IBM Chief Gets Options Deal
IBM Corp. Chairman and Chief Executive Louis V. Gerstner Jr. could reap a windfall in the hundreds of millions of dollars if IBM’s shares produce only a fraction of the gains they did in his first five years of running the company.
According to proxy materials filed Monday with the Securities and Exchange Commission, Gerstner, 56, who completes a five-year term as chairman and CEO of IBM this month, was granted the options package, which covers 2 million shares spread out in equal installments over the next five years, as part of the five-year contract extension agreed to late in 1997. All the options are exercisable at $103.56 per share, a price higher than IBM’s current share value. (IBM closed Monday at $101.25, up $1.63, on the New York Stock Exchange.)
According to figures in the proxy materials, if IBM’s share price increases just 5% a year over the options’ 10-year term, the options could be worth $130.3 million. With a 10% annual rate of increase in IBM’s stock price, the value would jump to $330.1 million.
For 1997, Gerstner’s salary remained flat versus 1996 at $1.5 million, but his bonus rose to $4.5 million from about $3.3 million.
* PaineWebber Group Inc. Chairman and Chief Executive Donald Marron took home about $14.1 million in pay last year, a 28% increase over 1996, as the fourth-biggest U.S. brokerage posted record profit.
Marron, 63, received $800,000 in salary, a $7.66-million bonus, $2.48 million in restricted stock awards, $309,812 in other compensation, plus stock options the firm valued at $2.83 million the day they were granted, according to SEC papers. In 1996, Marron made $11 million, including options valued at $1.85 million at grant date.
The securities firm paid President Joseph Grano $9.26 million last year. That includes $450,000 in salary, $5.26 million in bonuses, about $1.7 million in restricted stock, $80,291 in other compensation, and stock options worth $1.77 million on the grant date, according to PaineWebber. The previous year, Grano, 50, took home about 13% less.
* The pay of two top Bell Atlantic Corp. executives more than doubled in 1997, with each getting multimillion-dollar bonuses tied to the Baby Bell’s successful acquisition of Nynex Corp. Chairman and Chief Executive Raymond Smith’s total pay rose to almost $9.2 million last year, including a $4-million merger bonus, according to its SEC filing. For 1996, his salary, bonus, other compensation and value of options granted totaled $4 million.
For 1997, Smith, 60, also received a performance-based bonus of $1.6 million, up from $1.2 million for 1996. His base salary increased to $940,800 from $905,400 for 1996. In 1997, the company awarded Smith options to buy 245,811 Bell Atlantic shares, with an approximate value of about $2.5 million at grant date.
President and Vice Chairman Ivan Seidenberg received a $3-million merger bonus as part of a total pay package worth $8.5 million in 1997. That compares with 1996 pay of $4 million when he was Nynex chairman and chief executive.
