The Board of Directors, specifically the independent directors that compose the Management and Development and Compensation Committee, design executive compensation packages at General Electric. When these independent directors meet, they do so with the purpose of incentivizing the executive team, who has a significant impact on strategy, decision-making, and creation of value for the company.
The Management Development and Compensation Committee is tasked with creating and establishing compensation packages for the CEO and other senior executives. There are several elements to compensation at General Electric. First, is the base salary, which according to the company’s proxy statements, is based on the scope of the responsibilities of each executive, as well as their performance on these responsibilities. Second, is the annual bonus, which is determined after evaluating how the company performed that year, as well as how well the executives performed individually. That is, if they met the company’s goals and objectives that were established at the beginning of the year. This serves to make sure the executives at General Electric perform well and make decisions that increase value for the company. Another part of the compensation structure at General …show more content…
That is roughly an 8 percent increase in his both his salary and cash bonus. Immelt's salary increased to $3.75 million while his cash bonus rose to $5.4 million. Immelt's total compensation in 2013 was $19.7 million, which is nearly half of what his total compensation would be later in 2014. Much of this increase is due to how the company performed in 2013. However, General Electric shares fell about 10 percent in 2014, underperforming gains for the broader U.S. stock market. The steep drop in oil prices has worried investors about GE's business supplying equipment and services to the energy