United Technologies Corp.
Summary:
We feel this compensation program is a joke, but I doubt shareholders will be laughing…
Analysis:
United Technologies is considered a "diversified company". This basically means that the company does so many different things that it can't be classified in a particular industry. Considering it works with everything from helicopters and elevators to security and fire protection services, we would have to agree with that classification.
It looks like they're doing just fine on their own though. United Technologies Corp. has been one of the steadiest performers over the last ten to fifteen years. In that time, their stock price has steadily risen and decreased in volatility. For example, the price went from a low point in 2001 of $20 to a recent high of $82.50 at the end of 2007. So how would you like to run one of the largest and most successful companies in the world?
Well, if you ever decide to make that move, your wallet will thank you for it, trust us. On the other hand, you don't have to trust us… we'll just show you.
So… What Are They Paid?
Salaries handed down were average to high, with the CEO pulling in $1.88 million in 2007. That, however, is about as close to you get to normal earnings. The Bonus combined with the Non-Equity Incentive (which is just a fancy phrase for Bonus #2) was very high, nearly $8 million for the CEO. The bonuses given out are also highly subjective as the CEO and two other NEOs are in charge of doling them out to the other execs. The rest of the Compensation Committee then gives out bonuses to the CEO and his two assistants, based on the bonuses given out by the Big 3.
It doesn't stop there either. Stock awards given out in 2007 were valued at $11.64 million for the CEO and a $2.23 million average for the NEOs. Option awards were just as high, equaling just over $8 million for the CEO and averaging $3.6 million for each of the NEOs. Another important note is Options exercised in 2007. The CEO exercised 1 million options for a total profit of approximately $54.7 million!
The perquisites program isn't under tight control either. When one of the NEOs gets more personal use of corporate airplanes than the CEOs of other companies usually get, it's not a good sign. The $90,000 NEO Chenevert used in 2007, however, is nothing compared to the CEO's plane usage, which was expensed as $390,000 in incremental costs! Add in over $120,000 for "Cash Flexible Perquisite Allowances" and the CEO is officially "raking it in".
Usually companies at least have the decency to try and hide the windfall profits their CEO and NEOs are reaping. United Technologies doesn't even care! They want you to know how much they're ripping off shareholders. The CEO pay is one of the highest we have seen, and the NEOs are doing pretty well for themselves too.
Compensation Details:
| CEO | NEO Avg. | |
|---|---|---|
| Base Salary | $1,883,333 | $674,000 |
| Bonus | $4,000,000 | $890,000 |
| Stock | $11,636,640 | $2,225,726 |
| Options | $8,144,480 | $3,602,783 |
| non-Equity Incentives | $3,480,455 | $376,948 |
Reference Links:
(1) Annual
Proxy Statement
(2) Annual
Report