GE Is Blasted for Revamping Culp’s Pay Package Amid Struggles
(Bloomberg) -- A labor-affiliated investor group blasted General Electric Co. for approving a restructured compensation plan last year that lowered the bar for Chief Executive Officer Larry Culp to potentially collect more than $230 million.
The manufacturer has faced a performance and operational crisis due to “years of poor board oversight,” CtW Investment Group Executive Director Dieter Waizenegger said Tuesday in a letter to GE director Risa Lavizzo-Mourey. The group called on GE’s board to permanently separate the CEO and chairman roles and refrain from re-nominating the five members of the executive compensation committee for approving the pay plan.
“This is not the time to lower, let alone reverse, performance goals for the CEO,” Waizenegger wrote. “Long-term shareholders have yet to benefit from an investment in the company, even with its recent appreciation.”
The pushback was sparked by GE’s August move to extend Culp’s contract by two years into 2024 and essentially halve the share price targets needed for him to qualify for a share-based payout valued at as much as $232 million by the end of his tenure. The change came after GE shares plunged to their lowest levels in years as the pandemic gutted GE’s jet-engine division, before the stock rallied later in 2020.
The shares rose less than 1% at 10:50 a.m. Tuesday in New York. Through Friday’s close, GE had climbed 8.1% since Culp was named to the top job in late 2018, trailing a 16% gain in an S&P 500 index of industrial companies. He recently qualified for the first threshold of the share-based payout, valued at $47 million.
GE declined to comment on CtW’s letter but pointed to a previous statement on behalf of the board defending the decision to revamp Culp’s pay plan. The company said it has improved both its financial position and the performance of GE’s industrial units under Culp’s leadership, despite a “significantly worse operating environment in 2020.”
CtW works with union pension funds with more than $250 million in assets under management and which are “substantial” GE shareholders, Waizenegger said. The group advocates for corporate governance reforms at major companies.
GE has resisted previous calls to separate the chairman and CEO roles. In a regulatory filing last year, GE said its independent directors determined that leaving the roles combined “was important to provide clarity on decision-making and accountability, particularly at a time of considerable change for the company.”
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