A bumper crop of comp for Sysco execs…

In early September, Sysco Corporation (SYY) – which sells food and foodservice equipment to a variety of restaurants and other commercial clients – disclosed in a press release that the company generated more than $37 billion in sales for the fiscal year that ended July 3, 2010.

Of course, that number is just a starting place. It doesn’t really reflect a company’s financial health or profitability. Like all other businesses, Sysco must pay for marketing and transportation costs, utilities, and labor; and – with respect to its executives – that last category doesn’t come cheap.

Sysco filed its annual proxy on September 29, and the filing discloses that the total compensation packages for its top five Named Executive Officers (NEOs) added up to more than $19.78 million for FY 2010. Of that, the combined base salaries account for just under $2.7 million. Stock awards worth more than $2.33 million were granted, as well as more than $5.03 million in options. Sysco’s board also gave the executives more than $5.53 million in non-equity incentive plan comp, plus the comparatively paltry sum of $443,316 in “Other” compensation (which paid for various types of insurance, a relocation, medical exams, spousal travel, etc.). The final category, which reflects the change in the value of pension accounts and nonqualified deferred compensation earnings, accounted for more than $3.73 million.

Besides the five current named executives, Sysco’s proxy also shows that it paid $9,987,297 in FY 2010 to Kenneth Spitler, its former vice chairman, president, and Chief Operating Officer. Nearly $5.73 million of that was paid in the form of salary and other types of compensation, but the remaining chunk of almost $4.26 million was severance. Spitler notified the company in early February that he intended to resign from most of his positions on February 5, 2010, but he agreed to stay as a non-executive employee through June 28. At the time, Sysco stated in an 8-K that in recognition of Spitler’s “significant contribution to the Company during fiscal 2009 and 2010, in which the Company transitioned to a new Chief Executive Officer, and his agreement to continue to provide important assistance to the Company and its operating companies during the remainder of his employment and after his retirement,” (as well as his willingness to sign a release), the company would pay him approximately $4.2 million plus whatever his COBRA premiums cost, to be paid over a period of 24 months.

While there’s no reason to believe that future compensation for Sysco’s executives will go in any direction but up, shareholders may be interested to know that multi-million-dollar severance packages like Spitler’s may be a thing of the past. In the 8-K that relates to Spitler’s departure, the filing states: “As of the termination of Mr. Spitler’s Severance Agreement, the Company is no longer party to severance agreements with any of its executive officers.”

Image source: Sysco Corporation


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