Boston, MA, 03/07/2014 – General Electric (NYSE:GE) announced that it will discontinue to pay dividends to senior executives on stock awards that have not yet vested. It announced the decision on Thursday, after investors pleaded the company to stop the long due perks.
The decision is to affect only new stock awards and not the old ones. The move has been made whilst increasing scrutiny by senior executive pay shareholders, which has been continuously increasing even as the salaries of average Americans become flat. The dividends can total up to millions of dollars for executives with long tenure.
Dividend On Previous Unvested Stock
In its annual proxy statement, GE disclosed that the change of policy would affect only stock awards given away this year and in future. According to the statement, some executives will receive big dividend checks on stock granted in the prior years, but which have not vested. Although the company has been paying dividend on unvested restricted stock for many years, it was unable to recall since when it is being practiced.
According to GE disclosures, the company’s Vice President Keith Sherin, will receive dividends for the next 10 years on 191,259 shares which belong to restricted stock that he does not belong to him, or which is vested, until he is 65 years of age, that is by 2023. Apart from this, four of the company’s senior executives jointly have 1.04 million shares of unvested restricted stock.
iPod Maker’s Policy
General Electric (NYSE:GE) spokesman Seth Martin said that the new policy caters to investors’ feedback but he declined to elaborate. In contrast to the policy GE and other companies are adopting, which are declining paying dividend on unvested shares, Apple Inc (NASDAQ:AAPL) is proposing to pay dividends to its executives on restricted stock. But there is a condition that the executives will not be liable to receive the payouts until shares vest. This was informed according to Apple’s latest proxy.