Fairfield industrial conglomerate General Electric Co. imposed new conditions on a large options award the board granted to Chief Executive Jeff Immelt after shareholders expressed concerns that the terms needed to be more stringent, Reuters reports.
The largest U.S. conglomerate said the vesting of 2 million stock options — which it said were worth $7.4 million and came in a year that Immelt also received his first cash bonus since before the financial crisis — will be tied to cash flow and stock performance targets.
Earlier this month, ISS Proxy Advisory Services had charged “there is a misalignment between long-term company performance and CEO pay” at GE, citing the options grant as the main cause of that misalignment.
The company said half the options awarded to Immelt would vest only if its generates at least $55 billion in cash flow across its industrial businesses — a term GE uses to refer to everything outside its GE Capital finance arm — over the four years ended December 31, 2014. That $55 billion target would exclude unusual events.
The other half will vest only if GE’s total shareholder return meets or exceeds the widely watched Standard & Poor’s 500 index over that time period.
