General Electric shareholders reject Larry Culp’s $ 230 million salary deal

General Electric shareholders voted against CEO Larry Culp’s $ 230 million package on Tuesday, continuing a wave of investor activism over big bonuses for U.S. companies this year.

According to preliminary results, 57.7 percent of shareholders rejected the industrial conglomerate’s compensation packages for its executives.

Investors took issue with Culp’s compensation plan being rewritten during last year’s pandemic in a way that made it easier for him to earn bonuses. GE’s board extended Culp’s contract and reduced the share price at which he would earn free shares and nearly doubled the amount of shares he would receive.

As the stock market rebounded late last year, Culp locked himself in free shares valued at $ 47 million and the payout could reach a maximum of $ 230 million earned in 2024 at the earliest if it stays in the business.

Last year, GE executive salary awards received 73% of shareholder support. After Tuesday’s vote – which was consultative and non-binding – GE said it was “disappointed” by the results and that it would continue to dialogue with shareholders on the issue of compensation.

Adding to investor angst over GE, Culp said on Tuesday that the company would not increase its dividend in the near future. “We need to keep making structural improvements to build a stronger GE before we can increase the dividend,” he said.

According to Equilar, a salary data company, average shareholder support for U.S. executive compensation programs has fallen this year to the lowest level since at least 2016. According to ISS Corporate Solutions, five companies in the S&P 500 have now suffered losses. denial of their executive compensation programs, including IBM and Starbucks, up from 10 in 2020.

Typically, investors approve of executive compensation, with most plans receiving more than 90% support.

“I don’t think we’ve ever seen a situation where big, important companies like this fail,” said Matteo Tonello, chief executive of The Conference Board, an international think tank. Rejections of wage packages typically occur in medium to small-sized companies, he said, adding that for these large companies the failure of bonus votes “is unprecedented.”

More controversial votes are expected this month as shareholders clash with Amazon, ExxonMobil and others.

Among Russell 3000 companies, the failure rate for salary votes is twice as high as it is at this point in 2020, according to Semler Brossy, a compensation consulting firm. Average compensation support “is well below average last year,” the company said in an April 29 report.

Compensation plans rewritten during the pandemic to make bonuses easier to earn are among the main reasons companies are rejecting salary votes this year, said Courtney Yu at Equilar.

“We’re definitely going to see a continuing trend of more companies getting less than 70% of the vote for this year,” he said.

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