General Electric Co. (NYSE: GE) announced that the board agree to link the bonuses of executive management team to its new financial targets. The announcement following the discussions with Trian Fund Management, which is an investment firm of Nelson Peltz and owned around 1% stake in GE. The new change was due to the pressure form Trian Fund Management.
In 2017, the company expected that the industrial structural costs to be $23.9 billion, and in 2018, the costs to be $22.9 billion, which was both lower than $24.9 billion last year. As for operating profit, the company expected that to increase 10.5% to $17.2 billion this year.
The bonuses for Jeff Immelt, the Chief Executive Officer of GE, and his direct at the senior vice president level and above, will be influenced by whether the financial targets are met. The bonuses will be increased or decreased by 20% depending on the financial results.
“Over the past month, Trian has intensified its dialogue with senior management regarding new initiatives to help ensure that GE can meet its financial commitments,” Trian said in the statement on Wednesday. The hedge fund said that it believed that the management of GE could meet its target to earn $2 per share in 2018.