Treasurer's Proposal to Join Amalgamated Bank Shareholder Action is Approved
SACRAMENTO, CA -- October 15, 2002 -- The California Public Employees' Retirement System (CalPERS) today approved a plan to file a shareholder proposal challenging General Electric's (GE) excessive executive compensation policies. CalPERS, at the urging of California State Treasurer Phil Angelides, will join with Amalgamated Bank to co-sponsor a shareholder resolution urging the GE Board of Directors to adopt a policy that clearly links pay to performance.
"Executives should be rewarded for performance, innovation and the creation of long-term value. But that is different than sanctioning a culture of greed," Treasurer Angelides said. "As shareholders, we have a responsibility and a right to restore rationality to the realm of executive pay - rewarding effective corporate leadership, while curbing excesses which undermine the economy and jeopardize the public's faith in the marketplace," he added.
The joint shareholder proposal will urge the GE Board of Directors to ensure that future stock option grants to senior executives are linked to performance. "Performance-based" stock options are defined as 1) indexed options whose exercise price is linked to an industry index; 2) premium-priced stock options, whose exercise price is above the market price on the grant date; or 3) performance-vesting options, which vest when the market price of the stock exceeds a specific target. The shareholder resolution will be taken up at the GE annual meeting in April 2003.
"At a time when thousands of workers and investors are being laid off or losing their retirements because of corporate excess, it's simply unconscionable that companies like GE should continue with its outrageous executive compensation policy," says Amalgamated Bank Vice Chair Bruce Raynor. "Now it is even more critical that the directors of GE reform these egregious practices, in order to maximize shareholder value in the long run," Raynor further commented.
The focus on General Electric arose out of the lack of any measurable link between pay and performance, which resulted in former CEO Jack Welch receiving a compensation increase of 80 percent in his final year, even as the company's aggregate market value dropped. CalPERS, the nation's largest public pension fund with assets of more than $135 billion, owns $1.4 billion in GE stock.
Amalgamated Bank invests workers' retirement savings through its LongView Funds. LongView filed a similar shareholder proposal with GE in 2001-02, which earned 31.5% of the shareholder vote. "The high vote this proposal received last year shows that shareholders support measures which will reign in excess and encourage high performance," says Raynor. "Given the current crisis in investor confidence, we expect to win majorities this year - especially since we are partnering with CalPERS, a world leader in advocating for improved corporate governance."
See also: "California CalPERS Wants Pay, Results Linked at GE Nation's biggest pension fund votes to co-sponsor a shareholder proposal on executive salaries."
Debora Vrana, Los Angeles Times
10/16/2002
C-2
