Larry Culp, the General Electric chairman and chief executive whose potential wages deal of $230 million was rejected by investors last year, has agreed to cut his stimulus premium by two-thirds for this year.
Culp and GE’s board of directors’ compensation committee have agreed to reduce its annual grant from $15 million to $5 million “in response to shareholder feedback,” the US industrial group said in a prior proxy filing. at its annual meeting on May 4.
The equity incentives, laid down in an amendment to Culp’s employment contract, are in addition to his base salary and cash bonuses. In 2021, he earned a $2.5 million salary and a $4.2 million annual cash bonus for a year in which he announced a plan to split GE into three separate public companies.
Culp’s total wages in 2021 were $22.7 million, or 412 times the $55,100 earned by the average GE employee.
Last May, 57.7 percent of GE shareholders rejected its executives’ compensation packages in a non-binding vote after the board of directors rewritten Culp’s compensation plan during the pandemic to make it easier for him to earn bonus shares.
In a letter to shareholders filed Thursday, the compensation committee said it had met with investors over the past year representing nearly 80 percent of the company’s institutional shareholding.
“Shareholders expressed no concern about fundamental aspects of the design of our rewards program” and were “overwhelmingly supportive” of Culp’s leadership, it said. Culp has been CEO since 2018.
However, the committee added that their concerns about “the timing, size and structure” of his 2020 retention allowance had prompted them and Culp to agree to a 67 percent cut in the annual stock incentive he was eligible under. a contract that runs until 2024.
GE also made concessions in response to shareholder concerns about how it was exercising discretion in awarding cash bonuses for 2020, adopting a performance-based formula instead. As a result, the airline division executives’ annual bonuses were paid at 113 percent of their target, while renewable energy executives received no annual bonuses.
Culp said in November he would “create value for customers, investors and employees” by splitting America’s best-known industrial conglomerate into three companies focused on healthcare, energy and aerospace.
GE’s stock initially jumped as investors welcomed the change of strategy, but the stock has fallen nearly 10 percent in the past year, underperforming the S&P 500 index as the group faced disruptions in its supply chain.
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