In its discussion of executive pay in the proxy it filed on Friday, tool giant Stanley Black & Decker (SWK) hits many of the right notes, including this one:
“As a general rule, the Company does not believe it is necessary for the attraction or retention of executive talent to provide our executives with a substantial amount of compensation in the form of perquisites.”
Unfortunately, the effect is dampened a little if you take a look at the compensation paid to Executive Chairman Nolan D. Archibald last year. In addition to $1.2 million in salary, $3.3 million in stock, $19.7 million in options, $1.9 million in cash incentive payments, and $1.6 million in pension gains, Archibald was paid in $604,152 in “other compensation” — a catchall that includes, yes, perquisites.
Most of that — some $526,391 — consisted of personal use of the company’s aircraft. Now, as far as we can tell from the proxy it filed in 2009, Stanley Works didn’t actually have a company plane at the time, before its merger with Black & Decker. Archibald was chairman and chief executive of Black & Decker before the merger, of course, and he seems to have taken the company plane with him to the combined firm — and ramped up his usage considerably. In 2008, for example, Archibald managed to rack up $328,415 in personal plane flights, just a little over 60% of his total for last year.
To put it in perspective, $526,391 could buy more than 500 round-trip “Business Select” tickets to Los Angeles on Southwest Airlines, flying out of Islip, New York, on Long Island — or more than 1,100 round-trip coach tickets to Los Angeles on Continental from Hartford, Connecticut. We sure hope shareholders are getting some concrete value for his private-plane experience.
Archibald was the only top Stanley Black & Decker exec who got to jet about on the company’s plane for pleasure. He also enjoyed some other perks that his colleagues didn’t, including personal use of a company car ($9,522), on top of a car allowance of $16,200; “personal use of tickets to athletic and other entertainment events” ($4,528); and club dues ($1,820). And he racked up the biggest bill under a free-product benefit for top execs, at $2,635 in tools or other merchandise, while collecting $39,671 in reimbursed financial planning costs — more than all four other top executives combined.
One of the many things that always strikes us about these captains of industry is just how stingy they are when they’re not spending shareholders’ money: Can Archibald, paid millions in cash and equity, really not afford to spring for $1,820 in club dues? Even assuming you consider club dues a business expense that the Internal Revenue Service arbitrarily excludes, it’s a lot like someone making $100,000 not swallowing a single $6.36 expense during the year.
Maybe the best news for shareholders, when it comes to Archibald’s compensation, is that his new contract lasts just three years. He seems to be making the most of it.
Image source: Stanley Tools website
Which dog is on top, Stanley or B&D?
I know they call it a merger but we all know that it is really a buy out. Even if the one that thinks it’s on top actually isn’t, like when Citibank though it was buying Travelers, but then Reed got a 61st floor office in a 60 floor building.
That’s a great point. Since I wasn’t writing about the merger per se, I took the shortcut of just calling it a merger. Looks like the current board includes nine people from the old Stanley Works board and six from Black & Deckers’ (including management). John F. Lundgren, the combined company’s CEO, was Stanley’s chairman and CEO. And while B&D’s Archibald is now executive chairman of the combined company, that’s explicitly described as a three year gig, while the proxy doesn’t list a timeframe for Lundgren’s job that I see offhand. I’d say it smells like an acquisition by Stanley, though as you say, only time will tell.
There’s no question that Stanley products are far superior to the crap that B&D makes, so I see Stanley on top as a good thing. That is, from a consumer perspective. However, after dealing with their Stanley Security division, I don’t think I’ll be investing in them anytime soon.
Name (required)
Mail (will not be published) (required)
Website
XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>
Comments will be closed on Tuesday July 12, 2011.
Is fire hot or cold? (required) - Why ask?
© Copyright 2010 Morningstar, Inc. All rights reserved. Please read our Legal Disclosure and Privacy Policy.
©2011 Financial Fineprint Inc. All commercial rights reserved. Legal Disclosure.
Read Full Article »