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GE’s Executive Bonus Cuts Are a Good Start - http://ezmoneyonlinefromhome.com | how to make money online

March 13, 2018 3:32 pm
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Scrapping executive bonuses was the least General Electric Co. could do, but it’s nevertheless a step in the right direction.

Past and present top leaders of the embattled industrial conglomerate — with the exception of David Joyce, head of the crown jewel aviation unit — won’t receive a bonus for 2017, GE said Monday. Considering the year brought a dramatic earnings miss, a more than $100 billion reduction in GE’s market value and only the second dividend cut since the Great Depression, this seems apt. GE also canceled stock-based performance grants from 2015 after failing to meet most of its goals. And CEO John Flannery will get 47 percent less in salary than predecessor Jeff Immelt.

A Tale of Two CEOs

GE is attempting to be more rational with its CEO compensation and bind its leadership more to the fortunes of investors

Source: GE proxy report

GE’s executives aren’t going hungry, of course. Even without the bonus, Flannery will receive $9 million in total compensation for 2017. That’s 157 times what a median employee at the company earned — excluding employees retained from acquisitions and countries that make up less than 5 percent of the workforce. And while it’s a lower payout than it might have been otherwise, the $8.1 million Immelt received for 2017 is still going to sting. Many of GE’s current problems can be traced back to his mismanagement of the company, and yet he hasn’t taken any public responsibility, leaving the dirty work for Flannery.

The (still) big numbers will grab the headlines, but Flannery deserves credit for following through on his pledge to hold executives more accountable and revamp GE’s compensation structure. That pronouncement was one of the few bright spots in an otherwise uninspiring November investor day, where Flannery was meant to lay out his vision for turning this fallen American icon around. It sometimes seems like Flannery has one foot stuck in the past, and he’s struggled to get the messaging right with investors as the company keeps unearthing new challenges like a $15 billion reserve shortfall and an SEC investigation. With these compensation changes, he finally seems to have struck the right chord.

 
 

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