Susan Ivey, the top executive at Reynolds American Inc., received a modest raise in salary, the company said in a regulatory filing yesterday.
However, her total compensation jumped 68 percent to $16.4 million because of an incentive payment based on Reynolds' 2009 performance, as well as a cash settlement from a 2007 incentive plan that vested at the end of last year.
Ivey, the chairwoman, chief executive and president of Reynolds, was paid $1.27 million, up $17,250. Ivey already was near a set company cap for salary before 2009, the company said.
In regards to non-equity incentive-plan compensation, Ivey received a 64 percent increase to $8.5 million.
Her total compensation package included $6.2 million in unvested long-term performance units granted in 2009, which depend on performance over the next three years.
In 2008, she received about $2.2 million in the same category.
In 2009, Ivey vested in about $1.8 million in restricted stock, and received $198,217 in other compensation.
Listed among all other compensation for Ivey is $79,000 in a payment that replaced the company's former executive perks program and $11,509 for the value of personal flights on company owned or leased aircraft.
For the full year, Reynolds reported net income of $962 million, down 28.1 percent, or diluted earnings of $3.30. Excluding charges, it had net income of $1.35 billion, down 3.8 percent, or diluted earnings of $4.64.
During the year, Reynolds dealt with several factors that contributed to a sales decline. Some were related to consumers smoking less and buying discount brands in response to higher state and federal excise taxes, and also having less disposable income.
"For a public company the size of Reynolds, the compensation appears to be right in line if not somewhat low on the salary side," said Peter Tourtellot, the managing director of Anderson Bauman Tourtellot Vos & Co., a turnaround-management company in Greensboro.
"Most people think when they see a number like $8 million that it is all cash, but they are stock awards with restrictions that I think are in the interest of all shareholders. If the company does well and the share price increases, the chief executive benefits but so do all the shareholders."
Thomas Adams, the chief financial officer, received a 4 percent raise in salary to $533,882. Daniel Delen, the president and chief executive of R.J. Reynolds Tobacco Co., was paid $814,600 in salary, up 4 percent. Judy Lambeth, its general counsel, received a 3 percent raise in salary to $564,850. Jeff Gentry, the chief scientific officer for Reynolds Tobacco, was paid $450,418 in salary.
In terms of non-equity incentive-plan compensation, Adams received $983,573, Delen $2.9 million, Lambeth $1.8 million and Gentry nearly $1.1 million.
rcraver@wsjournal.com
727-7376
Annual shareholders meeting
Reynolds American said it would hold its annual shareholders meeting at 9 a.m. May 7 in the auditorium of its corporate headquarters in downtown Winston-Salem.
Reynolds' shareholder meeting typically is filled with anti-smoking and anti-tobacco advocates who obtain shares to have an opportunity to speak in front of top management.
There are four shareholder proposals on the agenda:
• To eliminate a staggered board election and require board members to be elected annually.
• To require senior executives to keep a significant percentage of the shares they control for two years following the end of their employment.
• To compel the company to provide truthful information in all product advertising, marketing, packaging and promotions regarding the risk of using its products, how workers employed by contract suppliers are treated, and the effect of higher taxes and smoking bans on smoker cessation.
• To create a protocol for how the company and its suppliers treat employees.
The board recommends that shareholders vote against the proposals.
— Richard Craver
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