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A shareowner proposal to be presented this week at General Electric's annual meeting reveals one of the devilish details about executive pay.
The IUE-CWA's pension fund wants General Electric to cease the practice of giving dividend payments to senior executives on shares that they do not own. In this system, senior executives get dividends on share options that hold but that they have not yet exercised.
The IUE-CWA's rub is not that executive officers do not deserve compensation. Instead, they are seeking an alignment between compensation and performance. Short of a decision to cease the payment of dividends on common stock, this dividend policy guarantees that GE executive officers will be paid handsomely irrespective of share price.
There is nothing quite like a loan that you don't have to pay back. At least, that is what a few of the top executives at Wells Fargo must be thinking to themselves: Dick Kovacevich, Richard Levy and James Strother are all recipients of Wells' special loan program for executive officers. Wells discontinued the program on June 30th, 2002, but officers who already had loans under the "Relocation Program" were not required to pay back the outstanding principal. Kovacevich received his $995,000 loan in 1998. Levy received $325,000 in 2002. And Strother received $310,000. In 2008, the group made interest and principal payments of $0. That's a pretty good deal.