In its discussion of executive pay in the proxy it filed on Friday, tool giant Stanley Black & Decker (SWK) hits many of the right notes, including this one:
“As a general rule, the Company does not believe it is necessary for the attraction or retention of executive talent to provide our executives with a substantial amount of compensation in the form of perquisites.”
Unfortunately, the effect is dampened a little if you take a look at the compensation paid to Executive Chairman Nolan D. Archibald last year. In addition to $1.2 million in salary, $3.3 million in stock, $19.7 million in options, $1.9 million in cash incentive payments, and $1.6 million in pension gains, Archibald was paid in $604,152 in “other compensation” — a catchall that includes, yes, perquisites.
Most of that — some $526,391 — consisted of personal use of the company’s aircraft. Now, as far as we can tell from the proxy it filed in 2009, Stanley Works didn’t actually have a company plane at the time, before its merger with Black & Decker. Archibald was chairman and chief executive of Black & Decker before the merger, of course, and he seems to have taken the company plane with him to the combined firm — and ramped up his usage considerably. In 2008, for example, Archibald managed to rack up $328,415 in personal plane flights, just a little over 60% of his total for last year.
To put it in perspective, $526,391 could buy more than 500 round-trip “Business Select” tickets to Los Angeles on Southwest Airlines, flying out of Islip, New York, on Long Island — or more than 1,100 round-trip coach tickets to Los Angeles on Continental from Hartford, Connecticut. We sure hope shareholders are getting some concrete value for his private-plane experience.
Archibald was the only top Stanley Black & Decker exec who got to jet about on the company’s plane for pleasure. He also enjoyed some other perks that his colleagues didn’t, including personal use of a company car ($9,522), on top of a car allowance of $16,200; “personal use of tickets to athletic and other entertainment events” ($4,528); and club dues ($1,820). And he racked up the biggest bill under a free-product benefit for top execs, at $2,635 in tools or other merchandise, while collecting $39,671 in reimbursed financial planning costs — more than all four other top executives combined.
One of the many things that always strikes us about these captains of industry is just how stingy they are when they’re not spending shareholders’ money: Can Archibald, paid millions in cash and equity, really not afford to spring for $1,820 in club dues? Even assuming you consider club dues a business expense that the Internal Revenue Service arbitrarily excludes, it’s a lot like someone making $100,000 not swallowing a single $6.36 expense during the year.
Maybe the best news for shareholders, when it comes to Archibald’s compensation, is that his new contract lasts just three years. He seems to be making the most of it.
