General Electric Co. failed to achieve the minimum performance threshold and canceled the stock awards, which were initially valued at $20 million, to Larry Culp, its CEO. According to a communiqué from the company, the CEO has to steer its financial performance above the threshold to claim stock awards.
According to the most recent world news from BNN, the board of General Electric decided in its February 2023 meeting to cut $5 million from its CEO’s total compensation package of $8.2 million for the previous year. It also decided to reduce a tranche of shares, which were awarded in 2020 and valued at $15 million. General Electric also took similar steps, such as canceling equity awards for its other top executives during those years.
Shares of General Electric declined by 11% in 2022
Mr. Culp could have earned a total of $14.4 million at the end of last year if the company had not canceled the equity awards. After rising over 8.6% in the last five years, the shares of General Electric declined by over 11% in 2022. Its shares recovered from a low of $65.38 on December 2022, to $90.29 on Friday.
As per the terms of the two-year extension of his employment, which is into 2024, at General Electric, Mr. Culp is eligible to receive a chunk of performance-linked equity awards in 2020. Following the objections raised by the shareholders to the terms of his contract extension in 2020, the company lowered the stock awards for Mr. Culp for the year 2022. Now, Mr. Culp would receive $5 million worth of stock awards instead of $15 million as per the contract terms. It is against the backdrop of stock award cancellations last month.
China suspends Deloitte Hua Yong for Its Failure to Mention the Actual Value of China Huarong
The finance ministry of China has suspended the operations of Beijing’s office of Deloitte for three months. It is against the backdrop of Deloitte Hua Yong’s failure to mention the actual value of China Huarong’s assets. The auditor also failed to give a fair opinion after detecting unusual transactions at the company.
In today’s latest news, Deloitte said it fully cooperated with the inspection ordered by the ministry. The company said it accepts and respects the penalty decision of the Finance Ministry. It also said the finance ministry considered some of its work to have fallen below the set audit standards. However, Deloitte clarified that neither its Beijing branch nor the finance ministry has given any suggestions for improving the audit standards. It also said its executives had not acted unethically.
The Chinese Finance Ministry has imposed a fine of $31 million on Deloitte for failing to comply with auditing standards and provide the actual value of the assets of the audited company. Deloitte Hua Yong worked as an auditor for China Huarong until completing the accounts for the year 2019. China Huarong has appointed a local Ernst & Young unit in place of Deloitte Hua Yong in 2020.