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2000 CFO Pay: Continental’s CFO Snares $6 Million

The airline's finance chief exercised almost $3 million in options.
Michelle GabrielleApril 3, 2001

Lawrence W. Kellner joined Houston, Tex.-based Continental Airlines in June 1995 as SVP and CFO. In 1996, he was promoted to EVP and CFO. Since then, his compensation has taken off to quite a high altitude, according to the company’s recently released proxy.

Last year, he took home $580,781 in salary, $1,095,710 in bonus, $390,094 in a long-term payout, and $8,833 in other compensation that represents a tax adjustment relating to travel benefits provided by the company. But it gets much better. Kellner also received $1,620,000 in restricted stock and $2,912,869 in exercised options. He finished the year with a grand total of $6,608,287 in his pocket.

By comparison, in 1999, Kellner earned less than half that figure, just missing the $3 million mark for a total sum of $2,871,682. His salary came to $476,310, and he also earned a tax adjustment to his travel benefits of $7,872. His total package included a $2,387,500 bonus.

Kellner doubled his pay despite Continental’s net income falling to $342 million on revenue of $9.9 billion in 2000, compared to earnings of $455 million on revenue of $8.6 billion in 1999. Results for 2000 include a $6 million gain after taxes from the sale of the company’s investment in America West. But the gain was offset by a $6 million after-tax charge for early debt repayment.

The airline’s results for 1999 include a one-time after-tax gain of $117 million stemming from the sale of its Amadeus computer reservation system.

The company contributed $250,000 in Kellner’s name to the We Care Trust, the employee assistance charitable fund of Continental.

Under a five-year employment agreement that became effective July 25, 2000, Kellner is guaranteed an annual base salary of not less than $693,500. The agreement provides for participation in any cash bonus program that Continental implements at the maximum level available to any executive. Kellner may terminate the agreement at any time. Should he choose to cancel his employment, however, he will be limited to two times the sum of his then current annual base salary, as well as the amount of his salary times 125 percent, unless his termination occurs within two years following a change of control.

While Kellner’s package was certainly generous, he wasn’t the only employee to receive a bonus last year. In 2000, Continental paid employees $39 million in one-time performance bonuses and gave away 16 new Ford Explorers for perfect attendance. In addition, on February 14, the company distributed approximately $66 million in profit sharing.

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