AOL CEO Tim Armstrong's pay package decreased 40 percent in 2010 to $15.3 million, according to an Associated Press analysis of a regulatory filing, as the struggling Internet company attempted to turn itself around.
A Thursday filing with the Securities and Exchange Commission stated that Armstrong, 40, earned a salary of $1 million last year, compared with $734,849 in 2009. He received a performance-based bonus of $2.3 million, compared with no bonus in the year before.
But the value of options he was awarded totaled $7.1 million on the date they were granted _ a 63 percent drop from what he received the year before. He also received stock worth $4.9 million on the date it was granted, down 13 percent from what he received in 2009.
In addition, Armstrong received other compensation worth $15,738 _ up 72 percent from 2009. This consisted of $8,250 in matching contributions to a retirement plan and $7,488 in reimbursements for life insurance premiums.
The AP executive compensation formula calculates total compensation during the last fiscal year by adding salary, bonuses, perks, above-market interest the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year. The AP formula does not count changes in the present value of pension benefits. That makes the AP total slightly different in most cases from the total reported by companies to the SEC.
The value that a company assigned to an executive's stock and option awards for 2010 was the present value of what the company expected the awards to be worth to the executive over time. Companies use one of several formulas to calculate that value. However, the number is just an estimate, and what an executive ultimately receives will depend on the performance of the company's stock in the years after the awards are granted. Most stock compensation programs require an executive to wait a specified amount of time to receive shares or exercise options.
Armstrong was lured to AOL Inc. from Google Inc. in April 2009, and he oversaw AOL's separation from Time Warner Inc. late that year.
AOL, a high-flying company in the 1990s with its dial-up Internet service, bought Time Warner at the height of the dot-com boom in 2001. The two never really fit together, though, and AOL's main revenue source dropped as consumers started moving to faster Internet services from cable and phone companies.
Over the past several years, the New York-based company has refocused on online advertising and content, and it runs a large stable of websites. With Armstrong's arrival, AOL began concentrating more on the local content market, helped by its purchase and build-out of the Patch local news sites. More recently the company has moved into the market for news, as evidenced by its $315 million purchase of news hub The Huffington Post in March.
Throughout 2010, Armstrong worked on turning around AOL by sharpening its focus on content and ads, continuing to whittle its number of employees, adding some new websites and selling some peripheral properties such as social site Bebo and instant messaging service ICQ.
AOL reported a 2010 loss of $782.5 million, or $7.34 per share, on revenue of $2.42 billion. This compares with a profit of $248.8 million, or $2.35 per share, on revenue of $3.25 billion in 2009.
The company's stock rose 2 percent, finishing the year at $23.71.