El Paso Answers Call for New CEO
Updated from 2:09 p.m. EDT
El Paso (EP) has ended a crucial shopping trip with a big-ticket CEO.
Just a month after winning a nasty fight that left it in place to choose the company's next leader, El Paso's board selected Halliburton (HAL) COO Douglas L. Foshee to lead a turnaround. Foshee, who spent most of his two-year Halliburton career as CFO, last held the top spot at Nuevo Energy (NEV).
But he left the Houston oil minor in a dispute that could trouble shareholders at El Paso, which has been struggling with corporate-governance issues in the wake of a steep plunge in its stock. Investors who criticized the current board's compensation arrangements, among other things, were narrowly defeated in a fierce proxy battle last month.While at Nuevo, Foshee refused to budge on the issue of executive pay, and in taking the El Paso job he accepted a package that appears more lucrative than the guidelines proposed by dissident shareholders. Nearly half of El Paso's shareholders have made it clear -- by voting for the frugal dissident camp -- that they favor cuts in the company's notoriously fat checks to management. "The incumbent board ... was unprepared to commit to basic executive compensation reforms," the AFL-CIO complained last month as it joined with influential proxy firm Institutional Shareholder Services to endorse the dissident camp. El Paso's stock, expected to bounce with the CEO question answered, actually slid 8 cents, to $8.13, in the middle of Wednesday's session.
FrugalityEl Paso has promised Foshee the same base salary of $900,000 the dissidents suggested for their own CEO candidate, former Tenneco leader Steve Chesebro. But Foshee's compensation hardly ends there. He's entitled to a maximum target bonus of twice his annual salary, higher than the 150% bonus promoted by the dissidents. He will also receive an initial grant of 1 million El Paso stock options, more than double the grant backed by the dissident camp. And he's eligible for 300,000 restricted shares -- triple the dissidents' pledge -- if he meets performance targets.
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