Larry Culp. Picture: SUPPLIED
Larry Culp. Picture: SUPPLIED

General Electric (GE) shareholders rejected the company’s executive compensation plans in a nonbinding vote, snubbing a revised pay package that lowered the bar for CEO Larry Culp to eventually collect as much as $232m.

Almost 58% of shares voting went against the pay deal at GE’s annual meeting on Tuesday. Investors weighed in less than a month after shareholder advisory firm Glass Lewis chided GE’s board for maintaining Culp’s maximum potential payout “in exchange for reduced shareholder value creation”.

The vote amounted to a rebuke of GE’s decision in August to essentially halve the share-price targets needed for Culp to qualify for equity-based compensation valued at as much as $232m by the end of his tenure. The revisions were made as part of a two-year contract extension to keep him at the helm through 2024, as the coronavirus pandemic upended his turnaround push at GE.

The board said it was confident that the continued leadership of Culp and his executive team were in the long-term interests of investors.

“We value the views of our shareholders, and we will gather additional feedback from them as we take into consideration the outcome of the vote and evaluate our executive compensation programme moving forward,” a board spokesperson said in a statement.

Only a handful of S&P 100 companies each year receive less than 50% support for their pay programmes. Most plans win the backing of a decisive majority.

This year, shareholders are closely scrutinising the various tweaks to executive pay programmes that boards made to cushion the blow from the pandemic. AT&T shareholders voted against the company’s executive compensation plan last week, in another nonbinding vote.

GE fell 2.3% to $13.14 in New York amid a broad slump. The shares climbed 25% this year through Monday, outpacing the 16% advance of an S&P index of US industrial companies. GE rallied strongly late last year in the months after the board revamped Culp’s pay package.

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