NEW YORK (AP) -- Bowing to shareholder concerns, General Electric Co. has placed new performance conditions on two million stock options that it awarded to Chairman and CEO Jeffrey Immelt last year.
As part of his overall 2010 compensation package, Immelt received options valued at $7.4 million on the day they were granted. Originally, the 55-year-old Immelt would have seen half of the options vest after three years and the other half after five years as long as he stayed with the company. No performance targets were required to have been met.
But after holding talks with several shareholders, GE said that half of the options now will vest only if it improves cash flow from industrial businesses to at least $55 billion between 2011 and 2014, barring "unusual events." The other half will vest only if total shareholder returns such as dividends and stock price match or outpace the Standard & Poor's 500 Index during the same period.
"Some shareowners have expressed the view that additional performance conditions should be applied to Mr. Immelt's 2010 stock option award," GE said in a regulatory filing on Monday. "After taking into account these views, the Management Development and Compensation Committee, with Mr. Immelt's full support, has modified that award."
The news comes ahead of GE's April 27 annual meeting in Salt Lake City.
Immelt's total compensation for 2010 nearly tripled to $15.2 million from $5.6 million in 2009, according to an Associated Press analysis of data that GE reported last month. While his salary remained unchanged at $3.3 million from the previous year, he received a $4 million bonus for the first time in three years and the option awards. GE has said that it had granted the options to Immelt "to increase the equity-based portion of his compensation and to underscore the board's confidence in his leadership."
GE, which makes products from dishwashers to wind turbines, and finances large projects around the globe, said in March that its directors determined that Immelt "performed very well in 2010" and beat their goals for him on multiple targets, including earnings from continuing operations, cash generated, and profit margins.
Shares of the Fairfield, Conn.-based company's stock edged up 18 cents to $20.16 in midday trading.
As part of his overall 2010 compensation package, Immelt received options valued at $7.4 million on the day they were granted. Originally, the 55-year-old Immelt would have seen half of the options vest after three years and the other half after five years as long as he stayed with the company. No performance targets were required to have been met.
But after holding talks with several shareholders, GE said that half of the options now will vest only if it improves cash flow from industrial businesses to at least $55 billion between 2011 and 2014, barring "unusual events." The other half will vest only if total shareholder returns such as dividends and stock price match or outpace the Standard & Poor's 500 Index during the same period.
"Some shareowners have expressed the view that additional performance conditions should be applied to Mr. Immelt's 2010 stock option award," GE said in a regulatory filing on Monday. "After taking into account these views, the Management Development and Compensation Committee, with Mr. Immelt's full support, has modified that award."
The news comes ahead of GE's April 27 annual meeting in Salt Lake City.
Immelt's total compensation for 2010 nearly tripled to $15.2 million from $5.6 million in 2009, according to an Associated Press analysis of data that GE reported last month. While his salary remained unchanged at $3.3 million from the previous year, he received a $4 million bonus for the first time in three years and the option awards. GE has said that it had granted the options to Immelt "to increase the equity-based portion of his compensation and to underscore the board's confidence in his leadership."
GE, which makes products from dishwashers to wind turbines, and finances large projects around the globe, said in March that its directors determined that Immelt "performed very well in 2010" and beat their goals for him on multiple targets, including earnings from continuing operations, cash generated, and profit margins.
Shares of the Fairfield, Conn.-based company's stock edged up 18 cents to $20.16 in midday trading.