[Snow may lack hair, but he isn't deficient in chutzpah. From today's NY Times:]
Lucrative Years as C.E.O., Despite Average Performance
By ALEX BERENSON
John W. Snow was paid more than $50 million in salary, bonus and stock in his nearly 12 years as chairman of the CSX Corporation, the railroad company. During that period, the company's profits fell, and its stock rose a bit more than half as much as that of the average big company.
Mr. Snow's compensation, amid CSX's uneven performance, has drawn criticism from union officials and some corporate governance specialists. In 2000, for example, after the stock had plunged, CSX decided to reverse a $25 million loan to him.
The move is likely to get more scrutiny after yesterday's announcement that Mr. Snow has been chosen by President Bush to replace Paul O'Neill as the Treasury secretary.
Like Mr. O'Neill, Mr. Snow is an outsider on Wall Street but an insider in corporate America, with long experience running an industrial company. Some Wall Street analysts who follow CSX said yesterday that Mr. Snow had ably led the company through a difficult period in the railroad industry and would make a good Treasury secretary.
"It's an excellent nomination," said Jill Evans, an analyst at J. P. Morgan who has a neutral rating on CSX stock. "I think John's a great person for the administration. He, as the C.E.O. of a railroad, has probably touched every sector of the economy."
Union officials are less complimentary of Mr. Snow's performance at CSX. Last year, the A.F.L.-C.I.O. criticized him and CSX for the company's decision to reverse the loan, allowing him to return stock he had purchased with the borrowed money.
At a time when independent directors are in demand, a corporate governance specialist said recently that Mr. Snow had more business relationships with members of his own board than any other chief executive. In addition, Mr. Snow is the third-highest-paid of 37 chief executives of transportation companies, said Ric Marshall, chief executive of the Corporate Library, which provides specialized investment research into corporate boards. "His own compensation levels have been pretty high," Mr. Marshall said. "He could afford to take a public service job."
A CSX program in 1996 allowed Mr. Snow and other top CSX executives to buy company shares using loans subsidized by the company. According to the company's proxy statements, Mr. Snow borrowed $25.4 million from CSX, putting up $7 million in shares as a down payment. In total, he held almost 700,000 shares worth more than $32 million through the program in 1996.
The company said the program was designed to align the interests of executives with those of CSX shareholders, and it said explicitly that "the down payment remains at risk until the purchase loans have been paid in full."
But in 2000, after CSX shares had fallen 40 percent from their 1996 levels, CSX canceled the program. The company took back its shares, canceled Mr. Snow's loan and returned his down payment, which by then had fallen in value to $4 million.
Bill Patterson, the director of the office of investment at the A.F.L.-C.I.O., said the loan cancellation was unfair to the company's shareholders and employees.
"This is the kind of practice that we have been active on and feel it's a key issue for corporate reform," Mr. Patterson said. "Having C.E.O.'s compensated for weak performance, a no-lose proposition, heads I win, tails I win proposition, flies in the face of what pay-for-performance is supposed to be about."
Claire Buchan, a White House spokeswoman, said the loans were legal and had been fully disclosed to shareholders. "This was a program available to a large number of senior executives of the company," she said. Loans to top executives have since been forbidden by the Sarbanes-Oxley securities legislation. The corporate loan programs gained attention after the disclosure that Kenneth Lay had borrowed tens of millions of dollars from Enron and repaid it in company stock.
During the last decade, while CSX's stock has risen slightly and its sales and profits have declined, Mr. Snow's pay has skyrocketed. In 1991, his first year as chairman, Mr. Snow made $1.6 million and received 134,000 stock options, adjusted for a 2-for-1 split, according to the company's proxy statement. Ten years later, Mr. Snow earned $10.1 million in cash and stock grants and received 800,000 options valued at $8 million more.
Over all, Mr. Snow earned about $50 million in salary and other compensation during his 12-year tenure as chairman and chief executive. He also received more than four million long-term stock options, which were valued at about $60 million when he was given them. But because CSX's stock is lower than the prices at which those options can be exercised, they are mostly worthless today.
In 1991, Mr. Snow's first year as chairman, the company reported a profit of $382 million, excluding one-time charges, on sales of $8.6 billion. A decade later, CSX made $293 million on sales of $8.1 billion. When Mr. Snow took over CSX on Feb. 1, 1991, the company's stock traded at $17.75 a share, adjusted for the split. Yesterday it closed at $28.08, for a 12-year gain of about 55 percent. Including dividends, CSX has returned 6.5 percent annually to shareholders during that period, compared with about 8 percent interest offered by an 10-year Treasury note in 1991, the 10 percent return on the New York Stock Exchange transportation index and the 11 percent return on the Standard & Poor's 500.
[end]
Carl
_________________________________________________________________ MSN 8 with e-mail virus protection service: 2 months FREE* http://join.msn.com/?page=features/virus