(Correction: This article has been revised to reflect information brought to our attention by Merrill Lynch.)
The Securities and Exchange Commission’s new rules for disclosing executive compensation unfortunately confused us as well.
Earlier we reported that Merrill Lynch chief financial officer Jeffrey Edwards earned $28.3 million last year, including a salary of $270,000, nearly $22 million in stock awards, and a $5.6 million bonus, all clearly described in the company’s “Summary Compensation Table.”
The $22 million figure includes amortization of prior-year awards, according to Merrill, which stated in a footnote: “As required by SEC rules adopted in December 2006, this column includes amounts recognized as an expense in our 2006 financial statements related to all stock awards. Specifically, this column includes: (i) the full grant date fair value of restricted stock granted in 2006 for performance in 2005; (ii) the full grant date fair value of 2007 awards for performance in 2006 for retirement-eligible employees.”
Immediately preceding the summary compensation table, however, is a table titled “2006 Annual Executive Compensation,” which states that the value of stock awards last year was closer to $8.2 million.
A footnote to that table elaborates: “The stock grant amounts shown above represent the dollar value of the portion of 2006 annual incentive compensation delivered as restricted stock. These amounts are different from the amounts included in the Summary Compensation Table under “Stock Awards,” which are calculated as required by the SEC disclosure rules and represent expense related to awards for multiple performance years.”
Bottom line: Edwards earned $14.7 million last year, not $28.3 million as we originally reported.
For other finance chiefs, non-cash sources of compensation — including awards of stock and stock options, as well as gains from exercising previously granted options — also played a large role.
At Bank of America, Alvaro de Molina earned about $10.6 million last year. In addition to a salary of $700,000, de Molina received about $4.2 million in stock awards, $3.3 million in non-equity incentive plan compensation, and options awards valued at $2.1 million. He took home another $2.3 million by exercising previously granted stock options, raising de Molina’s total 2006 compensation to $12.9 million.
Pfizer’s David Shedlarz earned $10.2 million last year: $1 million in salary, $3.2 million in stock awards, and $3.2 million in options awards.
At McGraw-Hill, Robert Bahash earned about $5.2 million. In addition to a salary of $826,000, Bahash received option grants valued at $1.5 million as well as $1 million in stock awards. He also took home $3.5 million from exercising previously granted stock options, bringing his total 2006 compensation to about $8.7 million.
Thomas Freyman, executive vice president for finance and CFO of Abbott Labs, earned $6 million last year, including more than $1.8 million in stock awards, more than $1.2 million in stock options, and $1 million from non-equity incentive plan compensation.
Thomas Casey, executive vice president and CFO of Washington Mutual, earned about $4.5 million, including $1.5 million in options grants and more than $1.3 million in non-equity incentive plan compensation.
Chevron’s Stephen Crowe earned more than $6 million, half from stock awards and stock options. He received another $1.5 million from the change in pension value in two Chevron retirement plans.
At Verizon, executive vice president and CFO Doreen A. Toben earned more than $6.6 million; $4.3 million came from stock awards.