GE ends freebie dividends on executives' unvested stock
By Tim McLaughlin
BOSTON (Reuters) - General Electric Co (GE.N: Quote) said on Thursday it will stop paying its senior executives dividends on stock awards that have not yet vested, after investors urged the company to end the long-held perk.
The move, which affects only new stock awards and not old ones, comes amid growing scrutiny by shareholders of senior executive pay, which has been on the rise for years even as average Americans' salaries plateau. The dividends can add up to millions of dollars for executives with long tenure.
"The change is in response to investor feedback," GE spokesman Seth Martin said. He declined to elaborate.
GE's policy change affects only stock awards granted this year and beyond, the company disclosed this week in its annual proxy statement. That means some executives will continue to receive big dividend checks on stock awarded in previous years, but which has not vested.
Vice Chairman Keith Sherin, for example, will continue to receive dividends over the next decade on 191,250 shares of restricted stock that he doesn't own, or which is unvested, until his 65th birthday in 2023, according to GE disclosures.
GE had been paying dividends on unvested restricted stock for years. But the company was not able to say when the practice began.
While GE and other companies move away from paying dividends on unvested stock, Apple Inc (AAPL.O: Quote) is picking up where they left off, but with a twist. Executives at Apple accrue dividends on restricted stock, but don't get the payouts until shares vest, according to its latest proxy.
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