Why did General Electric's stock jump 5% this morning?

What happened

Beat actions of General Electric Company (NYSE: GE) – down 48% over the last 52 weeks – took advantage of a break Friday, but more than 5% of its value early in the session (before picking up a gain of about 2.6 % beginning at 12:45 New York time))

The reason: the terms of employment of the new CEO of GE have just been published, and the new CEO is strongly urged to recover all that GE has lost over the last year – and even a part.

The President and CEO of GE has a new occupant – and his financial future is tied to his performance. Source of the image: Getty Images.

So what

TheFly.com has a good summary of the details here. To begin with, the new CEO of General Electric, H. Lawrence Culp Jr., will receive a salary of only $ 2.5 million – an unreasonable sum for the boss of a company as prestigious as GE. He could potentially earn a bonus of up to 150% of this salary plus $ 15 million in shares.

The big advantage, however, is that if Culp succeeds in repairing GE as his stock goes from 50% to 150%, he will be eligible for a single reward ranging from 2.5 million to 7.5 million dollars. GE shares. But if he delivers stock gains from Less than 50%, so he gets zero actions.

Now what

As Bloomberg comments, "Nearly 90% of [the CEO’s] the annual remuneration will be threatened. On the other hand, it's a significant incentive for Culp to offer its shareholders – a reward valued at $ 200 million in addition to his usual salary.

All he has left is to win it.

Rich Smith has no position in any of the actions mentioned. The Motley Fool has no position in the mentioned actions. Motley Fool has a disclosure policy.