NEW YORK (BLOOMBERG) - General Electric has slashed chief executive officer Larry Culp's controversial compensation package by US$10 million (S$13.5 million) a year, a surprise move by the industrial titan in response to last year's rebuke by shareholders.
Mr Culp and GE's board of directors agreed to cut his annual equity award to US$5 million from US$15 million previously, according to a proxy filing on Thursday (March 17).
The change takes effect this year and will bring Mr Culp's total target compensation down to about US$11 million from an original projection of about US$21 million. He earned US$22.7 million in 2021, according to the filing.
Shareholders rarely reject executive compensation packages, and it is even less common to see companies dialling back those plans in response. Some 97 per cent of say-on-pay resolutions among Russell 3000 companies were approved by stockholders in 2021, according to Bloomberg calculations.
As in GE's case, those votes are typically non-binding, meaning that companies do not necessarily make cuts even if there is opposition.
The action to nearly halve Mr Culp's total pay "reflects our desire to recognise and meaningfully respond to our shareholders" while continuing to provide a performance incentive to the CEO, members of GE's compensation committee wrote in the filing.
Shares of the company are up 1.1 per cent this year, but little changed from when he took over in October 2018.
As its stock was reeling in the depths of the coronavirus pandemic, GE's board in August 2020 revised Mr Culp's employment contract, extending it to keep him on as CEO into 2024 and effectively cutting in half the share price targets needed for him to collect as much as US$232 million.
Almost 58 per cent of shares voting in a non-binding resolution went against the pay deal at GE's annual meeting last year, following criticism by shareholder advisory firms.
Mr Culp's pay cut comes as he prepares a plan to split the nearly 130-year-old manufacturing icon into three companies focused on aviation, healthcare and energy equipment by early 2024. GE's board arrived at the break-up decision following a "rigorous portfolio and business strategy review" held over several months.
