Lucent’s Top Execs Denied Bonuses
Lucent Technologies Inc.’s top executives did not receive 2001 bonuses as the company slashed jobs and reported multibillion-dollar losses, but several are in line for big payouts next year if they stay with the company, according to regulatory documents filed Friday.
Lucent Chairman and Chief Executive Henry Schacht was paid a 2001 base salary of slightly more than $1 million, and the total package including other compensation was $1.21 million, according to the company’s proxy statement filed with the Securities and Exchange Commission.
He rejoined the telecommunications equipment maker in October 2000 after his predecessor, Richard McGinn, was forced out. McGinn succeeded Schacht, who was at Lucent’s helm from September 1996 to October 1997. The Murray Hill, N.J.-based company, which posted a loss of $16.2 billion in fiscal 2001, launched its restructuring in January to remake itself into a smaller, more nimble supplier to the largest telecom carriers.
It started the year with 106,000 employees and is cutting jobs to bring that total to as low as 57,000 by the end of March.
Lucent has struggled with slowing demand by its customers amid the weak economy, which also has hurt rivals such as Nortel Networks Corp., Tellabs Inc. and ADC Telecommunications Inc.
To ensure several top executives would not leave through late April while the company completes its restructuring, Lucent offered retention bonuses this month to Vice Chairman Ben Verwaayen, Executive Vice President Bob Holder, Bell Labs President Bill O’Shea and chief scientist Arun Netravali. However, Verwaayen left to join British Telecommunications as chief executive.
In letters from Schacht on Dec.3, the executives were told that they would receive bonuses if they remained with Lucent through either his exit when a new CEO is named or April 22, according to SEC documents.
The retention bonuses are equal to two times an executive’s base salary plus an annual target bonus. The executives also receive immediate vesting of all their stock option grants and restricted stock awards April 22.
McGinn received $11.46 million from Lucent in 2001, but that included $11.26 million in special payments, mostly in the form of a buyout package, the proxy said. The buyout deal included $5.5 million in cash and $5.26 million for his vested restricted stock units and other items.
He received total compensation of $1.27 million in fiscal 2000, the proxy said.
Schacht was granted a total of 3.54 million shares of Lucent stock options in fiscal 2001, the proxy said.
His options’ combined value as of the grant date was estimated at more than $20 million, but with strike prices of $12.14 and $16.03 they are now worthless as Lucent’s stock was trading at just above $6, according to the proxy.
Lucent’s stock closed Friday up 4 cents at $6.18 on the New York Stock Exchange.
