5 million reasons to stick around…

Big tobacco companies have long been known for compensating their executives well. But this exhibit to an 8-K filed by UST (UST) yesterday seems to go above and beyond.

According to the filing, Chairman and CEO Vincent Gierer stands to collect a $5 million retention bonus in July 2007, provided he stays in his current job through the end of 2006. In fairness, Gierer has been running the company since 1993 and outside of the past six months, the stock has done well over the past five years. But that doesn’t make the bonus any less elaborate, even if the company does note that they’re providing it in lieu of any stock grants in 2005 and 2006. As the company notes in the filing, Gierer already owns a lot of UST stock: 533,660 shares and he has options to purchase another 860,300 shares, so the board must have reasoned that offering Gierer more stock to stick around probably wasn’t enough of an incentive for the 57 year-old executive.

Still, just do the math: each day that Gierer remains in his job, he’ll pocket another $11,820 a day ($5 million divided by 423 days) — even on days when he’s not working, like, say, Christmas. That’s in addition to his salary and standard bonus, which last year added up to nearly $3.5 million.