General Electric co
said stock awards for Chief Executive Officer Larry Culp were canceled for an original $20 million and said the company failed to meet minimum performance thresholds required for the executive to fully earn the stock.
The move, made by the board last month, wiped out $5 million of the $8.2 million in total compensation the company had reported for Mr. Culp for 2022, as well as a tranche of stock originally valued at $15 million , when she was assigned in 2020. The company also canceled stock awards for other top executives for the same years.
Had the company not canceled the stock awards, Mr. Culp’s two blocks of shares would have been valued at approximately $14.4 million at the end of 2022. GE shares fell a little over 11% over the year and are up about 8.6% over the past five years. They closed at $91.97 on Thursday, down from $65.38 on December 30th.
Mr. Culp could still receive a tranche of performance shares that were granted in 2020 in connection with a two-year extension of his employment contract through 2024.
GE valued these shares at approximately $146 million at the end of 2022, up from $57 million originally, assuming Mr. Culp would receive the maximum possible number of shares under the terms of the grant. So far, he has earned about a third less than the maximum, said a company spokeswoman. The number he ultimately gets depends on the company’s highest average share price over 30 consecutive trading days through mid-August 2024.
The salary disclosures were made in the company’s annual proxy statement filed with the Securities and Exchange Commission on Thursday.
In GE’s annual proxy statement, Thomas Horton, the company’s executive director and partner at an infrastructure investment fund, commended the company for spinning off its healthcare business, paying down $11 billion of debt in 2022, and starting new ones Share buybacks and meetings with investors throughout the year to discuss executive compensation and other matters.
GE had already reduced the amount of shares Mr. Culp could receive for 2022 after shareholders objected to the terms of his 2020 contract extension. Instead of a $15 million stock award set under that agreement, GE said a year ago that its target would be $5 million. This is one of the awards that was canceled last month.
Approximately 66% of the shares voted at GE’s 2022 annual meeting supported the company’s “Say on Pay” action, an advisory vote intended to express support or disapproval of the company’s compensation practices. In 2021, nearly 58% of shares voted against GE’s executive compensation practices. Many large public companies generally get 90% or more support.
GE’s board of directors’ decision to reverse a portion of Mr. Culp’s equity means the company reported a value of minus $23.8 million for his 2022 “actual compensation paid,” a new measure first reported in was required by the SEC this year.
The number measures the change in CEO compensation over the year, including new cash and stock awards, and gains or losses from previous stock awards.
In Mr. Culp’s case, this reflects the loss of his 2022 stock awards that were canceled last month, as well as $27.4 million in other stock award losses from prior years.
The outstanding 2020 leadership award decreased in value by approximately $18.6 million in 2022, while an outstanding 2021 stock award decreased in value by approximately $2.7 million, according to GE’s securities filing. Both awards are expected to vest or vest in full in 2024 if the performance conditions are met.
Mr. Culp is nearing the end of a three-year plan to split General Electric into three parts. Earlier this year, it spun off its healthcare business, GE HealthCare Technologies inc,
as an independent company. It plans to do the same over the next year with its power generation and renewable energy businesses, now called GE Vernova. That will leave GE Aerospace, which Mr. Culp says he wants to lead.
Write to Theo Francis at email@example.com
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