GE Didn't Pay Cash Bonuses to Top Executives in 2017 -- 3rd Update

By Thomas Gryta and Theo Francis 

General Electric Co. didn't pay a cash bonus last year to its top executives at corporate headquarters, which it said was the first time in the company's 125-year history.

The Boston-based company said in a regulatory filing Monday that its board withheld the 2017 bonuses and canceled some 2015 equity awards that executives would have partly received. It cited the conglomerate's struggles last year, which forced GE to slash its dividend, cut thousands of jobs and overhaul its leadership.

John Flannery, who took over as CEO on Aug. 1 with a $2 million annual salary, received $9 million in total compensation for 2017, including stock options and changes in values in his pension plan, according to the proxy filing. Mr. Flannery earned $1.6 million in salary in 2016 when he was CEO of the GE Healthcare division.

Former CEO Jeff Immelt received $8.1 million in total compensation last year, down from $21.3 million in 2016. Mr. Immelt, who led the company for 16 years and retired as chairman in October, didn't receive any severance payments.

GE said it was changing its executive compensation program for 2018, eliminating a long-term cash incentive program and lowering the amount of cash salary paid to Mr. Flannery compared with Mr. Immelt.

The company also is tying equity awards to total shareholder return. Bonuses for employees of each operating business will be funded based on segment performance, rather than overall company performance.

The company disclosed on Monday that in February it awarded 800,000 performance share units to the new CEO that will vest in three years. It also awarded 200,000 performance share units to Jamie Miller, who took over as finance chief on Nov. 1. The shares underlying the equity awards were valued at $12 million and $3 million, respectively, based on where the stock was trading in February.

The company said the grants were delayed from the fall to give the board more time to consider the appropriate performance metrics and targets.

Over all, GE said it funded its corporate bonus pool at 24% of its plan last year. The only senior executive to receive a cash bonus for 2017 was David Joyce, the Cincinnati-based head of GE Aviation, which makes jet engines. Mr. Joyce received a cash bonus of $1.4 million and total compensation of $5.2 million in 2017, less than half of what he received the year before.

Jeff Bornstein, who officially stepped aside as CFO on Nov. 1, received $6.9 million in total compensation for 2017, excluding $7.7 million worth of restricted stock awards that he received earlier in the year but were canceled when he resigned.

GE said it trimmed the number of metrics used to determine long-term performance awards, beginning in 2018, to two -- one a measure of earnings, the other a measure of cash -- from five. The company previously also had used adjusted earnings per share, industrial profit margins and cash returned to shareholders.

In a disclosure required for the first time this year, GE said its median worker -- a health-care employee in Germany -- made about $57,000 in 2017, and that Mr. Flannery's compensation was about 157 times as much.

Write to Thomas Gryta at [e-mail] and Theo Francis at [e-mail]

(END) Dow Jones Newswires

March 12, 2018 19:48 ET (23:48 GMT)

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