General Electric shares rose Monday after it was revealed recently appointed chairman and CEO Larry Culp bought $2.2 million worth of company stock last week.
Culp bought 225,000 shares at an average price of $9.73 a share on Thursday, a day before the stock closed at the lowest price in nearly a decade, according to an SEC filing disclosed Monday. The purchase brings his total GE holdings to 416,000 shares. Culp bought 191,000 shares on July 24 at $13.04 a share while he served on GE’s board, the filing said.
GE shares rose 0.9 percent in trading from Friday’s close of $9.29 a share.
Named as the leader of GE on Oct. 1, one of Culp’s first actions during the company’s earnings report last week was to slash the quarterly dividend to just a penny a share. starting in 2019. The move frees up some cash for the beleaguered conglomerate but it is expected to be the first of many from Culp to turn the company around. Culp is facing multiple predicaments at GE, from the company’s ailing power business to ongoing accounting investigations by the Justice Department and the SEC.
CEOs buying back shares can indicate a bottom for a struggling company. In 2009, J.P. Morgan CEO Jamie Dimon bought back TK shares when the price was hitting record lows in 2009. The bank’s stock has surged for the past decade, up TK percent.
Culp also inked a stock-heavy compensation plan when he signed with GE. The company is set to pay Culp as much as $317 million in annual pay and awards if he boosts GE shares dramatically over the next 4 years.
