General Electric CEO Larry Culp is taking home $10 million less in GE shares this year. In its proxy statement released on Thursday - the announcement informing shareholders about decisions to be made during the annual general meeting and requesting them to vote on those decisions - the company disclosed that during 2021, it had received a considerable amount of unfavourable feedback over executive pay.

The shareholder pushback stemmed from a huge retention package of $230 million in GE stock that the board gave to Culp in August 2020 - right in the middle of the global economic downturn. That package was based upon GE's share performance from late 2019 to early 2020, and it was attached to the extension of Culp's contract to 2024, meaning that it would gradually have been paid out over the course of his tenure. Furthermore, it was pegged to lower financial performance targets, which would have made it more achievable despite the recession. The timing and setup made the optics of that package exceptionally bad, and although GE shareholders apparently have no objection to keeping Culp on or paying him well for his management of the company, they expressed enough concern that the board is now cutting his pay anyway.

According to the proxy statement, Culp's contract states that he will get a $15 million equity incentive annually. However, the board, with his agreement, is modifying that contract to reduce the amount to $5 million, or a 67% reduction. This will be a one-time change and the board has stated that it does not intend to make such retroactive changes to the CEO's contract again.

Besides the upheaval around CEO pay, GE shareholders also pushed back on the way the company has been paying out discretionary bonuses. These had apparently been done to make bonuses more uniform across the various businesses, with the result that bonuses were not reflective of actual performance - and when the company, in response, removed discretionary payouts and adhered to the original bonus formula, huge differences in bonuses appeared. The proxy statement cited, for example, bonuses of 113% in the aviation business compared to zero bonuses in the renewable energy business, which had badly underperformed in 2021.

Image: GE Investor Day 2022