GE 2011 Annual Report Download - page 32

At its heart,
the Board believes
GE Works is about GE’s
most valuable asset:
its people.
long- and short-term incentives, we reward our
executives’ discipline in consistently making
smart decisions over the course of their careers
at GE. We particularly value those individuals
who have the good judgment and ability to
balance risk and return and deliver long-term
results for shareowners.
At the same time, we do not ignore annual
performance, because we understand that if we
don’t turn in good short-term performance,
there won’t be a long term. We evaluate annual
performance both in terms of executing on long-
term strategies and in meeting specifi c annual
objectives. What is critical to note, however, is
that because we take the long view, good years
do not result in outsized payouts.
Similarly, in off years, compensation appropriately
considers the current year’s performance, but also
aligns it in the context of long-term performance.
Furthermore, we measure executives’ contribu-
tions to the Company’s overall performance rather
than focusing only on their individual business
or function. We reward sustained fi nancial
and operating performance and leadership
excellence. In short, we use a balanced approach,
one that enables us to attract and retain the best
people for the Company’s long-term success.
All our investors should know that the directors of
GE remain committed to working on your behalf.
And we will continue to take seriously our role in
ensuring that GE has the right strategies and the
right people to help make the world work better.
Sincerely,
Ralph S. Larsen
Presiding Director
February 24, 2012
As Presiding Director and Chair of the Management
Development and Compensation Committee of
GE’s Board of Directors, I write each year to
share our perspective on how GE measures
performance, how we motivate and reward our
executives, and how we work to align both
performance measurement and compensation
with the interests of our shareowners. This year,
I will focus on three areas: fi rst, how the theme
of our annual report, GE Works, fi ts with our
governing philosophy and why we believe it
provides an important business-building
advantage; second, our commitment to developing
leaders; and fi nally, executive compensation.
At its heart, the Board believes GE Works is about
GE’s most valuable asset: its people. It provides a
valuable platform for the Company to talk about
its defi ning culture and to tell the story of the
impact our people make around the world.
Furthermore, it serves as a powerful reminder
that GE works to deliver shareholder value
by offering real and sustainable solutions to the
world’s toughest problems.
It is a fi tting way to talk about the Company,
because GE has always taken a long-term view.
Through its more than 130-year history, the
Company has successfully weathered many
economic cycles. GE has done this over and over
again by fostering innovation, making smart
investments, and, of course, hiring and training
disciplined leaders who focus on achieving our
long-term strategies.
Developing leaders has always been a hallmark of
the Company, refl ecting a commitment to
meritocracy and a belief that when one person
grows and improves, all may grow and improve—
that together, we all rise. The collaborative,
evolutionary nature of GE’s leadership culture
inspires many of our top executives to spend most
or all of their careers here. This provides the
Company with unparalleled domain expertise; it
also creates an environment of loyalty where our
leaders are deeply invested in and committed to
the Company. Today, GE’s senior management,
under the exceptional leadership of Jeff Immelt, is
a proven team that we believe is among the best
in the world.
Our compensation programs are designed and
operate to support our leadership culture and
long-term emphasis. They are not formula-driven,
nor do we reward our executives for taking
outsized risks that produce short-term gains.
Instead, with a mix of cash and equity and
TO OUR SHAREOWNERS
30 GE 2011 ANNUAL REPORT