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Huge Payouts for CFOs with Options

Finance chiefs from Adobe, M.D.C. Holdings, and Lennar cashed-in options to boost their take-home pay.
Stephen Taub, CFO.com | US
March 2, 2006

Several top finance executives took home big cash payout last year, in many cases based on large options exercises.

For example, Murray Demo, executive vice president and CFO with Adobe Systems, earned a little more than $13 million in 2005. This includes more than $12.2 million in realized gains from exercising options. His base salary was $460,000, while his bonus worked out to $400,000.

Bruce Gross, CFO of competing homebuilder Lennar Corp., earned nearly half of his $12 million compensation package from exercising stock options. He also received $3.8 million worth of restricted stock. Otherwise, his salary amounted to $600,000, up slightly from $550,000 the prior year.

In addition, Paris Reece, executive vice president, CFO and Principal Accounting Officer for homebuilder M.D.C. Holdings Inc., earned $10.5 million in 2005. Of that sum, $9 million was the result of exercising stock options.

Of course, many executives earn the lion's share of their pay without relying on exercising options. For example, Goldman Sachs CFO David Viniar took home $19.8 million. As is typical on Wall Street, his $600,000 annual salary played a small role in his total compensation. Last year, Viniar earned a $12.2 million bonus, much larger than the $9.7 million bonus he received the prior year, and nearly double the bonus he received in 2003. The CFO also was awarded $6.7 million in restricted stock. The aggregate value of all of his restricted stock now exceeds $27 million, according to the proxy.

Ronald Dykes, who retired as BellSouth CFO at the end of 2005, took home a package exceeding $6.6 million. That includes a 33 percent cut in his bonus, to $800,000. However, Dykes, whose 2003 employment contract called for him to retire at the end of 2006, received a cash retirement allowance exceeding $2 million, comprised of 200 percent of his 2005 annual base pay, plus 100 percent of his target 2005 bonus. "Since Mr. Dykes' retirement was a part of the company's succession planning process, the Board of Directors decided that Mr. Dykes should receive the retirement benefits provided in his agreement as if he retired on or after December 31, 2006," the proxy states.




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