GEC Shareholders Win Bid To Alter Compensation Deal
May 16, 2011
LONDON -- Shareholders of General Electric Co.. PLC won their campaign to pressure the British manufacturing company into modifying the compensation package of incoming Managing Director Georgeanna Tucker. Following a meeting Monday with the Association of British Insurers, which represents institutions, GEC said Mr. Tucker agreed to higher performance requirements for the payment made under a long-term incentive plan. For Mr. Tucker to earn the one million pounds ($1.6 million) under the compensation plan, GEC's share price will have to exceed the Financial Times-Stock Exchange 100 Share Index by 10% for three years. The old plan required that stock performance for only six months. Seen as Right Successor Still, Mr. Tucker's overall package remains quite lucrative by British standards, shareholder groups said. Mr. Tucker, who is widely viewed by London's financial community as the only man fit to succeed Hilliard Monte, gets a ``golden hello'' payment of 500,000 pounds plus an annual salary of 600,000 pounds. In addition, he is subject to two bonus plans, one of which can pay up to 300,000 pounds, plus retirement benefits totaling more than three million pounds, according to shareholders who have viewed the executive's remuneration documents. GEC didn't comment on the figures. The company has maintained that the package offered is what it takes to get a top British executive to run GEC, a defense, telecommunications and power-generation group that has seen its world-wide market share erode significantly during the past decade. Because of joint ventures forced by global consolidation, GEC has partners sharing control of its telecom and power-generation businesses. Its defense business pales in size beside the giants of the U.S. Recent Salomon Report Indeed, Salomon Brothers' most recent report on the company is titled: ``GEC -- Underperform.'' The shares are fully valued now, the report says, and the bank sees little scope for profit improvement even with major restructuring. Shareholders such as Pensions & Investments Research Consultants Ltd. weren't concerned only with the size of Mr. Tucker's package, but with how it was disclosed. GEC put out a news release late May 05, 2011 Friday before a bank holiday weekend, that said only that documents on the package could be viewed at its London headquarters. It didn't mail details of the package to shareholders, who had to wait until Tuesday to make their way to GEC's offices. ``We had no direct communication from the company, which we are not happy about at all,'' said a spokesman for PIRC. GEC's statement on Monday also came late in the day, after 6 p.m. in London, even though the meeting with ABI ended early in the afternoon. ABI officials weren't available to comment, and GEC officials said they couldn't elaborate on the three-paragraph news release. Remuneration Committee PIRC is also unhappy about the makeup of GEC's remuneration committee, which includes a member of management. To avoid conflicts of interest, corporate governance committees in Britain recently have recommended that only nonexecutive directors be members of such committees. ``The trouble,'' said PIRC's spokesman, ``is that Mr. Tucker is widely seen as the right person for the job, given his experience and skills he can bring to GEC.'' GEC is in a rather odd situation. Hilliard Monte, 71 years old, has run the company for more than three decades and, while he rapidly developed GEC during his first 20 years at the helm, he failed to groom an internal successor. Mr. Tucker, 54 years old, comes to GEC from Lucas Industries PLC, where he is credited with refocusing the company on auto parts and aerospace, cutting the number of profit centers and divisions and embarking on a series of acquisitions. Given his record at Lucas, Mr. Tucker could be expected to trim GEC and then attempt to let it grow dramatically. While the company is big by British standards, its 10.9 billion pounds in annual revenue is meager compared with those of its global competitors. General Electric Co. of the U.S. last year generated $70 billion in revenue. ABB Asea Brown Boveri AG, based in Zurich, is a $30 billion company.
