General Electric shareholders reject Larry Culp’s $230 million compensation agreement

General Electric shareholders voted against CEO Larry Culp’s $230 million compensation plan on Tuesday, expanding investor enthusiasm for the huge bonuses of US companies this year.

According to preliminary results, 57.7% of shareholders rejected the remuneration package provided by the industrial group for its executives.

Investors opposed Culp’s compensation plan being rewritten during the pandemic last year, which made it easier for him to get bonuses. GE’s board of directors extended Culp’s contract and lowered the share price at which he could receive bonus shares, almost doubling the number of shares he received.

When the stock market rebounded at the end of last year, Culp locked in $47 million worth of dividend stocks If he stays in the company, the highest dividend that he will receive as early as 2024 will reach $230 million.

Last year, the salary incentives for GE executives received 73% support from shareholders. After the vote on Tuesday, this is only an advisory opinion and is not binding. GE said it was “disappointed” with the results and it will continue to engage with shareholders on compensation issues.

What makes General Electric even more worried is that Culp said on Tuesday that the company will not raise its dividend in the near future. He said: “We need to continue to make structural improvements to build a stronger General Electric before we can increase the dividend.”

Equilar, a compensation data company, said that average shareholder support for US executive compensation plans this year has fallen to the lowest level since at least 2016. According to data from ISS Corporate Solutions, there are now five S&P 500 companies that have been rejected by executive compensation packages, including IBM and Starbucks, and there will be only 10 in 2020.

Usually, investors have to raise the salary of executive officers, and most plans will receive more than 90% of the support.

Matteo Tonello, managing director of the International Think Tank Conference Committee, said: “I don’t think we have seen such a large and well-known company go bankrupt.” He said that salary rejections usually occur Medium or small companies, adding that for such a large company, it is “unprecedented” if the dividend vote is not passed.

As shareholders reach consensus with companies such as Amazon and ExxonMobil, they are expected to receive more controversial votes this month.

Salary consulting firm Semler Brossy said that among Russell’s 3000 companies, the rate of failure to vote for salaries is twice as high as in 2020. The company stated in its April 29 report that the average salary support was “significantly lower than last year’s average.”

Courtney Yu of Equilar said that during the pandemic, the compensation plan was rewritten to make bonuses more accessible, which was one of the main reasons why the company rejected the salary vote this year.

He said: “We will definitely see the continued trend that more and more companies will get less than 70% of the votes this year.”

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