General Electric Co. said CEO Larry Culp agreed to cut his potential compensation by about $10 million this year, responding to shareholder concerns about changes the GE 0.88% board made to executive compensation packages in 2020.
In August 2020, GE’s board renegotiated Mr. Culp’s contract, extending it through 2024 and awarding him a special stock grant for a year, valued at more than $100 million by the end of 2020. the company’s performance, which they described as lagging behind GE’s competitors.
Nearly 58% of GE’s shares were voted against board remuneration practices at last year’s annual meeting. Shareholders rarely refuse to support such votes in large companies.
In 2022, Mr. Culp will receive a $5 million stock award instead of the $15 million specified in his renegotiated contract if he and the company meet performance targets. Exceeding or failing to meet these targets increases or decreases the reward accordingly.
GE cut Mr. Culp’s potential salary in 2022 after discussions with most of its major shareholders last year, the company said in an annual official statement.
“Shareholders were concerned about the timing, size and structure of the 2020 retention subsidy provided as part of the renewal,” GE said in a statement, along with shareholder support for Mr. Culp’s leadership. The company also said it has no plans to make similar changes to its CEO pay in the coming years.
On Thursday, GE announced it had paid Mr. Culp $22.7 million for 2021, including a $4.2 million cash bonus and $2.5 million salary, and a share award of 15 million dollars. The share award was made prior to the 2021 annual meeting, GE said in a statement.
His 2021 salary was less than the $73.2 million GE reportedly paid him in 2020, but it was roughly in line with the $24.6 million paid in 2019, the first full year Mr. Culp has led the company. , as the securities documents show.
GE said in its power of attorney that the board will also limit its discretion in determining executive bonuses after shareholders raised concerns that GE used discretion in 2020 to award bonuses rather than tying them to performance measures.
The company said that Mr. Culp’s 2021 bonus was paid at 112% of the target, reflecting higher-than-target free cash flow and margin growth, as well as below-target revenue growth, as well as a penalty based on on corporate security performance.
A GE spokeswoman said that after the failed vote on the payment, the company spoke with investors who own about half of the company’s shares and three-quarters of the shares held by institutional investors.
Write to Theo Francis at [email protected]
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Published in the March 18, 2022 print edition as “GE Cuts CEO Pay After Shareer Protest”.