General Electric (GE 0.43%) has added two years to Larry Culp's employment contract, an endorsement of the CEO's turnaround strategy and an important step toward stabilizing the once high-flying industrial conglomerate.

In a regulatory filing, the company said Culp's contract has been extended through August 2024. GE's board also revised his compensation, approving a one-time equity performance award that would pay him more than $200 million if GE's stock price doubles over the term of his contract.

A LEAP engine on a testing rig.

General Electric's LEAP jet engine. Image source: General Electric.

Culp joined GE in late 2018 as the company was searching for stability. He was the third CEO in a little more than a year, and inherited a company burdened by massive debt and a number of poor-performing operating units.

Shares of GE have lost more than 80% of their value since 2007.

Culp has completed a deal to combine GE's transportation business with Wabtec (also known as Westinghouse Air Brake Technologies) and sold much of its life sciences business to Danaher for $21 billion. But challenges remain.

Last year Bernie Madoff whistleblower Harry Markopolos suggested that GE was a "bigger fraud than Enron." Although a number of analysts pushed back at that accusation, Culp still needs to find a way to resuscitate the company's energy businesses. And GE's aerospace unit, which heading into 2020 was a rare bright spot in its portfolio, has turned into a drain on resources this year due to the coronavirus' impact on airlines.

There are dangers in tying CEO compensation to stock price movements, since it could motivate management to make decisions based on the likely near-term stock reaction instead of what is best for the long haul. But given the turbulence GE has flown through in recent years, investors are likely to look favorably on this announcement due to its promise of management continuity.