GE 2003 Annual Report Download - page 25

What’s the advantage of a
multi-business company?
you can borrow ideas from your friends
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There is no question
about gove≥nance
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The role of GE’s Board of Directors is clear: to oversee how man-
agement serves the long-term interests of shareowners and other
stakeholders. To do this, GE’s directors have adopted corporate
governance principles aimed at ensuring that the board remains
informed, independent and involved in your company. GE’s goal
is to have two-thirds of its board be independent under a strict
definition. Today, 12 of GE’s 16 directors meet that standard.
In 2003, the board changed compensation policies to fur-
ther align the long-term interests of our executives and share-
owners. Most prominently, the equity compensation of GE’s
CEO will consist entirely of performance share units that will
vest only if specific long-term performance goals are met. The
change reflects the board’s belief that the CEO of GE needs no
retention compensation and that his or her equity compensa-
tion should be focused entirely on performance. In addition,
non-employee directors now receive 60% of their compensation
in deferred stock units that do not vest until one year after they
leave the board.
GE’s governance principles are published in the Governance
section of the GE Web site at www.ge.com/governance.
meetings
The GE board held 13 meetings in 2003. In December, the board
voted to increase GE’s quarterly dividend for the 28th consecu-
tive year. The Audit Committee, composed entirely of inde-
pendent directors, held 11 meetings to review the activities and
independence of GE’s external auditors and the activities of GE’s
internal audit staff. It also reviewed GE’s system of disclosure
controls and procedures — including internal control over finan-
cial reporting — and compliance with key GE policies and appli-
cable laws. The Management Development and Compensation
Committee, composed entirely of independent directors,
reviewed in nine meetings all executive compensation plans, poli-
cies and practices, changes in executive assignments and respon-
sibilities, and key succession plans. The Public Responsibilities
Committee, in three meetings, reviewed GE’s litigation matters
and GE’s policies on charitable contributions.
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In anticipation of his retirement later this year after more than
37 years of outstanding service to GE, Gary L. Rogers stepped
down from the board and his role as a Vice Chairman in
December 2003. He will continue to serve the company as a
senior advisor until he retires this December.
Andy Sigler, a GE director for 20 years and the board’s cur-
rent presiding director, has announced his intention to retire in
2004. Andy’s vast business knowledge and experience, and his
determination to help make GE a leader in governance, have
served GE well. Ralph Larsen, former chairman and CEO of
Johnson & Johnson, has agreed to succeed Andy as chairman of
the Management Development and Compensation Committee
and presiding director.