Smith International Former CEO Gets $3.5M In '08
The Associated Press
04/14/09 - 03:18 PM EDT
DEBORAH JIAN LEE
HOUSTON (AP) In a year when its profit rose but its stock tumbled 69 percent amid a battered energy market, oilfield services company Smith International Inc. lowered the value of its chief executive's total compensation almost 60 percent according to an Associated Press calculation of figures disclosed in a filing with the Securities and Exchange Commission.
Doug Rock, who served as the Houston-based company's chairman, chief executive, president and chief operating officer in 2008, saw his total pay package fall to $3.5 million, compared with the $8.6 million he earned in 2007.
The bulk of this compensation cut came from the fact that in December 2008 the company did not award Rock any performance-based restricted stock units, after he stepped down from his position at year-end. Rock entered an employment agreement with the company to serve as a special executive adviser to the chief executive officer for about one and a half years. John Yearwood has taken the reins as chief executive, president and chief operating officer. In 2007, Rock received awards valued at $5 million on the date they were granted.
Smith International also cut Rock's performance-based bonus 27 percent to $1.3 million, compared with $1.8 million in 2007.
Rock's salary rose to $1.4 million, up 15 percent from the $1.2 million he earned the previous year. Rock also received $820,690, or 40 percent more, in "other" compensation, including more than $770,000 in contributions to retirement plans, $33,980 in a cash perk and $15,689 related to life insurance premiums.
Rock, 62, served as the company's CEO since March 1989, and was by far the highest paid company official compared with the other four executives listed in the filing.
Last year crude oil prices soared to peak at $147.27 in July, but plunged in the second half of the year as an unraveling economy, tight credit markets and layoffs battered demand for energy products and oilfield services.
With help from its W-H Energy acquisition in August 2008 and higher demand for tubular products, Smith International weathered the rough market and reported a rise in earnings. Its full-year profit was $767.3 million, or $3.68 per share, on revenue of $10.77 billion. In 2007, the company earned $647.1 million, or $3.20 per share, with sales of $8.76 billion.
Over the course of 2008, the company's stock mirrored the decline in crude oil prices, plummeting 69 percent to close at $22.89 per share.
The Associated Press formula is designed to isolate the value the company's board placed on the executive's total compensation package during the past fiscal year. It includes salary, bonus, performance-related bonuses, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year.
The calculations don't include changes in the present value of pension benefits, and they sometimes differ from the totals companies list in the summary compensation table of proxy statements filed with the Securities and Exchange Commission, which reflect the size of the accounting charge taken for the executive's compensation in the previous fiscal year.
