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CWA Urges Investors, Analysts to Raise Impact of Pension Income on GE Executive Compensation

General Electric Co. is set to hold its first-ever conference call for investors, analysts and reporters on Thursday, April 11, at 9 a.m., EDT, and the Communications Workers of America is encouraging participants to question GE executives about a resolution that would exclude pension fund income from the calculation of executive bonuses and compensation.

The resolution, proposal number 6 on the GE proxy and sponsored by the Communications Workers of America, would tie executive compensation strictly to performance and would prohibit compensation from being based on the income generated by pension fund investments.

CWA has pointed out that the inclusion of pension income in executive compensation formulas distorts the concept of pay for performance. Compensation for executives and senior managements must be based on performance, not pension fund income that has been generated by fund investments and accounting rules, and that doesn't add any real money to the company.

"This resolution will ensure that shareholders realize the true value of their investments and that managers and executives are held to the performance standards they have pledged to meet. It also will take away the incentive executives now have to maintain a highly overfunded pension fund instead of providing fair increases to retirees," CWA said.

About 30 percent of companies reported pension income that added, on average, about 12 percent to pretax earnings for the year 2000, according to a June 2001 study by Credit Suisse First Boston. For the year 2000, GE reported $1.7 billion, or 9.4 percent of its pre-tax income, as coming from pension income. For 2001, pension income rose to $2.1 billion, or 10.6 percent of pre-tax income.

Earlier this year, McDermott International Inc., became one of the first major corporations to agree to change its calculation of executive compensation, eliminating income generated by the pension plan.

Similar resolutions are being considered by shareholders at other major corporations, including IBM, Verizon, AT&T and Qwest.



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