GE shareholders vote down governance changes

General Electric shareholders rejected a series of attempts at the US industrial group’s annual meeting to give investors more control over management and the board, although in some cases there were substantial minority votes in favour.

At its meeting in New Orleans, shareholders put forward resolutions calling for governance changes including term limits for directors, the appointment of an independent chairman, and new powers for investors to make decisions without holding a meeting, all of which failed.

The most popular shareholder resolution was a proposed requirement for senior executives to hold until retirement at least 25 per cent of the shares they are given in their pay packages, which was supported by 29.3 per cent of the votes cast, according to preliminary figures released at the meeting.

GE’s corporate governance has been criticised over issues such as its lack of an independent chairman, and investor discontent has been fuelled by relatively poor share price performance.

Over the past five years, GE’s shares have fallen 34 per cent, while the S&P 500 index has risen 14 per cent. Among GE’s peers in US industry, Honeywell’s shares are up 24 per cent and United Technologies’ are 27 per cent higher.

However, Jeff Immelt, GE’s chief executive, promised a sharp increase in cash distributions to shareholders through dividends and buybacks, from $12.4bn last year to about $18bn this year, helped by the proceeds from the $18.1bn sale of the group’s remaining 49 per cent stake in NBCUniversal, the entertainment group.

He also reaffirmed the group’s prediction of double-digit growth in operating earnings per share this year.

Although there was a substantial minority in favour of compelling GE executives to hold more stock, the overall pay package for senior management won overwhelming support. It was backed by 94.5 per cent of the votes cast.

The call for an independent chairman was backed by 24.7 per cent of the votes. That was a little more than the 22 per cent backing at the 2012 annual meeting in Detroit, although still well below its 35 per cent support in 2011.

However, a proposal to allow shareholders to make decisions about the group “by written consent”, without calling a meeting, which nearly passed in 2012 with a 47.5 per cent vote in favour, was backed this year by only 21.7 per cent of the votes.

A proposal that directors elected during 1998-2013 should have to step down after 15 years of service, which would have first affected Andrea Jung, the former chief executive of Avon Products, and Ann Fudge, the former CEO of Young & Rubicam, was supported by just 5.9 per cent of the votes cast.

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