Hilton’s Chief Executive Gets a Bonus Boost in 2002

Despite a tough year for the lodging industry, Hilton Hotels Corp. Chief Executive Stephen Bollenbach received a small pay increase in 2002, a year the stock of the nation’s third-largest hotel operator rose 16%.

The Beverly Hills-based company left Bollenbach’s base salary unchanged at $1 million. But the board of directors agreed to increase his bonus by $100,000 to $1 million. The result was a 5% increase in salary and bonus over 2001. Bollenbach’s employment contract allows for a bonus as high as $2 million, depending on the company’s financial performance and other factors.

Bollenbach, 60, also received an additional $218,000 in perks, such as use of company aircraft, cash to purchase a car and contributions to his retirement plan, Hilton said in a regulatory filing Thursday.

Still, Bollenbach’s 2002 compensation was down considerably from previous years. In 2000, for example, the hotel company paid its top executive $2.7 million in salary and bonus and awarded him $4.6 million in stock. Bollenbach has not been awarded stock options for the last two years.

Hilton shares logged a 16% gain in 2002 but have since fallen. The company’s stock has dipped 3% this year and 17% in the last 52 weeks. Shares fell 10 cents to $12.36 on the New York Stock Exchange Thursday.

The lodging industry has been hurt over the last two years by the sluggish economy and fears about terrorism, which have contributed to large drops in international and business travel. More recently, concerns about the war in Iraq and the spread of the pneumonia-like severe acute respiratory syndrome have crimped business and leisure tourism further.

Last month, Hilton lowered its quarterly and annual earnings forecasts. It said the first quarter would be about break-even and that its annual net income would come in the high 30 cents-per-share range, rather than the mid- to high 40-cent range previously forecast.

Hilton’s net income rose 19% to $198 million in 2002. Revenue declined 4% to $3.8 billion.

Bollenbach, a former chief financial officer at Burbank-based Walt Disney Co., was named CEO of Hilton in 1996.