No doubt you’ve heard by now that General Electric may sell its Kentucky-based appliances business, which reaches back to more than a century of consumer “white goods” such as refrigerators, ranges, dishwashers, washers/dryers, air conditioners and water heaters.
The unit, which also includes lighting (which is not on the block), is a smaller business for the industrial giant, making it ripe for sale.
Appliance-makers Electrolux, LG and Samsung have been identified as potential purchasers, as has Quirky, the New York City invention company that just opened an office in downtown Schenectady to be close to GE.
I’ll admit my first reaction to the sale news was a bit flip: Pity the poor directors and executives who’ll be out a GE perk. In my defense, it comes from years of reading company proxy statements.
You see, senior GE executives — and, more recently, directors on its board — are able to take part in a so-called Executive Products and Lighting Program that lets them request GE appliances and lighting for their home. The products’ fair-market value then is added to the annual compensation they’re paid by the company — and taxed on by the government.
For instance, by my back-of-the-envelope calculation, Sam Nunn, who served 16 years as a director after leaving the U.S. Senate and retired from GE’s board last year, could have fully remodeled his kitchen with the $21,000 or so in GE lighting and appliance products he got over the past decade.
GE directors receive $250,000 annually for sitting on the board, $100,000 of it in cash and the rest in deferred stock units, which are cashed out after a director leaves the board. The appliance perk is accounted for in a column called “all other compensation,” which is added to the yearly cash payment and DSU value to become a director’s total annual compensation.
GE has been detailing the directors’ appliance/lighting perquisites since its 2005 proxy; public companies send proxies to shareholders — and file them with regulators — in preparation for their annual meeting.
After the disclosure of many over-the-top perks during the country’s long bull market, the U.S. Securities and Exchange Commission in 2006 mandated that public companies detail perquisites for both executives and directors, especially when the benefits total $10,000 or more. Executive perks often include things like country club membership, box seats at sporting events and spouses’ corporate jet use.
In Nunn’s case, an “all other compensation” disclosure did not necessarily mean he was raking in super high-end lighting or appliances in any one year. In the 2006 proxy, for example, his “all other compensation” line was $48,563 — which might raise an eyebrow.
But a reader could see in the footnotes that it included not only $2,887 for appliances/lighting but also $45,676 under GE’s matching gifts program, through which the GE Foundation matches directors’ donations to approved charities.
Soon, though, the appliance perk may become a historical footnote for GE.