General Electric Company (LON:GEC) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On April 1, 2019, General Electric Company (“GE” or the “Company”) announced annual equity awards for the Company’s executives and the framework for the Company’s 2019 annual cash bonus plan, in each case as approved by the Management Development & Compensation Committee (“MDCC”) of the GE Board.
Equity Awards. All of the 2019 equity awards approved by the MDCC for GE’s Chairman and CEO, H. Lawrence Culp, Jr., are in the form of performance stock units (“PSUs”), with a grant date fair value of approximately $15 million, in accordance with his employment agreement. The MDCC also approved an equity award with a grant date fair value of approximately $15 million for David Joyce, Vice Chairman, GE and President and CEO, GE Aviation, anticipating that Mr. Joyce is not expected to receive other equity awards in future years prior to his retirement. The performance conditions for Mr. Joyce’s PSU award will be based upon operating metrics for the Aviation business and the PSU award will vest in two tranches of 50% each on December 31, 2020 and December 31, 2021.
For the other named executive officers in GE’s Definitive Proxy Statement for the 2019 Annual Meeting of Shareowners, approximately 50% by value of their 2019 equity awards were delivered in the form of PSUs, approximately 30% by value were delivered in the form of options (with an exercise price of $10.19) and approximately 20% by value were delivered as restricted stock units (“RSUs”).
| PSUs (target) | Options | RSUs | |
| H. Lawrence Culp, Jr., Chairman & CEO | 1,500,000 | — | — |
| David Joyce, Vice Chairman, GE and President & CEO, GE Aviation | 1,500,000 | — | — |
| Jamie Miller, Senior Vice President, Chief Financial Officer | 225,000 | 380,290 | 90,000 |
| Michael Holston, Senior Vice President, General Counsel & Secretary | 137,500 | 232,400 | 55,000 |
| Kieran Murphy, Senior Vice President, GE and President & CEO, GE Healthcare | 175,000 | 295,780 | 70,000 |
The stock options and RSUs become exercisable and vest, respectively, in two equal tranches on the second and third anniversary of the grant date. The PSU awards granted in March 2019 (with the exception of those for Mr. Joyce), have an approximately three-year performance period and will settle in equity based upon a single performance metric: GE total shareholder return (“TSR”) versus the S&P 500 from the grant date through December 31, 2021. PSUs will be earned to the extent that the performance condition is satisfied as follows, with proportional adjustment for performance between threshold, target and maximum:
| Threshold | Target | Maximum | |
| Relative GE TSR v. S&P 500 | |||
| Percent of PSU award earned | 25% | 50% | 175% |
The MDCC determined that a single TSR-based metric for the PSUs continued to be appropriate due to the difficulty in forecasting Company performance over a three-year period during the ongoing portfolio restructuring. TSR performance will take into account any change in GE’s capital structure. Additionally, any shares issued under the PSUs (other than those issued to Mr. Joyce) will have a mandatory one-year hold period, regardless of whether the executive has satisfied the Company’s stock ownership requirement.
Annual Bonus Plan. Similar to 2018, the Company has determined that the annual cash bonus program for 2019 will focus on two metrics – an earnings metric and a free cash flow metric. Individual targets will be set at the business level, while achievement of the performance objectives for Corporate executives will be measured against Company-wide results.
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