F. Welch, Jr. 450,000 3.3% $ 66.25 9/12/07
Paolo Fresco 225,000 1.7% $ 66.25 9/12/07
John D. Opie 150,000 1.1% $ 66.25 9/12/07
Dennis D. Dammerman 115,000 0.9% $ 66.25 9/12/07
Benjamin W. Heineman, Jr. 55,000 0.4% $ 66.25 9/12/07
- ----------------------
All Share Owners NA NA NA NA
All Optionees - 13,471,750 100% $ 68.49 (1)
% of Total NA NA NA NA
Share Owners' Value
- --------------------------------------------------------------------------------
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF STOCK PRICE APPRECIATION
FOR TEN-YEAR GRANT TERM
- --------------------------------------------------------------------------------
AT 0% AT 5% AT 10%
ANNUAL ANNUAL ANNUAL
NAME OF GROWTH GROWTH GROWTH
EXECUTIVE/GROUP RATE RATE RATE
- --------------------------------------------------------------------------------
John F. Welch, Jr. 0 $18,783,000 $47,403,000
Paolo Fresco 0 $9,391,500 $23,701,500
John D. Opie 0 $6,261,000 $15,801,000
Dennis D. Dammerman 0 $4,800,100 $12,114,000
Benjamin W. Heineman, Jr. 0 $2,295,700 $5,793,700
- ----------------------
All Share Owners 0 $ 136,264,000,000(2) $ 343,892,000,000(2)
All Optionees - 0 $ 562,311,000 $ 1,419,114,000
% of Total NA 0.4% 0.4%
Share Owners' Value
- --------------------------------------------------------------------------------
(1 Options expire on various dates during the year 2007. Exercise price shown
is an average of all grants.
(2) Based on the number of shares outstanding at December 31, 1997.
- --------------------------------------------------------------------------------
AGGREGATED SARs EXERCISED IN 1997,
AND DECEMBER 31, 1997 STOCK OPTION AND SAR VALUE
<TABLE>
<CAPTION>
EXERCISED IN 1997 UNEXERCISED AT DECEMBER 31, 1997
- ----------------------------------------------------- -----------------------------------------------------
NUMBER OF SARS/OPTIONS VALUE OF SARS/OPTIONS(1)
------------------------- -------------------------
NAME OF NUMBER $ VALUE UNEXER- UNEXER-
EXECUTIVE OF SARS REALIZED EXERCISABLE CISABLE EXERCISABLE CISABLE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
John F. Welch, Jr. 600,000 $31,825,020 1,880,000 2,450,000 $98,830,048 $83,413,770
Paolo Fresco 480,000 $19,063,760 160,000 1,225,000 $ 7,660,000 $41,706,885
John D. Opie 206,000 $10,690,317 185,000 665,000 $ 9,184,379 $21,000,004
Dennis D. Dammerman 190,000 $10,010,000 215,000 650,000 $10,498,755 $22,319,380
Benjamin W. Heineman, Jr. 192,000 $11,275,010 253,000 340,000 $12,882,003 $11,855,628
- -------------------------------------------------------------------------------------------------------------
<FN>
(1) SAR and option values are based upon the difference between the grant prices of all SARs and options
awarded in 1997 and prior years and the December 31, 1997, closing price for the Company's stock of
$73.375 per share.
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
26
the SAR (which is equal to the closing price of the Company's common stock on
the date of grant) and the highest closing price of the Company's common stock
during a ten-business-day period, beginning on the third business day following
the public release of the Company's quarterly summary statement of sales and
earnings in which the SAR is exercised. In 1997, the Board of Directors amended
GE's 1990 Long-Term Incentive Plan to facilitate financial and estate planning
by the Company's officers by permitting them to transfer stock options granted
under the Plan to their descendants in accordance with rules established by the
Committee.
RETIREMENT BENEFITS
Employees are generally eligible to retire with unreduced benefits under
Company retirement plans at age 60 or later, and with social security benefits
at age 62 or later. The approximate annual retirement benefits provided under
Company retirement plans and social security for GE employees in higher salary
classifications retiring directly from the Company at age 62 or later are shown
in the table below.
- --------------------------------------------------------------------------------
ESTIMATED TOTAL ANNUAL RETIREMENT BENEFITS UNDER THE GE PENSION PLAN, THE GE
SUPPLEMENTARY PENSION PLAN, THE GE EXCESS BENEFIT PLAN AND SOCIAL SECURITY
YEARS OF SERVICE AT RETIREMENT
EARNINGS CREDITED FOR ----------------------------------------------------------
RETIREMENT BENEFIT 20 25 30 35 40
- --------------------------------------------------------------------------------
$1,000,000 $ 359,146 $ 445,731 $ 532,317 $ 600,000 $ 600,000
1,500,000 534,146 664,481 794,817 900,000 900,000
2,000,000 709,146 883,231 1,057,317 1,200,000 1,200,000
2,500,000 884,146 1,101,981 1,319,817 1,500,000 1,500,000
3,000,000 1,059,146 1,320,731 1,582,317 1,800,000 1,800,000
3,500,000 1,234,146 1,539,481 1,844,817 2,100,000 2,100,000
4,000,000 1,409,146 1,758,231 2,107,317 2,400,000 2,400,000
5,000,000 1,759,146 2,195,731 2,632,317 3,000,000 3,000,000
6,000,000 2,109,146 2,633,231 3,157,317 3,600,000 3,600,000
7,000,000 2,459,146 3,070,731 3,682,317 4,200,000 4,200,000
8,000,000 2,809,146 3,508,231 4,207,317 4,800,000 4,800,000
- --------------------------------------------------------------------------------
Note: The amounts shown above are applicable to employees retiring in 1998 at
age 62.
- --------------------------------------------------------------------------------
Amounts shown as "earnings credited for retirement benefits" in this table
represent the average annual covered compensation (as defined in the GE
Supplementary Pension Plan) paid for the highest 36 consecutive months out of
the last 120 months prior to retirement. For 1997, covered compensation for the
executive officers named in the table on page 20 is the same as the total of
their salary and bonus amounts shown in that table. As of February 13, 1998,
those executive officers had the following years of credited service with GE:
Mr. Welch, 37 years; Mr. Fresco, 36 years; Mr. Opie, 36 years; Mr. Dammerman,
<PAGE>
27
30 years; and Mr. Heineman, 10 years. The approximate annual retirement benefits
provided under Company retirement plans are payable in fixed monthly payments
for life, with a guaranteed minimum term of five years.
APPOINTMENT OF INDEPENDENT AUDITORS
KPMG Peat Marwick LLP have been recommended by the Audit Committee of
the Board for reappointment as the Independent Auditors for the Company. KPMG
Peat Marwick LLP were the Independent Auditors for the Company for the year
ended December 31, 1997. The Firm is a member of the SEC Practice Section of the
American Institute of Certified Public Accountants. Subject to share owner
approval, the Board of Directors has appointed this Firm as the Company's
Independent Auditors for the year 1998.
Representatives of the Firm are expected to attend the 1998 Annual Meeting.
They will have an opportunity to make a statement if they desire to do so and
will be available to respond to appropriate share owner questions.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSAL:
Resolved that the appointment by the Board of Directors of the Firm of KPMG Peat
Marwick LLP, Stamford Square, Stamford, Connecticut, as Independent Auditors for
the Company for the year 1998 is hereby approved.
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28
SHARE OWNER PROPOSALS
Some of the following share owner proposals contain assertions about GE that, in
the judgment of the Board, are incorrect. Rather than refuting all these
inaccuracies, however, your Board has recommended a vote against these proposals
for broader policy reasons as set forth following each proposal. Share holdings
of the various share owner proponents and, where applicable, names and addresses
of filers and co-filers, will be supplied upon oral or written request to GE.
SHARE OWNER PROPOSAL NO. 1
Evelyn Y. Davis, Watergate Office Building, 2600 Virginia Avenue, N.W., Suite
215, Washington, D.C. 20037, has notified GE that she intends to present the
following proposal at this year's meeting:
"Resolved: That the stockholders of General Electric recommend that the Board
take the necessary steps so that future outside directors shall not serve for
more than six years.
"Reasons: The President of the U.S.A. has a term limit, so do Governors of
many states. Newer directors may bring in fresh outlooks and different
approaches with benefits to all shareholders. No director should be able to feel
that his or her directorship is until retirement. Last year the owners of
53,144,387 shares, representing approximately 4.6% of shares voting, voted for
this proposal.
"If you agree, please mark your proxy FOR this resolution."
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
GE believes that requiring all outside directors to leave the Board after six
years of service would not be in the best interests of the share owners. The
experience, perspective and judgment of directors who have served beyond the
proposed six-year limit on the Board of a corporation as diverse and complex as
GE are invaluable benefits to the Company. Therefore, your Board recommends a
vote against this proposal.
SHARE OWNER PROPOSAL NO. 2
The GE Stockholders' Alliance, 5349 W. Bar X Street, Tucson, AZ 85713-6402, and
other filers have notified GE that they intend to present the following proposal
at this year's meeting:
"Whereas:
"The last viable U.S. nuclear power plant order was placed in October 1973;
all subsequent orders were canceled because nuclear power is acknowledged to be
dirty, dangerous and expensive;
"General Electric is actively seeking foreign markets for nuclear reactors;
"Nuclear fuel sales and reactor operation abroad provide material for
possible diversion to weapons programs, and in spite of customer countries
possibly being signatories of the Non-Proliferation Treaty, there is no
enforceable way to prevent this diversion;
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29
"There is still no resolution for the safe isolation of radioactive wastes
that must be sequestered from the environment for thousands of years;
"The inordinate expense of nuclear power plants can threaten the fiscal
equilibrium of customer countries, and jeopardize payment to GE; and
"A serious accident at a GE reactor abroad could cause severe adverse
economic, legal and health repercussions that would adversely affect the
Company;
"Therefore be it resolved that the shareholders request the Board of
Directors determine that GE will no longer seek new nuclear reactor and nuclear
fuel sales abroad, and instead, promote the sale of safer, lower-risk,
energy-efficient alternate generating systems to foreign markets.
"Supporting Statement: The Nuclear Regulatory Commission has no technical
specifications governing design or siting and no oversight on construction or
operations of reactors for export. Compared to the United States, most customer
countries have less stringent regulations, fewer trained personnel and less
operating experience. The technology is sufficiently complex and hazardous that
it is difficult to maintain an adequate level of safety even by our own
experienced technicians. The potential for serious accidents is very clear.
"Nuclear power is in great financial distress domestically in spite of
continuing heavy government subsidies. Expansion of nuclear power to additional
foreign markets, particularly developing countries, enlarges the pool of
possible economic distress. Government subsidies now in place for the export of
reactors may not be maintained.
"Energy researchers have demonstrated that energy efficiency and renewable
energy systems are the most economical, environmentally sound and readily
implemented ways to meet the energy needs of both industrial and developing
countries, with the least harm to the ozone, and without generating hazardous or
radioactive wastes that must be sequestered from the biosphere for hundreds of
generations. The nuclear power fuel cycle creates greenhouse gases and causes
the release of low-level radioactive gases and particulates into the atmosphere.
"Nuclear power's bomb proliferation potential, the mounting evidence of
adverse biological effects of radiation, the unresolved problem of nuclear waste
disposal, and strong public opposition are additional reasons for the Company to
cease the promotion of this technology abroad.
"Exporting nuclear power, with its possible catastrophic consequences either
as power plants or weapons, could threaten the financial integrity of the
Company and is socially irresponsible. Please vote FOR this proposal."
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
Nuclear power makes a significant contribution to meeting the world's demand
for electricity. In 1997, approximately 17% of the world's electricity was
generated from commercial nuclear plants. The Nuclear Regulatory Commission in
the United States and similar regulatory bodies in other countries have the
ongoing responsibility to ensure that nuclear facilities operate safely.
The major focus of GE's profitable nuclear business today is to provide
nuclear fuel and plant support services with the aim of enhancing safe and
efficient utility operations. These products and services should be available to
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30
utility customers throughout the world who need and want them. Your Board
believes it is also appropriate for GE to participate in the development of
advanced designs for nuclear generating plants for sale, under appropriate
conditions and safeguards, to utility customers in areas of the world where a
mix of technologies will be necessary to supply a growing and balanced need for
electrical generating capacity. Therefore, your Board recommends a vote against
this proposal.
SHARE OWNER PROPOSAL NO. 3
Patricia T. Birnie, 5349 W. Bar X Street, Tucson, AZ 85713-6402, and other
filers have notified GE that they intend to present the following proposal at
this year's meeting:
"Whereas: The Superfund Amendment and Reauthorization Act of 1986 has been in
effect for 11 years, requiring corporations to reduce production and increase
clean up of hazardous effluents, and report to the public on its efforts to
clean up hazardous effluents;
"GE has long expressed a commitment to protect the environment, and has a
comprehensive audit system to comply with regulations to protect workers, the
public and the environment;
"In January 1996, the U.S. Environmental Protection Agency identified GE as
the potentially responsible party at 83 Superfund sites, more than any other
company; and
"Environmental pollution is one of the world's most urgent problems,
affecting the future viability of life;
"Therefore be it resolved that the Board of Directors shall provide the
summary of an environmental report to shareholders in the next annual report,
and provide a copy of the full report to shareholders on request, to include:
"1. GE's progress in the remediation and its compliance with EPA cleanup
standards at each of the 83 Superfund sites and all other contaminated sites
for which the Company is responsible;
"2. GE's progress in making the workplace safer (as measured by the reduction
of OSHA violations and penalties), and progress in providing all employees with
adequate health insurance, domestic and foreign;
"3. GE's progress in making products more energy efficient and durable, and
manufacturing processes more energy efficient, domestic and foreign;
"4. GE's published policies with regard to its efforts to reduce the use of
toxic materials and effluents at all company operations, domestic and foreign;
and
"5. Status of law suits relating to the Company's involvement in
environmental issues, and report of fines from regulatory non-compliance.
"Supporting Statement: OUR STOLEN FUTURE by Theo Colborn, Dianne Dumanoski
and John Peterson Myers (1996 Dutton Publishing) relates compelling scientific
evidence that certain toxic chemicals act as endocrine disruptors in wildlife
and humans. These chemicals include dioxins and other chlorine-based organic
chemicals, components in herbicides, insecticides, plastics and other industrial
products and by-products. The presence of endocrine disruptors, even in minute
doses, can damage the endocrine, reproductive and immune systems of life forms,
<PAGE>
31
not only in populated industrial areas, but in the most remote locations of the
earth. The authors maintain that quality of life and maybe even survival itself
are being adversely affected by indiscriminate use of these dangerous synthetic
chemicals. Reports in the June 7, 1996 Science journal indicate that the
synergistic effect of combinations of these chemicals can be even more damaging
than each alone.
"For clear, scientifically sound reports on cancer and genetic damage from
radiation see Dr. John Gofman's work on the Web at http://www.ratical.com/
radiation/CNR/
"GE should make these changes within Company operations, and cooperate with
other corporations and government agencies to initiate and implement an
international ban on the use of endocrine-disruptive synthetic chemicals, and
halt further radiation pollution. We urge your supporting vote."
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
GE has undertaken substantial efforts to remediate the effects of past waste
disposal, to comply with current standards of environmental protection and
worker safety, and to prevent future environmental harm. Moreover, GE is
accountable to many units and levels of government, both in the United States
and in other nations, for sound environmental practices. As part of this
accountability, GE complies with governmental reporting requirements regarding
environmental matters. Under these circumstances -- a substantial Company
program and regulatory requirements of localities, states, the federal
government and other nations -- your Board does not believe that creating the
type of report requested by the proponents would help the Company improve its
environmental performance. Therefore, your Board recommends a vote against this
proposal.
SHARE OWNER PROPOSAL NO. 4
The Maryknoll Sisters, P.O. Box 311, Maryknoll, NY 10545-0311, and other
filers have notified GE that they intend to present the following proposal at
this year's meeting:
"Whereas: From 1947 to 1977 General Electric allowed at least 1.3 million
pounds of highly toxic PCBs (polychlorinated biphenyls) to enter the Hudson
River ecosystem. An additional large amount saturated the bedrock and soil
substrates beneath the two plants, from where it is seeping into the Hudson to
this day. PCBs persist in the environment for many decades. Women, children, and
disadvantaged communities are most at risk.
"PCBs are not readily excreted, and bio-accumulate in the fatty tissue of
fish, mammals and humans. This has resulted in the destruction of the Hudson
River commercial fisheries, which once earned about $40 million annually.
Because PCB concentrations in Hudson River fish exceed the U.S. Food and Drug
Administration safe limit, NY State has issued an "EAT NONE" warning for
children and women of childbearing age each year since 1976 for more than 200
miles of the river.
"Recent scientific studies indicate that evaporating PCBs from the Hudson may
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32
be spreading to fish, mammals and humans along the River and as far as the
Arctic Circle. These PCBs are potent toxins and may interfere with hormone
production and function resulting in possible immune system deficiency,
reproductive disorders and impaired brain function.
"PCBs in the foodweb have been linked to abnormal reproduction by tree
swallows feeding over the river, abnormal hormone levels in fish, and are
suspected of interfering with bald eagle reproduction. The U.S. Fish and
Wildlife Service found 55ppm of PCB (i.e., above the hazardous 50ppm) in the
eggs of tree swallows nesting along the upper Hudson. New York State found 71ppm
in a dead 16-week-old bald eagle hatched along the Hudson.
"GE's Pittsfield, Massachusetts plant has polluted the Housatonic River much
the same way as the Hudson Falls and Fort Edwards plants have polluted the
Hudson River. In addition, state and EPA officials have discovered last summer
that GE contaminated at least 30 residential properties with PCBs by giving out
contaminated 'clean fill' from the 1940s to 1960s. Several more properties with
suspected contamination have not yet been tested. Unsafe PCB contamination
required city officials to close Dorothy Amos Park.
"Resolved: Shareholders request the Board of Directors to adopt a public
education effort along the Hudson River Valley, the Housatonic River Valley and
other regions where appropriate, to warn local residents and visitors of the
dangers of fish consumption and prepare a report to shareholders that includes:
plans to insure that further contamination ends; ways to cooperate with federal
state and local efforts to clean up contaminated sites; details of the above
public education program.
"Statement of Support: Dangers of eating fish along the Hudson River are
not popularly known. Subsistent and recreational fishing continues along the
Hudson Valley. While the EPA reviews the next steps in cleaning up the Hudson
and Housatonic Valleys a GE funded campaign can be seen as an effort by our
company to respond to the ecological and health effects of PCB contamination."
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
As stated in response to share owner proposal No. 3, GE has undertaken
substantial efforts to remediate the effects of past waste disposal, to comply
with current standards of environmental protection, and to prevent future
environmental harm. GE's use of PCBs was at all times lawful. The Company is
investing substantial technical and financial resources to improve research on
the possible environmental and health effects of PCBs. GE also is making
significant expenditures to comply with all governmental orders and agreements
involving the cleanup of PCBs, even though, based on numerous scientific
studies, the Company believes that federal and state regulatory authorities have
significantly overstated the potential human health risk associated with PCBs
and set overly stringent cleanup standards. As part of their ongoing regulation
of fishing, state officials establish and publicize fishing restrictions and
advisories where they consider such measures to be appropriate. In view of these
facts, GE does not believe a report as outlined in this proposal is necessary.
Therefore, your Board recommends a vote against this proposal.
<PAGE>
33
SHARE OWNER PROPOSAL NO. 5
The Sisters of Charity of the Incarnate Word, 6510 Lawndale, Houston, Texas
77223-0969, and other filers have notified GE that they intend to submit the
following proposal at this year's meeting:
"Whereas the proponents of this resolution believe that General Electric
should establish criteria to guide management in bidding for and executing
military contracts, we propose the following for Board and management study.
"Resolved: The shareholders request the Board of Directors to commission a
subcommittee to develop criteria for acceptance and execution of military
contracts and to report these criteria at the 1998 annual meeting. Proprietary
information may be omitted and cost limited to a reasonable amount.
"Statement of Support: The proponents of this resolution believe corporate
social responsibility in a successful free enterprise society demands that
business conduct be ethically correct, socially supportive and economically
useful as well as financially profitable. Therefore, we recommend the criteria
include:
- - Basic canons of ethical business practice such that human rights and fair
labor standards are upheld
- - Long-term environmental impact and waste management
- - Stability of employment, including descriptions of conversion plans and
funding sources; strategies identifying community needs; employees' ideas and
market opportunities; membership in state and/or local government economic
conversion task forces
- - Lobbying and marketing practices, including costs
- - Limits on military contracts measured by a percentage of sales
- - Competitive bidding
- - Sale of weapons, weapons parts and dual-use technology to foreign
governments, other companies and individuals
- - Sourcing and contracting which respects the culture of a foreign country but
does not, e.g., permit prison, forced or child labor and corporal punishment
- - Contracts for nuclear, biological and chemical weapons, parts and
technologies.
"Global security is not just security of territory, it is security of people.
It is not just security through weapons, it is security through jobs, human
development, environmental sustainability, improvement of conditions in the
community at large.
"A YES vote recommends these criteria for consideration by the Board."
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
GE is committed to doing business in full compliance with all applicable laws
and in accordance with Company policies regarding such matters as business
standards; environment, health and safety; and fair treatment of employees.
These policies apply to all GE operations, including those involving military
contracts. Thus, GE's business leaders must determine that the Company's
government contracts activities, which accounted for only about 4% of the
Company's 1997 sales, meet applicable legal requirements, adhere to the
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34
Company's ethics policies and satisfy standards of sound business judgment.
Because it believes that the Company's process for reviewing the types of
matters raised in the proposal is sufficient, your Board recommends a vote
against this proposal.
SHARE OWNER PROPOSAL NO. 6
The Communication Workers of America, 501 Third Street, N.W., Washington, D.C.
20001-2797, have notified GE that they intend to present the following proposal
at this year's meeting:
"Be it resolved: That the shareholders of the General Electric Company
('Company') request that the Board of Directors in the future refrain from
providing pension or other retirement benefits to non-employee or outside
Directors unless such benefits are specifically submitted to the shareholders
for approval.
"Stockholder's Statement in Support: The Board of Directors should play a
vital and independent role in helping to determine overall corporate policy and
strategic direction. They should actively monitor senior management in
faithfully implementing these policies. In their capacity on the Board,
Directors owe their fundamental allegiance to the shareholders of the company --
the owners who elect them, and not to management. In 1996 we received 27.4%
votes for this motion, please consider our motion and vote in favor of this
essential change.
"We believe, however, that certain business or financial relationships can
adversely affect the ability of Directors to function in their appropriate
oversight role. This is especially critical for so-called outside or independent
Directors who are not employee/Directors and who should bring a certain
arms-length objectivity to Board deliberations. According to the 1996 proxy
statement `any non-employee director who has served as a director for at least
five years, is 65 years of age or older, and retires directly from the Board is
eligible to elect to receive: (1) an annual retirement benefit for the lives of
the director and eligible surviving spouse in the amount of the retainer fee in
effect at retirement: or (2) in lieu thereof, a life insurance benefit in the
amount of $450,000.' The retainer is now a generous $50,000. Directors are also
paid a fee of $1,400 for each Board meeting and for each Board Committee meeting
attended and a travel allowance for attendance at Board meetings.
"While non-employee or outside Directors should be entitled to reasonable
compensation for their time and expertise, we are of the opinion that additional
layers of compensation in the form of retirement benefits, which are 100 percent
of the Director's base compensation, has the pernicious effect of compromising
their independence and impartiality. It is our view that such generous and
unnecessary extra compensation for outside Directors of the Company is
management's way to insure their unquestioning loyalty and acquiescence to
whatever policy management initiates. Accordingly, when viewed from this
perspective, these types of retirement benefits become yet another device to
enhance and entrench management's control over corporate policy while being
accountable only to themselves, and not to the Company's owners. We believe that
<PAGE>
35
this additional layer of compensation to Directors may influence their ability
to exercise that degree of independence from management which is critical to the
proper functioning of the Board.
"Because of our strong concern for maximizing the ability of Board of
Directors to act in a shareholder's interest, we feel that the long-term best
interests of the Company are not well-served by such retirement policies. The
vast preponderance of Directors at various corporations are undoubtedly covered
by generous retirement policies at their principal place of employment, and they
need not be `double-dipping' at this Company or any others.
"We urge your support for this Proposal."
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
As one of the world's largest and most diverse companies, GE provides an
overall level and mix of non-employee director compensation and benefits
designed to consistently attract individuals with broad perspectives, diverse
backgrounds and relevant experience to serve on your Board; to fairly compensate
them for the service they provide to the share owners; and to align their
interests with the long-term interests of the share owners. As part of the
overall compensation and benefit program, the Company provides a retirement plan
for directors. This plan gives directors an equitable benefit in return for
extended service to the Company. The superior long-term increases in share owner
value (as illustrated in the performance graphs on pages 22 and 23) show the
results of the long-term commitment by your directors and management to the
interests of share owners, and indicate that the Company's overall compensation
and benefit programs for both directors and management are achieving their
goals. Your Board therefore recommends a vote against this proposal.
SHARE OWNER PROPOSAL NO. 7
The Franklin Research & Development Corporation, 711 Atlantic Avenue, Boston, MA
02111, and other filers have notified GE that they intend to present the
following proposal at this year's meeting:
"Whereas, increases in CEO compensation continue to dwarf the compensation
increases enjoyed by employees. Between 1990 and 1996, CEO cash compensation
rose 90% and total compensation (including stock options) rose 195% to $5.7
million, vastly exceeding a 19% increase in factory wages and S&P 500 earnings
growth of 78% (Business Week Survey of Executive Compensation; Bureau of Labor
Statistics);
"Whereas, in 1996, U.S. CEOs earned on average 209 times the average
factory worker's pay, a dramatic rise from the 42 times reported in 1980;
"Whereas, though U.S. multinational corporations increasingly see themselves
as global companies, taking advantage of global labor markets, they continue to
pay their executives at levels far surpassing levels common in Europe and Asia;
"Whereas, considering executive pay in the global context, U.S. CEOs make on
average 2,141 times the wage of Mexican maquiladora workers ($2,700 a year) and
11,562 the minimum wage of workers in Vietnam ($500 a year);
<PAGE>
36
"Whereas, a significant number of corporate executives themselves believe CEO
pay is too high. When asked, 'How would you assess compensation of top officers
of large U.S. corporations?' 47% of the corporate executives responding to a
Business Week poll replied, 'too much.' (Business Week; May 12, 1997);
"Whereas, General Electric's CEO in 1996 was the 15th highest paid U.S. CEO,
making $27.6 million or 4.8 times the pay of the average U.S. CEO, 1,003 times
the average U.S. factory worker, and 10,276 times the minimum wage for Mexican
workers, a nation where General Electric continues to expand;
"Whereas, growing research on effective organizations stresses the importance
of empowering front-line workers, a goal undermined by compensation policies
that reward top executives at the expense of workers closest to the customers
and production;
"Whereas, business leaders and thinkers ranging from J.P. Morgan to Peter
Drucker have argued against wide pay gaps within enterprises and called for
limits on executive pay based on multiples of worker compensation;
"Therefore, be it resolved that shareholders urge the Board to address the
issue of runaway remuneration of CEOs and begin to close the widening gap
between highest paid and lowest paid workers by:
1. Establishing a cap on CEO compensation expressed as a multiple of pay of
the lowest paid worker at General Electric.
2. Explain to shareholders in next year's proxy materials the determinations
used in order to determine the appropriate cap.
"Supporting Statement: In asking General Electric to establish a cap on
executive compensation, we have not sought to impose our own arbitrary cap on
executive compensation. Instead we have asked our company to wrestle with the
issue of the rising wage-gap that exists between corporate executives and those
they seek to lead. By imposing the financial discipline of a pay cap, we hope
our company can help reverse a long standing trend that is neither good for
business, nor society.
"Please vote YES."
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
Setting the compensation and incentives for the Chief Executive Officer is a
key responsibility of the Board of Directors. As discussed in the report of the
Management Development and Compensation Committee of the Board on pages 16 to
19, your directors consider a number of factors in establishing those incentives
and compensation. Based upon its consideration of these factors, your directors
believe that Mr. Welch's overall compensation level is appropriate in light of
the value that his superior leadership, vision and dedication provided to the
share owners during his seventeen-year tenure as Chief Executive Officer. This
value is highlighted in the Performance Graph on page 23, comparing the value of
GE stock with broad market indices. Because of the unique contribution that Mr.
Welch has made to the creation of more than $235,000,000,000 of share owner
value during his tenure as Chief Executive Officer, your directors do not
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37
believe it would be in the best interests of the share owners to establish an
arbitrary cap on the compensation paid to the Chief Executive Officer and
therefore recommend a vote against this proposal.
SHARE OWNER PROPOSAL NO. 8
Frank W. Dahlberg, Jr., 34 Towne Lane, Topsfield, MA 01983, has notified GE that
he intends to present the following proposal at this year's meeting:
"Whereas the money for donations to political candidates and political
parties comes from the profits of the company's operations, and belongs to the
share owners. And since these contributions are nothing more than a thinly
disguised bribe, share owners should not be made to support candidates or
political parties with whom they do not agree.
"The Board of Directors is requested to adopt a policy that no contribution
to a political candidate or a political party shall be made by the General
Electric Company; nor shall solicitations for contributions to P.A.C.'s be made
on company property; nor shall any company facilities or equipment be used for
this purpose."
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
GE is fully committed to complying with the requirements of all laws and
regulations controlling the financing of political campaigns and with any
changes in campaign finance laws that may be enacted in the future. GE believes
it is in the best interests of the share owners for the Company to facilitate,
in full accordance with law, the operation of political action committees
enabling GE employees to voluntarily contribute to political campaigns and
candidates. GE also believes it is in the best interests of the share owners for
the Company to support the electoral process by contributing, as a company, to
national and state party organizations and to state and local candidates, when
such contributions are permitted by federal, state and local laws. Since GE
seeks to achieve strict compliance with all campaign finance laws, your Board
recommends a vote against this proposal.
<PAGE>
38
ADDITIONAL INFORMATION
SHARE OWNER PROPOSALS FOR 1999
Under the rules of the Securities and Exchange Commission, share owner proposals
submitted for next year's Proxy Statement must be received by GE no later than
the close of business on November 13, 1998, to be considered. Proposals should
be addressed to Benjamin W. Heineman, Jr., Secretary, General Electric Company,
Fairfield, Connecticut 06431.
VOTING SECURITIES
Share owners of record at the close of business on March 9, 1998, will be
eligible to vote at the meeting. The voting securities of GE consist of its
$0.16 par value common stock, of which 3,257,702,629 shares were outstanding on
February 13, 1998. Each share outstanding on the record date will be entitled to
one vote. Treasury shares are not voted. Individual votes of share owners are
kept private, except as appropriate to meet legal requirements. Access to
proxies and other individual share owner voting records is limited to the
Independent Inspectors of Election (The Corporation Trust Company) and certain
employees of GE and its agents who must acknowledge in writing their
responsibility to comply with this policy of confidentiality.
VOTE REQUIRED FOR APPROVAL
The 15 nominees for director receiving a plurality of the votes cast at the
meeting in person or by proxy shall be elected. All other matters require for
approval the favorable vote of a majority of shares voted at the meeting in
person or by proxy. Under New York law, abstentions and broker non-votes, if
any, will not be treated as votes cast and, therefore, will have no effect on
the outcome of the matters to be voted on at the meeting.
MANNER FOR VOTING PROXIES
The shares represented by all valid proxies received will be voted in the manner
specified on the proxies. Where specific choices are not indicated, the shares
represented by all valid proxies received will be voted: (1) for the nominees
for director named earlier in this Proxy Statement; (2) for approval of the
appointment of Independent Auditors; and (3) against the share owner proposals
described in this Proxy Statement. Should any matter not described above be
acted upon at the meeting, the persons named in the proxy form will vote in
accordance with their judgment. Except for omitted share owner proposals, the
Board knows of no other matters that may be presented to the meeting.
<PAGE>
39
SOLICITATION OF PROXIES
Proxies will be solicited on behalf of the Board of Directors by mail,
telephone, other electronic means or in person, and solicitation costs will be
paid by GE. Copies of proxy material and of the Annual Report for 1997 will be
supplied to brokers, dealers, banks and voting trustees, or their nominees, for
the purpose of soliciting proxies from beneficial owners, and GE will reimburse
such record holders for their reasonable expenses. Morrow & Co. has been
retained to assist in soliciting proxies at a fee of $22,000, plus distribution
costs and other costs and expenses.
March 13, 1998
<PAGE>
1998 ANNUAL MEETING OF SHARE OWNERS
10:00 A.M. (EDT), APRIL 22, 1998
ARONOFF CENTER
650 WALNUT STREET
CINCINNATI, OHIO 45202
CUT OFF AT DOTTED LINE
................................................................................
ADVANCE REGISTRATION FORM
Send your completed and signed proxy form in the enclosed envelope. Include this
Advance Registration Form in the envelope if you plan to attend or send a
representative to the Annual Meeting.
Attendance at the Annual Meeting is limited to GE share owners, members of their
immediate family or their named representative. We reserve the right to limit
the number of guests or representatives who may attend the meeting.
................................................................................
(PLEASE PRINT)
................................................................................
Share Owner's
Name ___________________________________________________________________________
Address ________________________________________________________________________
________________________________________________________________________________
_____________________________________________________ Zip ______________________
Name(s) of
Family Member(s)
Who Will Also Attend ___________________________________________________________
I am a GE Share Owner. My Representative at the Annual Meeting will be:
________________________________________________________________________________
(Admission card will be returned c/o the share owner's address)
________________________________________________________________________________
Share Owner's Signature
<PAGE>
[GE LOGO] PROXY FORM
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
SHARE OWNERS, APRIL 22, 1998
The share owner(s) whose signature(s) appear(s) on the reverse side of this
Proxy Form hereby appoint(s) John F. Welch, Jr., Gertrude G. Michelson and
Benjamin W. Heineman, Jr., or any of them, each with full power of substitution,
as proxies, to vote all stock in General Electric Company which the share
owner(s) would be entitled to vote on all matters which may properly come before
the 1998 Annual Meeting of Share Owners and any adjournments thereof. THE
PROXIES SHALL VOTE SUBJECT TO THE DIRECTIONS INDICATED ON THE REVERSE SIDE OF
THIS CARD 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. THE PROXIES WILL VOTE AS THE BOARD OF DIRECTORS
RECOMMENDS WHERE A CHOICE IS NOT SPECIFIED.
The nominees for Director are: D. Wayne Calloway, James I. Cash, Jr., Silas S.
Cathcart, Dennis D. Dammerman, Paolo Fresco, Claudio X Gonzalez, Gertrude G.
Michelson, Eugene F. Murphy, Sam Nunn, John D. Opie, Roger S. Penske, Frank H.
T. Rhodes, Andrew C. Sigler, Douglas A. Warner III and John F. Welch, Jr.
FOR PARTICIPANTS IN GE'S SAVINGS AND SECURITY PROGRAM (S&SP)
IN ACCORDANCE WITH THE TERMS OF THE SAVINGS AND SECURITY PROGRAM (S&SP), ANY
SHARES HELD IN THE SHARE OWNER'S S&SP ACCOUNT ON THE RECORD DATE WILL BE VOTED
BY THE TRUSTEES OF THE S&SP TRUST IN ACCORDANCE WITH THE INSTRUCTIONS INDICATED
ON THE REVERSE, AND IN ACCORDANCE WITH THE JUDGEMENT OF THE TRUSTEES UPON OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENTS OR
POSTPONEMENTS THEREOF. IF NO INSTRUCTIONS ARE PROVIDED OR IF THIS CARD IS NOT
RECEIVED ON OR BEFORE APRIL 20, 1998, SHARES HELD IN THE OWNER'S S&SP ACCOUNT
WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF GE'S BOARD OF DIRECTORS.
INSPECTORS OF ELECTION
P.O. BOX 1162
NEWARK, N.J. 07101-9664
<PAGE>
[GE LOGO] PROXY FORM
The Board of Directors recommends a vote "FOR" proposals A and B.
A. Election of Directors
FOR ALL / / WITHHOLD FOR ALL / / EXCEPTIONS / /
Exceptions
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INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark
the exception box and write the name(s) on the space provided above.
B. KPMG Peat Marwick LLP as Independent Auditors
FOR AGAINST ABSTAIN
/ / / / / /
The Board of Directors recommends a vote "AGAINST" the share owner proposals 1
through 8.
FOR AGAINST ABSTAIN
1. Term Limits for Outside Directors / / / / / /
2. GE's Nuclear Energy Business / / / / / /
3. Environmental Report / / / / / /
4. Environmental Education Report / / / / / /
5. Military Contract Standards / / / / / /
6. Outside Director Retirement Benefits / / / / / /
7. CEO Compensation / / / / / /
8. Political Contributions / / / / / /
/X/ VOTES MUST BE INDICATED (X) IN BLACK OR BLUE INK.
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If you do not wish to receive an Annual Report for the
account, please mark this box. / /
To include any comments please mark this box and use the
reverse side. / /
To change your address please mark this box and correct
at left. / /
(When signing as attorney, executor, administrator, trustee, or guardian, give
full title. If more than one trustee, all should sign.)
Signature of Share Owner(s)
Signature of Share Owner(s)
Dated: , 1998
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PLEASE DATE, SIGN AND RETURN PROMPTLY IN THE ACCOMPANYING ENVELOPE.
