Mar-24-2007 Boeing business climbs, so does pay for top execs(topic overview)CONTENTS:
REFERENCES  McNerney, 57, has been CEO since July 2005 after heading 3M for 4 1/2 years. He arrived with the company's reputation reeling from ethics scandals and has overhauled its procedures to try to avoid a recurrence. Among other changes, he linked pay and bonuses to how well executives embrace "Boeing values," such as promoting integrity and avoiding abusive behavior. [1] Mr. McNerney, who took over as CEO in July 2005, received $1.75 million in salary, a $4 million bonus and restricted stock valued at $6.63 million, Boeing said in a regulatory filing yesterday. His pay package includes $2.06 million in other compensation, such as company-paid life insurance premiums.[2] McNerney received a total pay package of $28.8 million in 2005, including restricted stock valued at the time at $25.3 million. Year-over-year comparisons of compensation from stock options and stock-related performance units are difficult because a new Securities and Exchange Commission rule spreads the value of executives' grants over a number of years instead of recording their worth in the year they're awarded.[3] "I can only imagine the shareholders are more than happy to pay that amount, given what's happened before." McNerney is among a growing number of executives to benefit as a greater percentage of their pay is "at risk" -- tied to long-term performance measures or placed in equities such as restricted stock or options whose value rise and fall along with their company's fortunes.[4] The Associated Press calculations of total pay include executives' salary, bonus, incentives, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year.[1] McNerney also got stock options valued at six million dollars. His compensation included one-point-six million dollars in perks and other personal benefits -- more than one million of it for moving expenses.[5] McNerney's generous compensation terms aren't likely to upset shareholders, however, analysts say. In his first full year after replacing Harry Stonecipher as CEO in 2005, Boeing racked up a record 1,044 airplane orders and saw sales surge 15 percent, to $61.53 billion. Its stock soared more than 30 percent for the year, hitting a high of $91.10 in late November.[4] A new Boeing policy tying annual incentive payments to performance targets stung one executive in 2006: Jim Albaugh, head of the weaker defense side of the business, saw his annual bonus cut in half compared with the previous year. Big payouts from previous long-term incentive plans based solely on the soaring stock price left Albaugh with no hole in his pocket. His total take-home compensation last year still topped $15 million.[6] Boeing also has established financial incentives for managers not based solely on a rising stock price but on improved performance. "The compensation numbers reflect the board's increased emphasis on pay-for-performance, both year to year and over the longer term," company spokesman Todd Blecher said.[1] CHICAGO Boeing C-E-O Jim McNerney received compensation valued at 13-point-eight million dollars in 2006. The company says in its proxy statement that McNerney was paid a salary of one-point-75 million dollars in his first full year at the aerospace company. He received four million dollars in annual cash incentive compensation based on 2006 performance.[7] After taking over as chief executive in mid-2005, McNerney scrapped the previous long-term incentive plans based on the stock price, which paid nothing in years like 2002 and 2003 when Boeing made money but the stock was depressed, in favor of a new plan where a large portion of the payout is determined by internal financial targets linked to profits.[6] Boeing Co., the world's second-largest maker of commercial aircraft, paid Chief Executive James McNerney $14.5 million last year as the company beat rival Airbus SAS in airplane orders.[3] Last year Boeing made $2.2 billion net profit on record revenue of $61.5 billion, as it took advantage of the booming market for commercial planes and record levels of military spending. It booked a record 1,044 commercial plane orders last year, overtaking European rival Airbus for the first time since 2000. The company now has an all-time high $250 billion of unfinished work on its books.[8]  Boeing's success in winning 787 orders 490 firm orders so far has helped to boost the company's stock, as well as its execs' paychecks. [6] Compensation for the jet maker's top executives climbed with the company's stock and its booming commercial airplane business.[6] Albaugh's bonus dropped from $1.6 million in 2005 to $730,000 last year. All the other top executives saw their base salary and bonus stay flat from the previous year. "They all get the same company score. If there's a decline or an increase compared to other executives, it comes down to their individual score," said a company official who asked not to be identified.[6] McNerney was the only executive whose annual bonus came in at the maximum allowed under the formula. One element that's considered, said Boeing spokesman Todd Blecher, is a market assessment "comparing him to what the CEOs of peer companies earn."[6] As a retired executive, Mulally receives a monthly pension from Boeing. He was paid $24,000 for the final quarter of 2006, indicating a pension of $8,000 per month.[6] Mulally is still owed another $23 million of deferred Boeing compensation, tied up in retirement accounts such as 401 plans.[6] Most large companies weight pay so salaries account for about 20 percent to 25 percent of compensation, while the rest is tied to performance, said Delves. "The growth in pay that produces the big numbers is almost all in equity pay," he added. Boeing is no different: About 80 percent of its executives' average pay is "at risk."[4] Doug Kilgore, executive director of the Worker Owner Council of Washington, representing the shareholder interests of building-trade unions pension funds, said that executive pay at large corporations is "excessive across the board" and that the idea of pay per performance is dubious if measured, as in Boeing's plan, against internal targets.[6] ABCMoney.co.uk does not guarantee the accuracy of any share prices or stock quotations displayed. These are not real time quotes; all are delayed by at least twenty minutes and are for information purposes only. [9] The company on Jan. 31 predicted 2007 profit will rise to $4.55 to $4.75 a share from $2.84 last year.[10] His compensation included $1.6 million in perks and other personal benefits, more than $1 million of it for moving expenses and $331,449 for personal use of company aircraft.[11] REFERENCES 1. AP Wire | 03/23/2007 | Boeing CEO McNerney's 2006 compensation valued at $13.8 million 2. World: Boeing boss lands $14.5M 3. STLtoday - Business - Story 4. Boeing chief paid $14.4 million 5. Boeing C-E-O McNerney's 2006 compensation valued at $13.8 million 6. Business & Technology | Boeing business climbs, so does pay for top execs | Seattle Times Newspaper 7. KNDO/KNDU Tri-Cities, Yakima, WA | Boeing C-E-O McNerney's 2006 compensation valued at $13.8 million 8. Boeing CEO Pay Flat, Got $6 Mln of Options in 2006 | Autos & Transport | Reuters.co.uk 9. Boeing CEO gets $13.8 million in 2006 10. Boeing CEO earned $14.5 million in '06 as orders beat Airbus | Chicago Tribune 11. Chicago Business News, Analysis & Articles | Boeing CEO got compensation valued at $13.8 mil. in '06 | Crain's |