General Electric Co. Chief Executive Officer Jeffrey Immelt’s compensation fell 35 percent to $21.3 million last year, as an oil and gas slump suppressed demand for industrial equipment and the company’s shares underperformed the market.
Immelt, 61, received a $3.8 million salary last year, unchanged from 2015, according to a proxy statement from the Boston-based company Wednesday. His $5.94 million in cash awards, $2.14 million in stock options and $4.67 million in restricted and performance-linked shares were all down from the prior year.
The weak oil and gas market, coupled with slow demand for locomotives, weighed on growth efforts last year after a sweeping transformation that tilted the company from finance and strengthened its manufacturing operations. GE returned 4.6 percent in 2016 including dividends, compared with 12 percent for the S&P 500 Index. The shares have continued to trail the index this year.
“Normally, we expect our diversified model to shrug off headwinds in one market and continue to achieve our goals,” Immelt wrote in a letter to shareholders dated Feb. 24. “In 2016, we simply couldn’t outrun pressure in the resource markets. Consequently, our compensation plans only paid out at 80% of target. This gives us more motivation for 2017.”
GE in October struck a deal to combine its oil and gas unit with Baker Hughes Inc., creating the world’s second-largest oilfield service provider and equipment maker. GE, which also makes jet engines and power-generation equipment, recently announced the acquisition of a turbine-blade manufacturer and majority stakes in two 3-D printer companies.
Immelt’s cash awards are split between an annual bonus tied to financial and strategic goals, and a three-year plan that’s linked to metrics including operating cash flow, return on total capital compared to peers and money returned to investors through dividends and share repurchases. The $5.94 million combined payout is less than half of the $13 million he received for 2015.
The accounting value of the CEO’s pension has fluctuated in recent years due to actuarial changes, resulting in big swings in his reported compensation. Immelt, who’s been at GE since 1982 and became CEO in 2001, had amassed $81.7 million in pension benefits at the end of 2016.
Vice Chairman John Rice got a $15.2 million package in 2016 and Chief Financial Officer Jeff Bornstein received $9.91 million.
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