Human Capital & Careers

Several CFOs See Big Paydays from LTIPs

Burlington Resources; Motorola; Honeywell; Fortune Brands; State Street.
Stephen TaubMarch 17, 2005

Long-term incentive payments (LTIPs) played a major role in the compensation of a number of chief financial officers last year.

Take Steven Shapiro, CFO at Burlington Resources. Last year, he earned a total package of $6.1 million, according to the company’s proxy. Nearly $2.7 million was attributed to his LTIP, which consists of stock options, restricted stock, and performance share units. “The [Compensation] Committee’s objective is to structure the executives’ overall long-term incentive compensation opportunity at approximately the seventy-fifth percentile of the long-term compensation,” the company explained in its proxy.

Burlington added that Shapiro deferred 100 percent of his 2004 payout into phantom shares of the company’s common stock at 75 percent of fair market value.

Shapiro also received a salary of $500,000, a bonus of $709,000, and restricted stock worth $592,000, as well as “other” compensation valued at more than $901,000, virtually all related to the discount on the deferral into phantom shares. In addition, he netted nearly $719,000 from exercising stock options.

At Motorola, finance chief David Devonshire received $1.725 million of his total 2004 earnings of $6.3 million from the company’s LTIP. Devonshire also received a salary of $642,000 salary and a bonus of nearly $1.2 million; he also realized more than $2.7 million in gains from exercising options.

Honeywell senior vice president and chief financial officer David Anderson earned more than one-third of his 2004 compensation from the company’s long-term incentive plan. In addition to about $1.3 million from the LTIP, Anderson received a $700,000 salary and an $800,000 bonus.

Anderson, who joined the company midway through 2003, also received more than $436,000 in what Honeywell calls “all other compensation.” Most of that amount represents a loss on the sale of his home when he relocated after being hired. He also received $50,000 in “cash flexible perquisite payments” and another $21,000 or so as compensation for temporary housing. His total package last year: $3.65 million.

Fortune Brands senior vice president and CFO Craig Omtvedt received $2.2 million from the company’s LTIP last year in the form of cash. This far exceeded his salary of roughly $535,000 bonus of about $461,000. However, the nearly $4.9 million he realized through gains from exercising options accounted for more than half of his total 2004 earnings, which totaled $8.4 million. Also included: $189,000 to pay the tax associated with a supplemental pension plan.

State Street Corp. executive vice president and CFO Edward Resch received more than $449,000 from a long-term incentive plan. The LTIP payout accounted for nearly 30 percent of his 2004 total compensation of nearly $1.6 million. This included a bonus of $600,000, twice the size of the bonus one year earlier. In its proxy, State Street pointed out that one-third of the 2004 bonus is payable in the form of deferred stock awards.