Two years after taking the helm at a slumping General Electric, Larry Culp has secured a huge reward: a bonus of around $47 million and the potential for much more.
The mammoth payoff follows thousands of layoffs at the industrial conglomerate amid the coronavirus pandemic.
Culp took over as chief executive in October 2018 and was paid almost $25 million in 2019, but he could reap as much as $230 million if GE meets additional targets, according to securities filings reviewed by AFP.
The ex-CEO of Danaher, Culp has been credited with stabilizing GE's finances through a series of austerity measures, including asset sales and layoffs.
The company justified the bonus citing the executive's performance amid a difficult operating environment.
The board launched a charm offensive over the summer to retain Culp as it faced a bruising downturn in aviation that hit orders for its LEAP engine joint-venture with France's Safran.
The company in August amended its long-term incentive plan, effectively lowering the bar Culp would have to clear to win the payoff and extended his contract until 2024 with an option for an additional year.
The head of the GE labor union called the package "absolutely outrageous," especially after the company announced some jobs would be shipped overseas.
"How can GE justify this type of enormous bonus for its CEO, while workers, their families, and communities are suffering due to layoffs and offshoring?" Carl Kennebrew, president of the Industrial Division of the Communications Workers of America (IUE-CWA) said in a statement.
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Under the revised package, Culp would receive the bonus if GE's share price reaches $10 and trade above that level for 30 days -- lowering the target price from $19 previously.
When the package was agreed, GE shares were trading at around $6.65 but have advanced more recently amid optimism surrounding Covid-19 vaccines.
GE's stock price has been above $10 for more than a month and Wednesday afternoon was trading at $10.73, up 1.6 percent.
Culp's payoff could reach $230 million if GE shares reach $17 -- well below the original benchmark of $31 a share.
People familiar with the situation said GE recognized that the potential sums are staggering, but noted that Culp must stay with the company through August 2024 to receive the full payout under the amended plan.
"Under Larry's leadership, GE has made significant progress against the goals he set on day one as CEO: improving the company's financial position and strengthening its businesses," said a GE spokesperson on behalf of the board, noting the difficult operating environment this year.
"We believe having Larry at the helm of the company for a longer period of time is unquestionably to the benefit of all shareholders and stakeholders."
Culp has presided over significant rounds of layoffs, including 13,000 aviation jobs globally earlier this year.
Even with the asset sales, GE still has heavy debt and operations are challenged by turbine overcapacity in its power division and still-weak demand in aviation.
GE reported a 2019 loss of $5.4 billion, compared with $22.8 billion in 2018. The company reported a $1.2 billion loss in the most recent quarter.