Guaranteed $ 47 million and even up to $ 230 million: Two years after the takeover of General Electric, which drives bad bets on energy, Larry Culp sees his 'risk' well rewarded.
The GE head is guaranteed a bonus of nearly $ 47 million as the industrial conglomerate is laying off thousands of employees, particularly in France, to respond to the crisis caused by the Covid-19 pandemic.
Up to ... $ 230 million
Mr Culps bonus, who has been at the top since October 1, 2018, could even reach the staggering $ 230 million if he manages to hit particularly low financial goals. This emerges from documents sent to the American stock exchange police officer. consulted the SEC and AFP.
The big boss had received almost $ 25 million for his compensation for 2019.
Given the difficulties facing the aviation division, which manufactures LEAP aircraft engines in partnership with the French group Safran, GE launched a real charm offensive this summer to prevent Mr. Culps departure.
On August 18, GE changed Mr. Culps compensation plan and passed new terms and conditions that were very beneficial to the manager compared to the original employment contract signed in October 2018.
Much more accessible destinations
The company extended his contract to 2024 with an additional option for one year, and then lowered the financial targets set for him, giving him more time to turn the business around.
Specifically, if Larry Culp, 57, could allow GE stock to hit $ 10 and above on Wall Street instead of $ 19 and stay there for 30 days, he would pocket $ 47 million in stock options that he could get in 2024. This has been the case for several days.
The stock was trading at $ 6.67 in August but has since risen as the markets woke up, excited by the news of the Covid-19 vaccine front.
Larry Culp could receive a total of $ 230 million in bonuses if GE stock climbed from $ 31 in the previous compensation plan to at least $ 17. A much more accessible destination.
And above all, one goal that he shouldnt achieve: Larry Culp has until 2025 to achieve it. Until then, the global economy should regain color, which should have a positive effect on General Electrics activities.
'Under Larrys leadership, GE has made significant strides toward the goals set on the first day he took office as CEO: improving the companys financial condition and strengthening its business.' said a spokesman.
13,000 jobs cut
Larry Culps bonus has been covered by Bloomberg, the Financial Times and other media outlets.
Mr. Culps strategy has â€œled to an uncertain future for many former employees. Much more insecure than Mr. Culps, 'Bloomberg Opinion columnist Brooke Sutherland castigates in the Washington Post.
In the past two years, GE has expanded its social plans worldwide, particularly at its French location in Belfort. The company announced in the spring a plan to save $ 2 billion by cutting 13,000 jobs. The group has already warned that new cuts are coming.
While GE slashed losses last year, GE still posted a net loss of $ 1.2 billion in the third quarter.
The group is still heavily in debt. Turbine activity is overloaded, while the decline in aircraft demand will have a lasting impact on the production of engines, spare parts and maintenance services.