| |
Micron Technology Cuts Bonuses
10/27/01
By: Julie Howard, The Idaho Statesman
Micron Technology Chairman and CEO Steve Appleton received a 22 percent raise in the summer of 2000 after guiding the company to a year of record profits.
But he and other top officers did not receive performance bonuses during 2001, the company's worst year in history, according to a proxy statement sent to shareholders this week.
Appleton received a salary of $784,616 for the company's last fiscal year, which ended Aug. 31, compared with his $656,827 salary for the prior year. He did receive a $39,137 profit-sharing bonus during fiscal 2001, compared with total bonuses of $2.5 million for the previous year.
According to the proxy statement, Appleton's annual salary was raised to $800,000, effective July 2000. Two months later, the company reported huge profits for its fiscal 2000, with $1.5 billion in profit on sales of $7.3 billion.
But in June of this year, Micron announced 10 percent pay cuts for top executives, which effectively trimmed Appleton's fiscal year-end salary down from $800,000 to the lower figure reported in the proxy statement.
The story was the same with other top officers, who received salary increases but had their bonuses all but wiped out in the most recent year.
Dan Moynihan, a compensation specialist, applauded Micron for sticking to its pay-for-performance executive compensation plan. He said many public companies say they tie executive bonuses to profits, but few actually follow through with that goal.
"Micron looks like they're walking the walk," said Moynihan, a principal with Compensation Resources Inc. in New Jersey. "A lot of companies, in a bad year, will throw their plan to the wind and give a discretionary bonus to their CEO for effort. That sends a bad message."
The raises granted to Appleton and Micron's other top executives were short-lived. Appleton announced that starting this week he would not draw any of his $66,667-a-month salary until the company was profitable. Other top officers saw an additional pay cut this month, bringing their total reduction since June to 20 percent.
Performance bonuses at Micron are strictly tied to the company's year-end profits. Micron reported losses during three of its last four quarters, and a year-end loss of $521 million on revenues of $3.9 billion.
Officers, along with other employees, received profit sharing of 10 percent of quarterly after-tax profits. Micron reported a profit of $352 million for its first quarter of 2001, which ended last November.
Appleton's increased salary was based on his "overall and anticipated performance, the company's performance and the (compensation) committee's assessment of the compensation practices of other semiconductor manufacturing companies," said the company's compensation committee, made up of Micron directors James Bagley, Robert Lothrop and Thomas Nicholson.
In addition, during 2001 the granting to Appleton of options to purchase 250,000 shares of Micron stock was based on similar criteria, the committee said in the proxy statement.
Executive compensation is variable from industry to industry and among individual companies, said Moynihan, the compensation specialist.
"Look at somebody like (Microsoft chairman) Bill Gates. He gets a $500,000 salary and a $171,000 bonus and no options," Moynihan said. "He already owns 661 million shares of his company. He's not motivated by a salary or a bonus."
Proxy statements, a document required to be issued by public companies to shareholders before they vote by proxy on company matters, contain proposed members of the board of directors, inside directors' salaries, and information regarding their bonus and option plans. The proxy statement also provides information on the annual shareholders' meeting and asks for shareholders to vote on issues.
Micron's annual shareholders' meeting is set for 9 a.m. Nov. 27, at the company's Boise headquarters, and shareholders are being asked to vote on four matters:
• To re-elect the current slate of seven directors for another year. Directors are Appleton, James Bagley, Robert Lothrop, Thomas Nicholson, Don Simplot, Gordon Smith and William Weber. Non-employee directors (all the candidates but Appleton) are entitled to receive an annual $50,000 retainer.
• To approve a stock option plan that would utilize 10 million shares of common stock to attract, motivate and retain employees. The company said about 12,000 employees, including executive officers, would be eligible to participate in the option plan. This is the renewal of a continuing program that Micron has used over the years, and is required to be approved by shareholders each 10 years, a company spokesman said.
• To ratify PricewaterhouseCoopers as independent accountants to audit the company's financial statements for its fiscal year 2002.
• To consider one shareholder's proposal to require twice as many candidates for the board of directors as there are seats, so shareholders are provided with a choice. The company has encouraged shareholders to vote against this proposal, saying it is the board's responsibility to identify the best candidates.
|
|
|
