Things must be looking up at the Sunbeam plant in Neosho. After working for a company that declared bankruptcy only a few years back, now they work for Jarden, a company that knows a little something about executive compensation.
According to a proxy statement filed today with the Securities and Exchange Commission, Jarden CEO Martin Franklin saw increases across the board in his compensation. His base salary increased from $648,931 in 2003 to $850,000 last year. But that's a paltry sum compared to his bonus. The SEC filing indicates Franklin received a bonus of $1,678,750, plus restricted stock awards worth more than $21 million. As if he needed anything else, Franklin also picked up $151,721 in what is described as "other compensation."
Franklin was not the only top executive at Jarden lining up at the gravy train. Chief Financial Officer Ian Ashken "only" received $450,000 in salary, but nearly doubled that with an $888,000 bonus, according to the filing. Ashken also picked up more than $8 million worth of restricted stock.
President and Chief Operating Officer James Lillie's salary was $400,000 and he received a $490,000 bonus.
What people often don't realize about these oh-so-extravagant sounding figures is, hey these guys have to make ends meet just like the rest of us. That's why the board of directors at Jarden had some added enticements for the top officials.
For instance, the board paid Franklin's life insurance premiums, totaling $2,234, matched his $12,300 401K contribution and paid him $21,000 in "financial consulting fees."
Similar payments were also made for Ashken and other top executives, according to the proxy statement.
For those of us who are quick to criticize such generous payments at a time when many people wonder if they are going to have enough money to make it to their next paychecks. The proxy statement includes Jarden's Compensation Committee's reasoning for the healthy benefits. "The total compensation package,which includes base salary, incentive compensation and other incentive opportunities in the form of grants under the Company's stock incentive plans, is designed to allow the Company to attract, motivate, and retain top-quality executives."
And we all know, you need $21 million in stock and a $1.6 million bonus to attract a top-notch CEO. Long gone are the days when $10 million in stock and a $1.5 million bonus would do the trick.
The filing indicates that the purchase of American Households, owner of Sunbeam, was a major reason why Franklin received such a hefty bonus. "The (compensation) Committee believed that the acquisition of American Household would approximately tripled the revenue of the Company, materially increased its long term earnings potential and created significant opportunities for future growth."
Thanks to that accomplishment and others under his watch, Franklin no longer will be saddled with having a meager $850,000 base salary. The proxy statement said his contract was amended as of Jan. 24, providing for him to receive no less than $1,840,000 a year. The contract runs through Dec. 31, 2008. If the Consumer Price Index goes up, so will Franklin's salary and he will also receive "an operating bonus of up to 50 percent of base compensation each year for achieving the company's earnings per share budget and up to 100 percent of base compensation each year for achieving 110 percent of the company's earnings per share budget in each case based on the annual budget approved by the Board of Directors. In addition, Mr. Franklin is eligible for a discretionary performance-based bonus of up to 100 percent of base compensation each year, at the discretion of the Board or Compensation Committee, but subject to the approval of the Board members."
That should give Franklin plenty of incentive to stay with Jarden.