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Governance Principles copyright 2019General Electric CompanyGovernance Principles
Governance PrinciplesThe following principles have been approved by the board of directors and, along with the charters of the boardcommittees, provide the framework for the governance of GE. The board recognizes that there is an ongoing andenergetic debate about corporate governance, and it will review these principles and other aspects of GEgovernance annually or more often if deemed necessary.1.Role of Board and ManagementGE’s business is conducted by its employees, managers and officers, under the direction of the chief executiveofficer (CEO) and the oversight of the board, to enhance the long-term value of the Company for its shareholders.The board of directors is elected by the shareholders to oversee management and to assure that the long-terminterests of the shareholders are being served. Both the board of directors and management recognize that thelong-term interests of shareholders are advanced by responsibly addressing the concerns of other stakeholdersand interested parties including employees, recruits, customers, suppliers, GE communities, government officialsand the public at large.2.Functions of BoardThe board of directors typically has six scheduled meetings a year at which it reviews and discusses theperformance of the Company, its plans and prospects, as well as immediate issues facing the Company. Directorsare expected to attend all scheduled board and committee meetings and the Annual Meeting of Shareholders. Inaddition to its general oversight of management, the board also performs a number of specific functions,including:a.selecting, evaluating and compensating the CEO and overseeing CEO succession planning;b.providing counsel and oversight on the selection, evaluation, development and compensation of seniormanagement;c.reviewing, monitoring and, where appropriate, approving fundamental financial and business strategies and majorcorporate actions;d.assessing major risks facing the Company — and reviewing options for their mitigation; ande.ensuring processes are in place for maintaining the integrity of the Company - the integrity of the financialstatements, the integrity of compliance with law and ethics, the integrity of relationships with customers andsuppliers, and the integrity of relationships with other stakeholders3.QualificationsDirectors should possess the highest personal and professional ethics, integrity and values, and be committed torepresenting the long-term interests of the shareholders. They must also have an inquisitive and objective perspective,practical wisdom and mature judgment. We endeavor to have a diverse board representing a range of experience atpolicy-making levels in business, government, education and technology, and in areas that are relevant to theCompany’s global activities.Directors must be willing to devote sufficient time to carrying out their duties and responsibilities effectively, andshould be committed to serve on the board for an extended period of time.Directors who also serve as executives of public companies should not serve on more than one board of a publiccompany in addition to the GE board, and other directors should not serve on more than three other boards of publiccompanies in addition to the GE board, absent special circumstances, such as a period of transition. Service by adirector on the board of a public company for which he or she serves as an executive, together with service on theboard of any public company subsidiary or public affiliates as part of the director’s executive responsibilities shall countas one board for purposes of this limit.When a director’s principal occupation or job responsibilities change significantly during his or her tenure as a director, copyright 2019General Electric CompanyGovernance Principles Page 1
that director shall tender his or her resignation for consideration by the governance and public affairs committee. Thegovernance and public affairs committee will recommend to the board the action, if any, to be taken with respect tothe resignation.The board does not believe that directors should expect to be renominated annually. The board self-evaluationprocess described below will be an important determinant for board tenure. All directors, other than the Company’sCEO, will have a term limit of 15 years. Additionally, directors will not be nominated for election to the board after their75th birthday. The full board may nominate candidates who have served past their term limit or who are over the agelimit in special circumstances.4.Independence of DirectorsA majority of the directors will be independent directors, as independence is determined by the board, based on theguidelines set forth below.All non-management directors will be independent. GE seeks to have a minimum of seven independent directors at alltimes, as independence is determined by the board based on the guidelines set forth below, and it is the board’s goalthat at least two-thirds of the directors will be independent. Directors who do not satisfy GE’s independenceguidelines also make valuable contributions to the board and to the Company by reason of their experience andwisdom.For a director to be considered independent, the board must determine that the director does not have any direct orindirect material relationship with GE. The board has established guidelines to assist it in determining directorindependence, which conform to, or are more exacting than, the independence requirements in the New York StockExchange listing requirements (NYSE rules). In addition to applying these guidelines, the board will consider allrelevant facts and circumstances in making an independence determination.The board will make and publicly disclose its independence determination for each director when the director is firstelected to the board and annually thereafter for all nominees for election as directors. If the board determines that adirector who satisfies the NYSE rules is independent even though he or she does not satisfy all of GE’s independenceguidelines, this determination will be disclosed and explained in the next proxy statement.In accordance with NYSE rules, independence determinations under the guidelines in section (a) below will be basedupon a director’s relationships with GE during the 36 months preceding the determination. Similarly, independencedeterminations under the guidelines in section (b) below will be based upon the extent of commercial relationshipsduring the three completed fiscal years preceding the determination.a.A director will not be independent if:i.the director is employed by GE, or an immediate family member is an executive officer of GE;ii.the director receives any direct compensation from GE, other than director and committee fees andpension or other forms of deferred compensation for prior service (provided such compensation is notcontingent in any way on continued service);ii.an immediate family member receives more than 120,000 per year in direct compensation from GE;iii. the director is affiliated with or employed by GE’s independent auditor, an immediate family member is acurrent partner of GE’s independent auditor, or an immediate family member is affiliated with or employedby GE’s independent auditor and such immediate family member personally works or worked on GE’s audit;oriv. a GE executive officer is on the compensation committee of the board of directors of a company whichemploys the GE director or an immediate family member as an executive officer.b.A director will not be independent if, at the time of the independence determination, the director is an executiveofficer or employee, or if an immediate family member is an executive officer, of another company that does copyright 2019General Electric CompanyGovernance Principles Page 2
business with GE and the sales by that company to GE or purchases by that company from GE, in any single fiscalyear during the evaluation period, are more than the greater of two percent of the annual revenues of thatcompany or 1 million.c.A director will not be independent if, at the time of the independence determination, the director is an executiveofficer or employee, or an immediate family member is an executive officer, of another company which is indebtedto GE, or to which GE is indebted, and the total amount of either company’s indebtedness to the other at the endof the last completed fiscal year is more than two percent of the other company’s total consolidated assets.d.A director will not be independent if, at the time of the independence determination, the director serves as anexecutive officer, director or trustee of a charitable organization, and GE’s discretionary charitable contributionsto the organization are the greater of 200,000 or one percent of that organization’s annual consolidated grossrevenues during its last completed fiscal year. (GE’s automatic matching of employee charitable contributions willnot be included in the amount of GE’s contributions for this purpose.)5.Size of Board and Selection ProcessThe directors are elected each year by the shareholders at the Annual Meeting of Shareholders. Shareholders maypropose nominees for consideration by the governance and public affairs committee by submitting the names andsupporting information to: Secretary, General Electric Company, 5 Necco Street, Boston, MA 02210. The boardproposes a slate of nominees to the shareholders for election to the board. The board also determines the number ofdirectors on the board provided that there are at least seven. Between annual shareholder meetings, the board mayelect directors to serve until the next annual meeting. In addition to considering candidates suggested byshareholders, the governance and public affairs committee considers potential candidates recommended by currentdirectors, Company officers, employees and others. The committee considers all potential candidates in the samemanner regardless of the source of the recommendation.6.Board CommitteesThe board has established the following committees to assist the board in discharging its responsibilities: (i) audit; (ii)governance and public affairs; and (iii) management development and compensation. The charters of thesecommittees are published on the GE website, and will be mailed to shareholders on written request. The committeechairs report the highlights of their meetings to the full board following each meeting of the respective committees.The committees occasionally hold meetings in conjunction with the full board. For example, it is the practice of theaudit committee to meet in conjunction with the full board in February so that all directors may participate in thereview of the annual financial statements and Management’s Discussion and Analysis of Financial Condition andResults of Operations for the prior year and financial plans for the current year. The board provides independent riskoversight with a focus on the most significant risks facing the Company, including strategic, operational, product, andreputational risks. It has also delegated specific risk oversight responsibility to the committees of the board asfollows: the audit committee oversees risk relating to the financial statements, financial systems, financial reportingprocesses, cybersecurity, enterprise risk management, regulatory, compliance and litigation risks and auditing; themanagement development and compensation committee oversees risk relating to senior officer compensation; andthe governance and public affairs committee oversees risk relating to corporate governance and public policyinitiatives and environment, health and safety compliance.7.Independence of Committee MembersIn addition to the requirement that a majority of the board satisfy the independence standards discussed in section 4above, members of the audit committee must also satisfy an additional Securities and Exchange Commission (SEC)independence requirement. Specifically, they may not accept directly or indirectly any consulting, advisory or othercompensatory fee from GE or any of its subsidiaries other than their directors’ compensation for GE or a GE subsidiary.Under NYSE rules, in determining the independence of management development and compensation committeemembers, the board also will consider their source of compensation, including any consulting, advisory or othercompensatory fee paid directly or indirectly by GE or any of its subsidiaries. As a matter of policy, the board will alsoapply a separate and heightened independence standard to members of both the management development andcompensation committee and the governance and public affairs committee. No member of either committee may bea partner, member or principal of a law firm, accounting firm or investment banking firm that accepts consulting oradvisory fees from GE or any of its subsidiaries. copyright 2019General Electric CompanyGovernance Principles Page 3
8.Meetings of Independent DirectorsThe board will have at least three regularly scheduled meetings a year for the independent directors without anymanagement directors or employees present. The lead director will preside at such meetings. The independentdirectors may meet without management present at such other times as determined by the lead director.9.Board LeadershipThe CEO generally serves as the chairman of the board, other than in times of leadership transition, and anindependent director serves as the lead director. The independent directors have appointed the chairman of themanagement development and compensation committee to serve as the lead director. If, at any time, this individual isunable to serve as the lead director, the chairman of the governance and public affairs committee shall serve as thelead director unless and until the independent directors determine otherwise.The lead director leads meetings of the independent directors and regularly meets with the chairman/CEO fordiscussion of matters arising from these meetings, calls additional meetings of the independent directors or the entireboard as deemed appropriate, serves as a liaison on board-related issues between the chairman/CEO and theindependent directors, and performs such other functions as the board may direct, including (1) advising thegovernance and public affairs committee on the selection of committee chairs, (2) approving the agenda, schedule andinformation sent to the directors for board meetings, (3) working with the chairman/CEO to propose an annualschedule of major discussion items for the board’s approval, (4) guiding the board’s governance processes, includingthe annual board self-evaluation, succession planning and other governance-related matters, (5) leading the annualchairman/CEO evaluation, and (6) providing leadership to the board if circumstances arise in which the role of thechairman/CEO may be, or may be perceived to be, in conflict, and otherwise act as chairman of board meetings whenthe chairman/CEO is not in attendance. The lead director oversees the board’s periodic review of the GE boardleadership structure to evaluate whether it remains appropriate for the Company. The lead director also makeshimself available for consultation and direct communication with the Company’s major shareholders. In light of thedemands placed on the lead director, absent special circumstances, the lead director shall not serve as the leaddirector, chairman or CEO of another public company.10. Self-EvaluationThe board and each of the committees will perform an annual self-evaluation. The governance and public affairscommittee will oversee the self-evaluation process, which will be used by the board and by each committee of theboard to determine their effectiveness and opportunities for improvement. Each year, each director will be asked toprovide his or her assessment of the effectiveness of the board and its committees, as well as director performanceand board dynamics. At least annually, the lead independent director or an outside expert in corporate governancewill contact each director soliciting comments with respect to both the full board and any committee on which thedirector serves, as well as director performance and board dynamics. Solicited comments may include how the boardcan improve its key functions of overseeing personnel development, financials, other major issues of strategy, risk,integrity, reputation and governance. In particular, for both the board and the relevant committee, the process willsolicit ideas from directors about:a.improving prioritization of issues;b.improving quality of written, chart and oral presentations from management;c.improving quality of board or committee discussions on these key matters;d.identifying how specific issues in the past year could have been handled better;e.identifying specific issues which should be discussed in the future; andf.identifying any other matter of importance to board functioning.The lead director or outside expert in corporate governance will then work with the committee chairs to organize thecomments received around options for changes at either board or committee level. At a subsequent board andcommittee meeting, time will be allocated to a discussion of — and decisions relating to — the actionable items. copyright 2019General Electric CompanyGovernance Principles Page 4
11. Setting Board AgendaThe board shall be responsible for its agenda. At the December board meeting, the chairman of the board and the leaddirector will propose for the board’s approval key issues of strategy, risk and integrity to be scheduled and discussedduring the course of the next calendar year. Before that meeting, the board will be invited to offer its suggestions. Asa result of this process, a schedule of major discussion items for the following year will be established, includingdiscussion of key material risks. Prior to each board meeting, the chairman of the board will discuss the other specificagenda items for the meeting with the lead director, who shall have authority to approve the agenda for the meeting.The chairman of the board and the lead director, or committee chair as appropriate, shall determine the nature andextent of information that shall be provided regularly to the directors before each scheduled board or committeemeeting. Directors are urged to make suggestions for agenda items, or additional pre-meeting materials, to thechairman of the board, the lead director, or appropriate committee chair at any time.12. Ethics and Conflicts of InterestThe board expects GE directors, as well as all officers and employees, to act ethically at all times and to acknowledgetheir adherence to the policies comprising GE’s code of conduct set forth in the Company’s integrity manual, “TheSpirit & The Letter”. GE will not make any personal loans or extensions of credit to directors or executive officers. Noindependent director may provide personal services for compensation to GE, other than in connection with serving asa GE director. The board will not permit any waiver of any ethics policy for any director or executive officer.a.If an actual or potential conflict of interest arises for a director, the director shall promptly inform thechairman/CEO and the lead director. The governance and public affairs committee shall resolve any suchconflicts. If a significant conflict exists and cannot be resolved, the director should resign. All directors will recusethemselves from any discussion or decision affecting their personal, business or professional interests.b.The governance and public affairs committee shall resolve any conflict of interest question involving the CEO, avice chairman or a senior vice president, and the CEO shall resolve any conflict of interest issue involving anyother officer of the Company.13.Approval of Certain Related Party Transactions.The governance and public affairs committee shall review and approve or ratify any transaction in which the Companyis a participant and a related person has a direct or indirect material interest and which is required to be disclosedunder the rules of the SEC. For purposes of this practice the terms “transaction” and “related person” have themeaning contained in Item 404 of Regulation S-K. In the course of its review and approval or ratification of atransaction, the committee shall consider:a.the nature of the related person’s interest in the transaction;b.the material terms of the transaction, including without limitation, the amount and type of transaction;c.the importance of the transaction to the related person;d.the importance of the transaction to the Company;e.whether the transaction would impair the judgment of a director or executive officer to act in the best interest ofthe Company; andf.any other matters the committee deems appropriate, including any third-party fairness opinions or other expertreview obtained by the Company in connection with the transaction.Any committee member who is a related person with respect to a transaction under review may not participate in thedeliberations or vote respecting such approval or ratification, provided, however, that such director may be counted indetermining the presence of a quorum at a meeting of the committee which considers the transaction. copyright 2019General Electric CompanyGovernance Principles Page 5
14.Hiring Guidelines for Independent Auditor EmployeesThe audit committee has adopted the following practices regarding the hiring by the Company of any partner, director,manager, staff, advising member of the department of professional practice, reviewing actuary, reviewing taxprofessional and any other persons having responsibility for providing audit assurance to the Company's independentauditor on any aspect of their certification of the Company's financial statements. "Audit assurance" includes all workthat results in the expression of an opinion on financial statements, including audits of statutory accounts.a.No member of the audit team that is auditing a GE business can be hired into that GE business or into a positionto which that business reports for a period of two years following association with that audit.b.No former employee of the independent auditor may sign a GE or GE affiliate's SEC filing for five years followingemployment with the independent auditor.c.No former employee of the independent auditor may be named a GE or major affiliate officer for three yearsfollowing employment by the independent auditor.d.GE's CFO must approve all executive-band and higher hires from the independent auditor.e.To the extent there is any hiring, GE's CFO shall report to the audit committee the profile of the preceding year'shires from the independent auditor.15.Reporting of Concerns to Independent Directors or the Audit CommitteeThe audit committee and the independent directors have established the following procedures to enable anyone whohas a concern about GE’s conduct, or any employee who has a concern about the Company’s accounting, internalaccounting controls, auditing matters or federal securities laws matters, to communicate that concern directly to thelead director or to the audit committee. Such communications may be confidential or anonymous, and may be emailed, submitted in writing or reported by phone to special addresses and a toll-free phone number that arepublished on the Company’s website.a.Comments, complaints and concerns are initially processed by the GE Corporate Ombudsperson’s Office, whichacknowledges receipt to the person submitting the communication.b.The audit committee has established the following procedures for: (1) the receipt, retention, and treatment ofcomplaints received by the Company regarding accounting, internal accounting controls, auditing matters orfederal securities laws matters; and (2) the confidential, anonymous submission by GE employees of concernsregarding questionable accounting or auditing matters:i.GE has established and published on its website special mail and e-mail addresses and a toll-free telephonenumber for receiving complaints regarding accounting, internal accounting controls, or auditing matters.ii.All such complaints that could materially affect financial reporting or controls or that relate to federalsecurities law matters will be sent directly to the chair of the audit committee.iii. All such complaints will be tracked on a separate board of directors' ombuds docket, but handled by theCompany's ombuds, finance and legal staffs in the normal manner, except as the audit committee mayrequest.iv. The status of such complaints will be reported to the chair of the audit committee and if he or she sodirects, to the committee or the full board.v.c.The audit committee chair may request special treatment, including the retention of outside counsel orother advisors, for any complaint addressed to him or her.Depending on the nature of the issues or concerns raised, the Corporate Ombudsperson’s Office also regularlyprovides copies or summaries of other comments, complaints and concerns directly to directors. copyright 2019General Electric CompanyGovernance Principles Page 6
d.With respect to all other communications, the Corporate Ombudsperson’s Office provides regular reports to theaudit committee and GE’s lead director. These reports summarize the communications by subject matter andfrequency, and break out significant concerns. The reports also include a summary of the status of significantmatters that are under review or investigation in response to a concern. This approach ensures that concerns areraised to the directors in an effective manner that accurately informs them of the nature and frequency of theconcerns.The lead director or the audit committee chair may direct that certain matters be presented to the audit committee orthe full board and may direct special treatment, including the retention of outside advisors or counsel, for any concernaddressed to them. The Company’s integrity manual prohibits any employee from retaliating or taking any adverseaction against anyone for raising or helping to resolve an integrity concern.16. Compensation of the BoardThe governance and public affairs committee shall have the responsibility for recommending to the boardcompensation and benefits for independent directors. In discharging this duty, the committee shall be guided by thefollowing goals: compensation should fairly pay directors for work required in a company of GE’s size and scope;compensation should align directors’ interests with the long-term interests of shareholders; and the structure of thecompensation should be simple, transparent and easy for shareholders to understand. In implementing these goals,the committee will adhere to the following practices, with specific compensation amounts to be determined followingthe review by the board, based on the recommendation of the committee:a.Board Compensation. Annual compensation will be paid to independent directors at the end of each quarter ofservice, 40% in cash and 60% in deferred stock units (DSUs). Each DSU will be equal in value to a share of GEcommon stock and is fully vested upon grant, but will not have voting rights. DSUs will accumulate quarterlydividend equivalent payments, which shall be reinvested into additional DSUs. In the event of an extraordinarydividend (whether paid in cash or shares), the DSUs shall be adjusted to reflect the value of that dividend. TheDSUs will be paid out in cash to independent directors beginning one year after they leave the board. Directorsmay elect to take their DSU payments as a lump sum or in payments spread out for up to ten years. Therefore, fortheir tenure on the board and for one year following board service, 60% of the independent directors’ annualcompensation will be aligned with the long-term interests of GE shareholders because the value of their DSUs willincrease or decrease in line with changes in the price of GE shares. There are no meeting fees becauseattendance is expected at all scheduled board and committee meetings, and at the Annual Meeting ofShareholders, absent exceptional cause.b. Lead Director and Committee Compensation. The lead independent director and members of certain or allcommittees may be eligible for additional compensation, as recommended by the governance and public affairscommittee and approved by the board, which will generally be paid 40% in cash and 60% in DSUs.c.Deferral of Cash Fees. If they wish, independent directors may defer some or all of their annual cashcompensation in DSUs.d. Benefits. The governance and public affairs committee will review and recommend for approval to the board theterms of any other benefits for which the independent directors may be eligible.17. Succession PlanThe board shall approve and maintain a succession plan for the CEO and senior executives, based uponrecommendations from the management development and compensation committee. The board views CEO selectionand management succession as one of its most important responsibilities. In coordination with the managementdevelopment and compensation committee, the board: (1) develops criteria for the CEO position that reflects GE’sbusiness strategy; (2) routinely reviews and discusses succession planning; and (3) identifies potential internalsuccessors for the CEO. The board also maintains an emergency succession plan that is reviewed periodically.18. Annual Compensation Review of Senior ManagementThe management development and compensation committee has primary responsibility for assisting the board indeveloping and evaluating potential candidates for executive positions, including the CEO, and for overseeing the copyright 2019General Electric CompanyGovernance Principles Page 7
development of executive succession plans. As part of this responsibility, the committee oversees the design,development and implemen
guidelines set forth below. All non-management directors will be independent. GE seeks to have a minimum of seven independent directors at all times, as independence is determined by the board based on the guidelines set forth below, and it is the board's goal that at least two-thirds of the directors will be independent.
