General Electric Co. (GE) Chief Executive Officer Larry Culp is putting his money where his mouth is.
The recently appointed CEO purchased 225,000 GE shares at the beginning of the month, according to a filing with the U.S. Securities and Exchange Commission. The shares were bought at an average price of $9.73, or a total of almost $2.2 million.
Culp, 55, was named CEO on Oct. 1, replacing John Flannery after a difficult year for the industrial conglomerate as it dealt with its troubled Power business, federal investigations and declining stock price. When Culp took the helm, he said GE "remains a fundamentally strong company" and management is committed to strengthening the balance sheet, including deleveraging.
Culp became CEO after joining the company's board in April. Prior to joining the board, Culp was the CEO of Danaher Corp. (DHR) between 2001 and 2014. During his tenure at the diversified conglomerate, Culp led the company to better revenue and increased the market capitalization.
Culp himself is getting a compensation package of up to $21 million a year in salary, bonuses and stock for the next four years, CNBC reported, including a salary of $2.5 million, a bonus of about $3.75 million and equity awards valued at $15 million.
"If the market were to value GE increasingly on a free cash basis, and assuming that GE Capital does not ultimately face insolvency, we estimate GE could trade for about $5 share," Gordon Haskett analyst John Inch said in a research note.
Inch has an Underweight rating on the stock with a $10 price target.
Still, Culp's stock purchase appears to have boosted investor confidence. GE shares rose 2% to $9.48 just after the market opened at 9:35 a.m.
There are nine Buys, 12 Holds and three Sell ratings on the stock, according to Bloomberg data.