GE CEO could reap more than $200M if stock rises
General Electric’s new boss could receive US$21.3 million in annual compensation and earn shares worth more than $200 million — but only if he manages to reverse the company’s deep stock slump.
That already looks like a decent bet.
The shares surged Friday after GE revealed a pay package that depends heavily on CEO Larry Culp’s ability to engineer an epic share rebound. Aside from a $2.5 million annual salary, the rest of his compensation — including a $3.75-million target bonus, an annual long-term incentive of $15 million and a big grant of shares — will only be paid out if he meets certain goals, GE said in a regulatory filing late Thursday.
“Larry is a proven executive with a long track record of superior execution, and the board’s package to attract Larry is overwhelmingly tied to performance,” the maker of gas turbines and jet engines said by email. “Nearly 90 per cent of his annual pay will be at risk.”
The agreement highlights GE’s efforts to pull its stock out of a tailspin that had erased about $180 billion of investor wealth since the end of 2016. Under former CEO John Flannery, who was ousted in a surprise decision just 14 months into his tenure, GE was unable to overcome challenges ranging from poor cash flow to a sharp downturn in the market for power equipment.
The Boston-based manufacturer jumped 4.5 per cent to $13.22 at 3:11 p.m. in New York, pushing the gain to about 16 per cent since the CEO change was announced on Oct. 1. The shares are still down about 25 per cent this year, compounding last year’s 45 per cent slump. GE was expelled from the Dow Jones industrial average three months ago.
Culp, 55, this week became the first outside CEO for GE in its 126-year history. He also took over as chair, less than six months after joining GE’s board.