Executive perks that take the cake
Posted on Sun, May. 19, 2002
Marie Antoinette may have lost her head -- literally -- but she is credited with one of history's most famous phrases: ``Let them eat cake.''
More than 200 years later, those words have special resonance in Silicon Valley. As people are laid off, investors lose their money and companies stumble on their products, the cannier CEOs thrive on the frosting of their jobs -- the perks and bonuses that make being a boss worthwhile.
Put another way, Christos Cotsakos, the E*Trade CEO who initially got a package valued at $80 million, wasn't a total aberration. While the other rewards may be smaller, they're just as ingenious.
Here, then, is my first ``Let Them Eat Cake Award,'' given to executives who show inventiveness above and beyond the call of duty in receiving perks. (In memory of Marie, call them the MAs for short, pronounced ``Emmays.'')
I don't pretend this is an exhaustive list. It's only a start. But innovation, after all, is our hallmark. And remember, it's tough managing through a recession. So let's honor the age by taking a bite of dessert.
CARROT CAKE: David L. Robertson was chief financial officer and vice president of Com21, (CMTO) a Milpitas supplier of cable modems and software. He stepped down from his job in May 2001 and left the company at the end of the year. But he still got a $30,000 ``retention bonus.'' ``Retained for what?'' might be a fair question for investors.
DEVIL'S-FOOD CAKE: CEO Dennis McKenna and CFO Robert Krakauer had a tough year at ChipPac (CHPC), a Fremont company that offers ways of packaging and testing semiconductors. They had to perform a massive restructuring that resulted in hundreds of layoffs, particularly in Malaysia and Korea. Their reward? Citing their service, the company forgave a $1.25 million loan to McKenna and a $250,000 loan to Krakauer.
PINEAPPLE UPSIDE-DOWN CAKE: In October 1999, SJW (SJW), the parent of San Jose Water, announced its intention to merge with the larger American Water Works. Afraid that American wouldn't retain SJW executives, the company offered them a ``transition incentive and retention plan.'' The merger fell through in 2001 but bonuses were still paid. Citing their work on the merger, the board agreed to pay $1.25 million to CEO W. Richard Roth and another $1.25 million to Chairman John Weingarten. Weingarten, who completed 38 years with the company, announced last week that he was stepping down as chairman.
BLACK FOREST TORTE WITH CHERRIES: Who else but Jerry Sanders, stepping down as the CEO of Advanced Micro Devices (AMD), could qualify for such a magnificent cake? Among other benefits reported in the last proxy statement, Sanders got $400,000 in deferred retirement compensation, $203,477 as a deferred cost-of-living salary adjustment on his $1 million salary; $26,282 in premiums paid for insurance policies, $195,138 in car compensation, and use of the company plane valued at $167,658. Oh yes: He's getting health benefits for life, along with a car and security driver, and $25,000 a year for estate planning.
HAWAIIAN COCONUT SPONGE: Sometimes it isn't the money but the principle that counts. Integrated Device Technology (IDTI), a Santa Clara semiconductor maker, listed an expense of $898 for buying back frequent flyer miles from its CFO, Alan F. Krock. And it spent $180 on a health club stipend for Vice President Jimmy J.M. Lee.
CHOCOLATE SOUFFLE: For a while after he returned to Apple (AAPL), Steve Jobs was famous for taking a salary of only $1 a year. But he's done well on the side. In 2000, the company gave him a Gulfstream jet valued at $90 million. And in October 2001, he got 7.5 million new stock options because his old options were substantially underwater, or worthless. The timing is important: It came not long after Sept. 11, when Apple stock ranged between $15 and $19. The stock is now trading at around $25, which makes the options worth between $45 million and $75 million if fully vested. (Apple does not have to offer details until its next year's proxy statement.)
WEDDING CAKE: Hewlett-Packard (HPQ) chief Carly Fiorina deserves this one for her work in merging her company with Compaq. We don't know the dimensions of the cake yet -- the board hasn't completed its talks -- but you can bet that it will be lavishly frosted. During the proxy fight, dissenter Walter Hewlett angered Fiorina when he revealed that the board had discussed a compensation package for her estimated at more than $63 million over two years. The combined company has said that it expects to cut 15,000 jobs.
BLUEBERRY CHEESECAKE: Sometimes compensation doesn't have to come as a bonus or options. Sometimes rent payments help out. AXT (AXTI), a Fremont chip-component maker, is renting warehouse space from a real estate holding company, 4160 Business Center LLC. The sole owner of the holding company is Davis Zhang, the president of an AXT division. The lease payments in 2001 were $188,000. |
