GE execs get big paydays after stock, job losses

General Electric estimated at $16.6 million the compensation paid last year to former CEO John Flannery, with the company’s chief financial officer getting a bonus of more than $1.1 million even as the company ratcheted down bonuses paid to underperforming units.

GE had a tumultuous 2018, capped by the board of directors installing Larry Culp Jr. as CEO in October, replacing Flannery and shedding jobs through subsidiary sales and cutbacks. The Boston-based company’s stock lost more than half its value as the company struggled to contain losses at its GE Capital division, based in Norwalk, including the revelation of a $1.5 billion settlement with the U.S. Department of Justice over its management of a former subprime mortgage subsidiary.

“This is a game of inches — every single day,” Culp told investors last week during a conference call in which he described 2019 as a reset year for GE. “This year will be more about what we do than what we say. ... This is a year of intensity, of focus and transparency.”

Culp received $15.4 million in his first three months on the job, most of it in up-front compensation pegged to the estimated value of GE’s stock based on the performance of the company going forward. The company calculated Culp’s annualized pay at $20.1 million, about 345 times the $58,000 in compensation received by the median GE employee, at a GE Baker Hughes facility in Louisiana.

Under a similar compensation model, Michael Holston received $13.5 million as GE’s new general counsel. Jamie Miller, who was promoted to chief financial officer in October 2017 and who has continued as CFO under Culp, saw a 50 percent increase in estimated compensation last year to $7.4 million. That was about $4 million less than her predecessor Jeff Bornstein made in his final full year as CFO.

GE’s compensation committee is chaired by Tom Horton, the former CEO of American Airlines. In a letter prefacing the company’s annual investor proxy published on Monday, Horton noted GE’s overhaul of its compensation plans with the goal of improving corporate results.

“While this plan entails a significant amount of transition, particularly for GE’s employees, we believe it is key to unlocking value for (shareholders) and laying the foundation for a stronger GE going forward,” Horton stated in the proxy document. “For 2018, the bonus pool was redesigned to make payouts for business executives based on business unit performance, rather than overall company results . ... Smaller or no bonuses were paid to businesses that fell short of expectations.”

GE has scheduled its annual meeting for May 8 at the Westchester Marriott in Tarrytown, N.Y., with the meeting to begin at 10 a.m. In past years, the company has allowed individual investors to pose questions to executives and board members about the company’s management, past practices and future direction.