According to a recent report by The Wall Street Journal, General Electric (GE) has cancelled stock awards worth USD 20 million for its CEO, Larry Culp. The company cited the failure to meet the minimum performance thresholds necessary for the executive to receive the full title to the shares. This move was made by the board last month, resulting in the loss of USD 5 million of Culp’s total compensation for 2022 and the cancellation of equity awards for other top executives.
Had GE not cancelled the stock awards, two batches of shares for Culp would have been valued at around USD 14.4 million at the end of 2022. However, the company still intends to award Culp a tranche of performance-linked shares, which was awarded in 2020 in connection with a two-year extension of his employment agreement into 2024.
In response to shareholder objections to the terms of Culp’s 2020 contract extension, GE had previously reduced the amount of stock he could receive for 2022. Instead of the USD 15 million target stock award outlined in the agreement, GE had announced that his target would be USD 5 million. This is one of the awards that was cancelled last month.
GE had valued those shares at around USD 146 million at the end of 2022, up from the original value of USD 57 million. The valuation was based on the assumption that Culp would receive the maximum number of shares possible under the terms of the award. However, Culp has so far earned about a third less than the maximum, and the number he ultimately receives will depend on the company’s highest average share price over any 30 consecutive trading days through mid-August 2024.
GE’s annual proxy statement, filed with the Securities and Exchange Commission on Thursday, disclosed these pay adjustments.