General Electric Chairman and CEO Larry Culp bought GE stock on May 2, taking advantage of recent decline with an open-market purchase. Investors hope that’s a positive signal about what’s to come for shares. Investors in another large U.S. industrial company would love a similar signal from its CEO.
Monday, Culp purchased 65,000 GE (ticker: GE) shares worth $4.84 million. That brings his direct ownership of GE stock to about 211,000 shares. GE’s proxy statement lists 2.2 million shares for Culp in all “stock-based holdings.”
The 211,000-plus shares are worth about $16 million. The 2.2 million shares are worth about $167 million.
The roughly $5 million purchase is a ray of hope for weary investors. Insider purchases are supposed to be a signal from management that things are better than investors might fear.
GE stock has been badly beaten up. Shares are down about 18% year to date and off about 34% from their November 52-week high of more than $116 a piece. The S&P 500 and Dow Jones Industrial Average are off about 14% and 10% from their 52-week highs, respectively.
Culp was brought in to turn around GE back in 2018 after some very difficult years for the company. GE stock is down more than 80% from its all-time high. GE declined to comment beyond Culp’s filing.
In January 2020, Culp peer Dave Calhoun was brought in to turn around another American industrial icon after a difficult spell too. That’s Boeing (BA), whose stock is down about 67% from its all-time high.
More recently, things haven’t looked much better. Boeing stock is down about 26% year to date and about 42% from their June 52-week high of more than $258 a piece.
Calhoun, however, hasn’t made any open-market purchases of Boeing stock. He as acquired shares as part of his management compensation. But the recently acquired shares carry a price of $0. In response to a request for comments on Calhoun’s ownership level, Boeing referred to its proxy.
Overall, the Boeing proxy lists 132,118 shares including compensation units held by Calhoun. The 132,000-plus shares are worth roughly $20 million. Boeing requires its CEO to hold stock worth six times the base salary.
In 2021, Calhoun’s base salary was $1.4 million and his cash bonus was zero. In 2021, Culp’s salary was $2.5 million and he was awarded a cash bonus of $4.2 million. Total compensation for Culp and Calhoun in 2021, including everything such as stock-based compensation, amounted to about $23 million and $21 million, respectively.
Management compensation can be a tricky issue for shareholders. Investors like to see management have “skin in the game” through a large stake of their net worth invested in the company they run. Investors also like to see more insiders buying shares than selling shares.
Over the past 12 months, Boeing insiders have picked up roughly 4,000 shares in open-market purchases, according to Bloomberg. There have been two buys and two sells. GE insiders have bought about 67,000 shares, including Culp’s recent buy of 65,000 shares. There have been three buys in the case of GE insiders.
Write to Al Root at email@example.com