[Intl-tobacco] Philip Morris CEO Gets Huge Raise (fwd)

[Robert Weissman]

Philip Morris More Than Doubles CEO's Pay to $21.2 Mln in 1999 
March 10, 2000

By Will Edwards

 New York, March 10 (Bloomberg) -- Philip Morris Cos. more
 than doubled the pay of Chairman and Chief Executive Geoffrey
 Bible to $21.2 million in 1999, as shares in the world's largest
 tobacco company fell to near five-year lows. 

 Bible received $1.63 million in salary, a $4.4 million bonus,
 restricted shares worth $6.48 million, and retirement and other
 payments worth $537,690, according to a proxy statement filed with
 the U.S. Securities and Exchange Commission. 

 The 62-year-old executive also got options worth
 $8.11 million on the days they were granted. The options to buy
 1.03 million shares won't be worth anything unless the company's
 stock price almost doubles in value. 

 Bible in 1998 was paid salary, bonus, options and other
 compensation worth an estimated $8.69 million. 

 Shares of the maker of Marlboro cigarettes, Kraft cheese and
 Miller beer fell 57 percent last year -- the biggest annual drop
 since at least 1981 -- because of legal challenges against the
 company. The stock lagged the 20 percent gain in the Standard &
 Poor's 500 stock index. 

 Philip Morris and other U.S. cigarette makers face the
 possibility of lump-sum damage award that could exceed
 $100 billion in a class-action suit filed in Florida. They have
 been sued by U.S. tobacco farmers alleging violation of antitrust
 laws, wholesalers charging price-fixing and hundreds of individual
 smokers seeking damages for smoking-related illnesses. 

 A jury in San Francisco is deliberating a lawsuit brought
 against Philip Morris and R.J. Reynolds Tobacco Holdings Inc. by a
 California woman with lung cancer who alleges the companies'
 cigarettes made her sick. 

 Philip Morris shares rose 3/16 to 19 5/16. 

 Incentives 

 Bible's 1999 option grants had exercise prices as follows:
 750,000 at $40 a share and 278,685 at about $35.81 apiece. 

 Philip Morris said in its proxy that Bible and some 3,600
 other employees were granted regular and special cash bonus awards
 for meeting incentive targets tied to cash flow, net income, and
 earnings per share as measured against 1998's results. 

 They were also rewarded for their performance in responding
 to the ``business, regulatory and litigation environment,'' the
 company said. 

 The special bonus was created to retain employees. Half of
 the award will be payable on June 30, and the other half is
 payable on Jan. 31, 2001. Bible's special bonus was about worth
 about $1.7 million. 

 Of Bible's restricted stock award, 100,000 shares vest on his
 65th birthday and 115,960 shares vest in 2002. 

 Bible also realized 1999 gains of $6.78 million by exercising
 previously granted options, the company's proxy statement said. In
 1998, he earned another $18.85 million by exercising such options. 

 Bible owned about 5 million shares as of Feb. 28, an increase
 of 13 percent from a year earlier, according to the proxy. 

 He had options to buy about 4.85 million shares as of Dec.
 31, about 3.82 million of which could be exercised. The underlying
 value of Bible's options held at the end of 1998 fell more than
 $87 million last year because of the decline in Philip Morris
 stock. 

1998 

 In 1998, Bible, who has been chief executive since 1994, got
 $1.5 million in salary, a $3.5 million bonus, and other
 compensation totaling $518,940. 

 Bible in 1998 also got options to buy 400,000 shares that
 were then valued at $3.11 million. The 1998 option grant had an
 exercise price of $39.72 a share. 

 Philip Morris's filing listed executive options using a
 formula that estimates their value the day the board awarded them.
 Some other companies use a different method, calculating an
 executive's potential profit if company shares rise a certain
 percentage during the term of the option grant. 

 Because the SEC lets companies use either method in proxy
 statements, it is difficult to compare executive pay from one
 company to another, even if they're in the same industry. 

Meeting 

Among the shareholder proposals included in the proxy are a
 request to remove genetically engineered crops or ingredients
 in any food products made by Philip Morris, a plan to link
 executive pay to smoking levels among teenagers, and a proposal
 whereby the company would separate its tobacco business from
 its other units. 

 Philip Morris's board recommends shareholders vote against
 each proposal. 

 At the company's April 27 annual meeting, shareholders will
 vote on a slate of 13 board members, as opposed to last year's 15. 

 Tennis legend Billie Jean King was elected to serve on the
 board in August. She fills a spot vacated by Murray Bring, who
 retired Feb. 1 as general counsel. 

 Two other members are stepping down as their duties increase
 at other companies. Richard Parsons, president of Time Warner
 Inc., was named co-chief operating officer of AOL Time Warner. 

 William Donaldson last month was picked to serve as Aetna
 Inc.'s chairman and chief executive.