Marlboro maker Altria Group Inc. gave its outgoing CEO Michael E. Szymanczyk a pay package valued at $10.2 million for fiscal 2011, about half of what he made in 2010, according to an Associated Press analysis of a regulatory filing.
The pay package came in a year when the Richmond, Va.-based owner of the nation's biggest cigarette maker, Philip Morris USA, saw its net income fall 13 percent to $3.39 billion on lease, legal and restructuring charges. Its net revenue excluding excise taxes fell nearly 2 percent to $16.62 billion. Shipments fell 4 percent to 135.1 billion cigarettes, largely on declines from its premium brands.
The compensation deal was disclosed in an annual proxy filing with the Securities and Exchange Commission filed Thursday.
Most of the decrease in Szymanczyk's compensation was due to the 2010 payout of a long-term performance-based bonus of $10.7 million that ran from 2008 to 2010. His salary rose slightly to $1.34 million, and he received $3.25 million for an annual performance-based bonus. The value of his stock awards rose 3 percent to $5.1 million.
The 63-year-old Szymanczyk, who will retire following the company's annual shareholder meeting May 17 in Richmond, also was given other compensation worth $503,804. That included $300,000 for the personal use of the company's aircraft and $201,250 the company put into a defined-contribution retirement plan, as well as $2,554 for personal security.
Szymanczyk has served as chairman and CEO since March 2008. He previously served as chairman and CEO of Philip Morris USA from August 2002 through July 2008 before the company spun off Philip Morris International Inc.
His total 2010 compensation was valued at more than $20.7 million.
In addition to Philip Morris USA, Altria owns U.S. Smokeless Tobacco Co., maker of brands such as Copenhagen and Skoal, and Black & Mild cigar maker John Middleton Co. The company also owns a wine business and holds a voting stake in brewer SABMiller.
The Associated Press formula calculates an executive's 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 Securities and Exchange Commission.
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.
Michael Felberbaum can be reached at http://www.twitter.com/MLFelberbaum.