General Electric has imposed new conditions on a large options award granted to chief executive Jeff Immelt after shareholders expressed concerns that the terms needed to be more stringent.
The largest US conglomerate said the vesting of 2m stock options – which it said were worth $7.4m (£4.5m) 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.
"Some shareholders have expressed the view that additional performance conditions should be applied to Mr. Immelt's 2010 stock option award," the Connecticut-based company said in a filing with the US Securities and Exchange Commission.
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 $55bn 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 $55bn 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.
GE shares have lagged the S&P 500 over the past year, gaining 5.3 per cent while the index has risen 9.5 per cent.
City A.M. Reporter