Larry Culp, General Electric’s chief executive, has defended a potential $46.5m bonus secured in a year when the company laid off thousands of its staff, saying that he had also made sacrifices because of the coronavirus crisis.

Unions had attacked the board’s decision to extend Mr Culp’s contract on new terms, which would unlock the bonus in 2024 if GE’s stock traded above $10 for at least 30 days rather than the original $19 target. A rally in the stock as GE’s performance improved ensured he hit the new goal within a matter of months.

Mr Culp defended his incentives on Tuesday, telling the Financial Times that agreeing to the board’s request to extend his contract in the midst of the pandemic last August “required a bit of soul-searching on my part, given what I’d agreed to initially”.

Mr Culp could receive a bonus of up to $230m if GE’s shares trade above $16.68 for a sustained period, rather than the $31 target in his 2018 contract. They were $11.48 on Tuesday, after strong fourth-quarter results.

“I didn’t take a salary last year once Covid hit. I think we all sacrificed,” he added. “[The board] did not extend to me a bonus for 2020. That contract extension was long term and performance-based. To characterise that as a big cheque I’m taking home at the end of 2020 is at odds with the facts.”

GE has not released details of its executives’ 2020 compensation but in 2019 Mr Culp earned a base salary of $2.5m, a $5.6m annual bonus and a grant of performance share awards that were valued at the time at $15.5m.

Shares in the US industrial conglomerate were up more than 4 per cent in lunchtime trading in New York, close to their level a year ago before GE began to feel the effects of a pandemic that took a particularly heavy toll on its aircraft engines business.

It ended a tumultuous year of lay-offs, debt repayments and restructuring with far stronger cash flow than forecast, boosting investor confidence in Mr Culp’s turnround.

Improving orders in GE’s power and renewable energy division drove industrial free cash flow to almost $4.4bn in the fourth quarter, compared with a target of at least $2.5bn, allowing the company to return to positive cash flow for the full year, 12 months ahead of schedule.

“I think we’ve done a tremendous amount to stabilise and de-risk,” Mr Culp told the FT, pointing to the fact the company had cut $16bn from its debt in 2020. “There’s more to do but that’s a lot of financial de-risking. Hopefully the speculation about our potential demise is fading.”

GE’s adjusted earnings for the quarter were down 60 per cent at 8 cents per share, while its preferred measure of industrial organic revenues dropped 14 per cent. Its power, renewable energy and healthcare divisions all reported improved profit margins.

For 2021, the group forecast organic revenue growth “in the low-single-digit range”, an improvement in industrial profit margins of 250 basis points or more and adjusted earnings per share of 15 to 25 cents. Industrial free cash flow should reach $2.5bn to $4.5bn, it said, compared with market expectations of about $3bn.

GE cut more than $2bn from its cost base in 2020 including thousands of job losses in the aviation business, which supplies Boeing and has been hit by the grounding of flights around the world during the pandemic.

Aviation orders were down 40 per cent year-on-year in the fourth quarter but GE said the division had come close to generating positive free cash flow in the period. Its healthcare division, which reported a surge in demand for ventilators and monitors for Covid-19 patients earlier in 2020, was experiencing the return of more normal demand patterns, Mr Culp said.

He added GE had ended the year with an order backlog of $387bn, down 4 per cent year-on-year but heavily skewed towards services, where it makes its highest profit margins.