GE to disclose all business with compensation advisers

NEW YORK — General Electric agreed to a request by a group of shareholders to go beyond regulatory requirements and disclose any business ties it may have with the firms that advise it on how to pay its top executives.

The company will make this information available in its coming proxy statement, which it tends to file in early March, ahead of the April shareholders' meeting, said Peter O'Toole, a spokesman. In 2006, GE used New York compensation-consulting firm Frederic W. Cook and had no business agreements with that firm beyond compensation consulting, O'Toole said.

Officials from Cook weren't available for comment.

In October, a group of 13 institutional investors sent a joint letter to the 25 largest Standard & Poor's 500 companies, including GE, asking for this information. In addition to helping the board of directors hammer out pay for top executives, consulting firms can also be hired by management for other work, such as crafting the benefits plan for rank-and-file workers. The concern of these shareholders is that consultants may be reluctant to provide objective advice on executive pay if they rely on management's approval to win other business at the company.

"It is critical ... that a compensation consultant be free of any conflict of interest, perceived or actual," said the Oct. 23 letter signed by shareholders representing $850 billion in assets, including London-based money manager F&C Asset Management, the Connecticut Treasurer's Office and union group AFL-CIO.

The group of 13 shareholders plans to announce Tuesday the results of its letter campaign, said Bernard Kavaler, spokesman for Connecticut Treasurer Denise Nappier. The shareholders may submit proposals asking investors to vote in favor of such disclosure if companies don't volunteer to make the information public, Kavaler said.

Other targeted companies include Hewlett-Packard, Exxon Mobil, Morgan Stanley, Wal-Mart, Pfizer and Home Depot. None of these companies were available for comment.

So far, two-thirds of the 25 companies have responded to the letter, said Kavaler, who declined to specify how many will make the information available next year.

Under new Securities and Exchange Commission rules put in place this year, companies will be required to disclose in public filings the name of their compensation consultants, but not their other business relationships.

The shareholders behind the letter have likened such ties to when auditing firms provided consulting work for the companies they were auditing, a situation that some critics have said made accounting scandals such as those at Enron and WorldCom more likely.

The Sarbanes-Oxley Act of 2002 restricted the nonaudit services firms are allowed to provide audit clients.