GE boss faces revolt over bonus as shareholder adviser bares its teeth

Investors should reject Larry Culp’s revised pay deal, ISS says in latest recommendation

General Electric’s chief executive Larry Culp: ‘I didn’t take a salary last year once Covid hit. I think we all sacrificed.’

General Electric’s chief executive Larry Culp: ‘I didn’t take a salary last year once Covid hit. I think we all sacrificed.’


General Electric is heading for a showdown over a $47 million (€39 million) bonus for its chief executive, Larry Culp, after a shareholder adviser recommended investors vote against the pay package in protest at the decision to relax his performance targets.

Rewriting the bonus plan last year after the pandemic hit GE shares was “problematic”, Institutional Shareholder Services wrote, in a report circulated to investors of the industrial conglomerate this week.

Its voting recommendation comes as corporate America heads into annual meeting season, with executive pay in particular focus. ISS has also advised investors to vote against compensation plans at AT&T, the media and telecoms group, Wells Fargo, the bank, and healthcare giant Johnson & Johnson.

At a low point for GE shares in August, the board rewrote the terms of Mr Culp’s bonus plan, which was tied to share price targets. It reduced the stock price at which the chief executive would earn bonus shares and nearly doubled the amount of stock he would receive.

Since then, the stock market has recovered to set new records and GE shares rebounded sharply, too, to the point that Mr Culp had locked in the bonus by late 2020. It will be paid in 2024 at the earliest if he stays with the company.

The bonus award could also yet swell in size. If GE’s share price remains above $13.34 for 30 consecutive days, Mr Culp could earn $124 million. GE shares were trading around $13.50 on Thursday. The revised plan also preserves Mr Culp’s chances of scoring a maximum $230 million bonus.

“The lowering of goals without adjusting the payout opportunity is viewed as problematic,” ISS said in advising a “no” vote on pay. It also recommended GE shareholders vote to separate Mr Culp’s roles as chairman of the board and chief executive.

It said shareholders should support the re-election of all of GE’s board members, however, including Mr Culp.


The adviser’s recommendations are influential because they are followed by many institutional investors without large corporate governance teams of their own.

Already this year, the coffee chain Starbucks and the pharmacy group Walgreens Boots Alliance have lost shareholder votes on executive pay after ISS recommended against their bonus plans.

GE said it disagreed with ISS’s recommendations. “We value the feedback and views of our shareholders, and we will continue to engage with many of them on a range of topics, including executive compensation,” it said.

In January, Mr Culp said the rewrite of his pay plan “required a bit of soul-searching on my part, given what I’d agreed to initially”.

“I didn’t take a salary last year once Covid hit. I think we all sacrificed,” he said.

GE’s annual meeting is on May 4th.

Contentious votes are due at three other S&P 500 companies before the end of this month.

The bonuses for J&J executives are not justified because the company has provided too little information about litigation expenses, including $4 billion of charges to cover cases related to its sale of opioids, ISS has said.

The advisory group has also raised concerns about the structure of bonus plans for executives at AT&T and Wells Fargo. – Copyright The Financial Times Limited 2021