Corporate Governance at General Electric
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Case Code: CGOX006 Case Length: 10 Pages Period: 2002 Pub Date: 2003 Teaching Note: Not Available |
Price: Rs.300 Organization: General Electric Industry: Services Manufacturing Countries: Global, US Themes: - |
Abstract Case Intro 1 Excerpts
Excerpts
Background Note
GE was established in 1892 in New York, following a merger between Thomson-Houston and Edison General Electric. GE's financial strength and its research focus contributed to its initial success. In the 1920s, GE joined AT&T and Westinghouse in a radio broadcasting venture. The company acquired Radio Corporation of America (RCA), but sold off its stake in 1930. In the 1940s, GE faced major industrial relations problems due to the increasing clout of labor unions. In the 1950s, GE streamlined its management practices by establishing various management techniques like MBO, SWOT analysis and strategic planning. In the 1960s, the company entered into new businesses like nuclear power and aircraft engines to increase growth. In the 1970s, GE accelerated its shift from electromechanical to electronic technology...
The Board of Directors
GE's directors were elected each year by the shareholders at the annual general meeting. The Board proposed a slate of nominees to the shareholders for directors' election. Between annual shareholder meetings, the Board could elect directors to serve until the next annual meeting...
Board Committees
The GE Board had established four committees for discharging its responsibilities effectively...
Board's Responsibilities
The Board was responsible for supervising the management and performing specific functions, like:
1. Selecting, evaluating and compensating the CEO and overseeing CEO succession planning
2. Providing counsel and oversight on the selection, evaluation, development and compensation of senior management...
Board Compensation
The NCGC recommended to the Board compensation and benefits for independent directors. The committee was guided by three goals. Compensation had to be paid to directors for work required in GE. Compensation had to align directors' interests with the long-term interests of shareholders...
Board Evaluation and Succession Planning
The NCGC, the Board and each of the committees performed an annual self-evaluation. The directors provided their assessments of the effectiveness of the Board and the committees on which they served. The individual assessments were organized and summarized by an independent corporate governance expert for discussion with the Board and the committees. The Board approved and maintained a succession plan for the CEO and senior executives, based on the recommendations of the MDCC...
Exhibits
Exhibit I: GE: Board Composition and Category of Directors
Exhibit II: GE: Members of the individual committees
Exhibit III: GE: Board Structure (2003-2004)
Exhibit IV: GE: Executive Directors' Compensation (2002)
Exhibit V: GE: Executive Directors' Stock Options (2002)
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