Market Likes that GE (GE) CEO Culp's Pay Package is Largely Tied to Outsized Stock Gains - RBC

RBC Capital analyst Deane Dray highlights that General Electric's (NYSE: GE) new CEO Larry Culp's compensation package is largely tied to outsized stock gains.

Dray notes that Culp's compensation could reach as high as $300 million if stock price milestones are achieved, which he said the market has taken notice of.

"If the price increases by 50% (to ~$18.60), Mr. Culp would receive 2.5 million shares, equating to a payout of $46.5 million," he comments. "However, if the price increases by 150% (to ~$31), then Mr. Culp would receive 7.5 million shares, equating to a payout of over $232 million, in addition to his base salary."

"The bottom line is that this overweighting of GE’s stock price as a benchmark for Mr. Culp’s incentive comp reinforces our view that he would not have taken on this job without clear line-of-sight on the turnaround strategy," he adds.

Dray notes the next potential catalyst will be GE’s highly-anticipated 3Q18 earnings on Oct-25, which will formally introduce Mr. Culp to the investing community and offer a first look at his operating strategy and priorities as GE’s newest CEO

The firm reiterated an Outperform rating and price target of $15.

For an analyst ratings summary and ratings history on General Electric click here. For more ratings news on General Electric click here.

Shares of General Electric closed at $12.66 yesterday.

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