General Electric Co. Chief Executive Jeff Immelt will not take a cash bonus for 2005, opting instead to take performance shares worth up to $6 million if the company has strong financial results.
Immelt said the move underscores his confidence that the Fairfield-based industrial, media and financial services conglomerate will achieve double-digit percentage profit growth in the coming years.
“I am so confident, in fact that I have asked the Compensation Committee of our board to pay my cash incentive bonus in GE performance shares for 2005,” Immelt wrote in a letter to shareholders.
Immelt’s base salary was increased by 10 percent to $3.3 million, his first salary increase since April 2001, according to the Friday filing with the Securities and Exchange Commission.
(General Electric Co. owns NBC. MSNBC is a joint venture of NBC and Microsoft)
Instead of a cash bonus, Immelt will receive 180,000 performance share units with a market value of $6 million. To receive that award, GE must meet certain benchmarks such as double-digit annual increases in cash flow and shareholder return that meets or exceeds the Standard & Poor’s 500 index over two years.
Last year, Immelt also received 250,000 performance share units that vest after five years. Those shares, which had a market value of $8.6 million last fall, are awarded if GE meets certain targets.
Immelt will receive a long-term performance award of $11.7 million this year.
GE’s revenue outside the United States rose 16 percent last year to $78 billion, Immelt said. Revenue from developing markets is growing even faster at about 20 percent annually, he said.
GE generated more than $1 billion in sales in India in 2005. Immelt said the company’s business with India could grow similar to China, where GE now does $5 billion in business.
Immelt told shareholders that GE’s consumer finance business is benefiting from growing consumer wealth around the world, while its healthcare unit is growing from new technology and demographic changes. He acknowledged weakness at the company’s NBC television network, which experienced a 20 percent decline in primetime ratings, but predicted the network will rebound with new programs.
GE exited most of its insurance business last year, taking a loss of nearly $3 billion. Immelt said the move will create a faster-growth, less volatile company.
“I made a few tough calls in 2005 that may have had a short-term impact on the stock,” Immelt wrote. “The sale of Insurance Solutions for a loss is one of them. But I know you will be happy with these decisions over time.”