Motorola (MOT) is certainly putting its money where its mouth is.
The big cell-phone maker shocked and relieved Wall Street last fall by cashiering its longtime chief, founding family member Chris Galvin. At the time, the Schaumburg, Ill., tech giant expressed confidence that his replacement -- former
executive Ed Zander -- would put the company back on the right track.
Now, a filing with securities regulators shows that Zander will wring some $24 million in compensation out of the company to make the effort worth his while.
Motorola's annual filing with the
Securities and Exchange Commission
shows that the board's largesse wasn't limited to its new chief. Departed chief Galvin bagged $6.8 million in salary, bonus and stock awards last year.
But that pales in comparison with the eye-popping penthouse suite-warming gift given his replacement.
Of course, to some eyes the handout will be worth it if Zander fulfills his promise. Hapless Motorola, after all, has done little but sputter in recent years: The continual fumbling of its cell-phone leadership and the lack of customers for its wireless infrastructure upgrade technology helped run Galvin out the door as he was increasingly at odds with the board.
Still, just in case Motorola needs his expertise, Galvin has been retained as a consultant. He will receive an annual pay and bonus of $2.2 million for two years. Galvin, who received options on 2.9 million shares in the past three years, also gets a supplemental retirement plan worth $13.8 million.
It apparently took some real arm-twisting to fill Galvin's shoes.
Zander, formerly with tech buyout firm Silver Lake Partners and a onetime COO at Sun, was corralled into the job, but not without a few perks to ease the pain.
Zander's salary is a mere $1.5 million, but he managed to secure two bonuses -- a minimum annual bonus of $2.02 million, which he will defer until he leaves the company, and a guaranteed annual incentive bonus of at least $3.75 million.
When Zander signed on in January, he received options on 1.35 million shares of Motorola stock and an award of 400,000 shares of restricted stock worth $6.4 million at current prices. Additionally, to compensate for forfeited investments, Zander was also given $600,000 in cash and 93,024 shares of restricted stock, worth $1.5 million today.
But there's more. In May, Zander will get options worth $6.25 million over 10 years and another stock award worth $2 million.
The 15-page pay contract shows great attention to detail. The fine print calls several pay deferrals to minimize income tax effects, at least 100 hours of personal use of the company jet and a home security system.
The Zander disclosure comes as Motorola shareholders are due to vote on a shareholder proposal to cap CEO pay. The plan would limit salary to $1 million, hold bonuses to $1 million, keep restricted stock awards at $1 million and limit severance to one year's pay. The company opposes the proposal, which holders will vote on May 3.
Luckily, that rule doesn't apply now. So Zander will be paid triple salary and bonus if the company changes hands. Perhaps best of all, should any other officer of the company get a better stock deal during a merger, Zander will be entitled to those benefits also.
So Motorola may be making a big bet, but Zander appears sure to win no matter what happens.