GE CEO Could Reap More Than $200 Million If Stock Slump Reversed

(Bloomberg) -- General Electric Co.’s new boss could receive $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.

Larry Culp, who was named chief executive officer and chairman this week, will receive a $2.5 million annual salary, GE said in a regulatory filing Thursday. He’s also eligible for a $3.75 million target bonus, an annual long-term incentive of $15 million and a big grant of shares, all dependent on performance goals.

“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 in an emailed statement. “Nearly 90 percent of his annual pay will be at risk.”

The agreement highlights GE’s efforts to pull its stock out of a tailspin that has erased about $170 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.

Culp, 55, the former head of manufacturer Danaher Corp., this week became the first outside CEO for GE in the company’s 126-year history. He joined GE’s board in April.

Stock Gain

The Boston-based manufacturer has advanced 12 percent since the CEO change was announced on Oct. 1, including a 1.4 percent rise Thursday to $12.66 a share. The shares are still down 27 percent this year, a drop that followed a 45 percent tumble in 2017. GE was expelled from the Dow Jones Industrial Average three months ago.

As part of his pay package, Culp could also collect as many as 7.5 million shares if GE’s share price closes on average at least 150 percent above its current level for 30 consecutive trading days before Sept. 30, 2022.

That block of stock would be worth $95 million as of Thursday’s close, and would soar to as much as $237 million if the performance condition is met. Culp could earn a smaller number of shares if the stock price increases at least 50 percent -- or no shares at all if the price falls short of that threshold.

The special award tied to stock price appreciation will be adjusted for spinoff transactions or special dividends, the filing said.

The company said it would disclose Flannery’s exit package when it’s finalized. The former CEO, who took the job in August last year, got $9 million for 2017, according to a regulatory filing earlier this year. That included $1.74 million in salary, stock options valued at $2.08 million and a $3.26 million adjustment to the value of his pension and deferred compensation.

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