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Top Dupont Executives Give Up Bonuses
03/22/02
By: Seth Agulnick, delawareonline.com
Move Is First Since 1976
DuPont’s top executives asked the company’s board not to award them cash bonuses for 2001, a year in which the chemical maker’s profits plunged, its stock price continued a downward trend and 5,500 workers were laid off.
It marks the first time since 1976 that the company’s top leaders did not receive annual bonuses, a spokesman said.
The executives, including Chief Executive Charles O. Holliday Jr., gave up the bonuses because of the economic downturn and its impact on earnings, according to a proxy statement filed Thursday with the Securities and Exchange Commission.
Bonuses for the top executives totaled $3.75 million in 2000, including $1.7 million for Holliday. His bonus for 2001 would have been $1.06 million had he accepted it.
Holliday did get a 4 percent increase last year in his base pay, to $1.085 million, but has asked for no raise for 2002, company officials said.
Top executives of businesses such as Texas Instruments, CVS Corp. and Kimberly-Clark Corp. also were not awarded or did not accept bonuses for 2001 because of their companies’ financial performances.
CEO bonuses were down 13 percent for 2001, according to a preliminary look by human resources consultant William M. Mercer Inc. at 100 proxy statements filed so far this year.
“Given the economic situation, it doesn’t surprise me that some people are trying to put their money where their mouth is,” said Dan Moynihan, a principal with consulting firm Compensation Resources Inc. of New Jersey.
Kenneth Henley, a Philadelphia lawyer who represents the International Brotherhood of DuPont Workers, called the gesture by DuPont Workers, called the gesture by DuPont executives “meaningless. “Their money is in their stock options,” he said. “The rest of it is window dressing.”
Holliday received 525,000 stock options for 2001 with an exercise price of $43.25. The options would be worth $14.3 million if DuPont’s stock grows at an average of 5 percent a year during the next 10 years. They are worthless if DuPont’s shares continue to fall.
DuPont’s shares lost 12 percent in 2001 after dropping 27 percent in 2000. They closed Thursday at $48.19.
Wilmington-based DuPont’s profits fell 54 percent in 2001, as the manufacturing economy slumped. In April, the company announced its biggest round of layoffs since 1993.
Despite the difficult year, the board credited Holliday for the $7.8 billion sale of the drug unit in October, progress with the Six Sigma productivity program and small acquisitions in key businesses. The committee was prepared to award Holliday 60 percent of the $1.77 million target for his bonus.
“[DuPont executives] must recognize that they’re under real pressure from the financial community,” Henley said, “because they’ve had bad years before and haven’t given up their bonuses.”
Executive Vice President Richard R. Goodmanson accepted just his $640,000 salary, though he is guaranteed at least $1.15 million in salary and bonus under his contract.
Other executives who gave up bonuses for 2001 include Chief Administrative Officer Stacey J. Mobley, who was paid a salary of $449,200; Chief Financial Officer Gary M. Pfeiffer, whose salary was $438,000; and Chief Science and Technology Officer Thomas M. Connelly Jr., who was paid $332,000.
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