A committee of General Electric Co.’s board of directors has slashed this year’s stock grant to Chairman and CEO Larry Culp by $10 million.
The decision to amend Culp’s contract comes 10 months after GE investors representing 58% of the company’s stock voted against the company’s compensation plans. Although that was a non-binding vote, GE board members and other officials said they have since met with many shareholders to learn more about why the vote turned out how it did.
“Shareholders have been overwhelmingly supportive of Larry and the action in 2020 to extend the term of his employment. But there was shareholder concern around the timing, size and structure of the 2020 retention grant made as part of the extension,” the five-member committee chaired by former AMR Corp. Chairman and CEO Thomas Horton wrote in the company’s proxy statement published March 17.
Culp was paid a base salary of $2.5 million in 2021, up from about $650,000 the year before when he forfeited about 75% of his salary due to COVID, as well as a bonus of $4.2 million. His 2020 contract extension through 2024 came with a large stock grant that was a major component in Culp being awarded shares worth more than $72 million that year.
“This action reflects our desire to continue incentivizing Larry to lead GE’s transformation and improve the company’s financial performance alongside the rest of the senior leadership team, his demonstrated strong performance as CEO and our Board’s support for his leadership,” the board committee wrote, and GE officials noted that Culp participated in that compensation restructuring process. “It also reflects our desire to recognize and meaningfully respond to our shareholders.”
Culp, 58, is former president and CEO of Danaher Corp. and has led GE since September 2018. Under his watch, the company last year sold its GECAS business for more than $30 billion and in November announced a plan to split what remains of the industrial bellwether into units focused on aviation, energy and healthcare. That initiative is expected to take most of the next two years and cost about $2 billion to carry out.
In addition to reducing Culp’s stock grant this year, the GE board also has voted to adjust how the company awards bonuses for its business units. In the past, directors had some discretion to boost payouts but shareholders voiced their desire to have those calculations be made only by following predetermined formulas. For 2021, the compensation committee noted, that resulted in GE renewable energy business receiving no bonuses last year while the aviation’s bonuses came in above their targets.
Shares of GE (Ticker: GE) were down slightly after hours March 17 after rising nearly 1% during the regular session. They are down slightly over the past six months.
