You may have noticed something a little wonky going on in summary compensation tables this month. The end of February marked a switch in the SEC reporting of stock option and restricted stock awards from a company recognized expense figure to the grant date fair value of equity grants. The change designed to enhance clarity, has also been implemented for the reporting of equity in prior years, making possible an apples to apples comparison of the grant date value of equity grants over a multiple year period. For example, at The Hershey Company, 2008 stock awards for President and CEO D.J. West are noticeably different than the amounts disclosed in the 2009 proxy.
2009 proxy
2010 Proxy
That’s because in the 2010 proxy, the stock and option awards for 2008 have been adjusted and now reflect the aggregate grant date fair value of awards. While $679,071 and $918,335 represent the dollar amount recognized in 2008 for stock and option awards granted, the latest proxy shows us the actual grant date value of those awards was $2,502,599 and $1,500,028, respectively.
Our analysts have entered just over 450 proxies under these new disclosure rules with 135 S&P 500 companies included in the data set. So far, the average grant date values for stock option awards across our coverage universe is $916,741 and the average stock awards are $1,388,898. In the S&P 500, these values climb to $1,973,602 and $2,705,065, respectively. These figures reflect the clear shift to the granting of restricted stock, with its more certain value, over the previously traditional stock options, which can often go underwater when suppressed under a sagging stock price.
Notable option awards so far this season include Tim Armstrong of AOL Inc. who received about $19.1 million worth of option awards in 2009 to go along with $5.6 million in stock awards. James M. Cracchiolo of American Financial, Inc. was granted more than a million stock options in 2009 with a grant date value of $9.1 million. Noteworthy stock awards include John Stumpf of Wells Fargo & Company, who received more than $13 million in restricted stock grants in 2009, independent of the $5.6 million in company stock designated as salary. James E. Rohr of The PNC Financial Services Group, Inc. received slightly more than $8 million in 2009 restricted stock awards.
Prominent CEO’s with no grant date values to report include Kenneth D. Lewis, formerly of Bank of America Corporation, Vikram S. Pandit of Citigroup Inc., John W. Allison of Home BancShares, Inc., and Warren E. Buffett of Berkshire Hathaway Inc.
Greg Ruel - Research Associate
