McCormick chiefs gain hefty incentives Shareholders approve millions in stock grants


March 19, 1998|By Sean Somerville | Sean Somerville,SUN STAFF

McCormick & Co. Inc. shareholders approved an incentive pay program yesterday that could give top executives millions of dollars in stock each if the company achieves its financial goals.

The approval was announced at an annual shareholders meeting in which Charles P. "Buzz" McCormick Jr. said he would retire as chairman next year. McCormick, 69, who came out of retirement four years ago to guide the company through a tumultuous period, named Chief Executive and President Robert J. Lawless as his successor.

The Mid-Term Incentive Program calls for the company to set goals for sales growth and shareholder return at the beginning of three-year periods -- the first of which started Dec. 1.

In an interview, Lawless said the proposal would reward executives based on the company's performance. "If you increase sales and shareholder return, the stock price will move up," he said.

"Over the last five years, we would have paid almost nothing out" if the program had been in effect, Lawless said.

Besides sales targets, bonuses would depend on shareholder returns compared with those of other companies in the Standard & Poor's food products index.

Seven top executives will be eligible for as much as $1.57 million apiece in stock grants in the first three-year cycle. That amount will increase to $2 million for the second cycle, which will start Dec. 1, 1999. Remaining cycles will start every two years after that.

Executives would get the maximum amount if the company's sales grew by more than 50 percent over the three years and its shareholder returns placed the company in the 80th percentile of the S&P food products index companies.

The qualifying executives include Lawless; Robert G. Davey, executive vice president and chief financial officer; Carroll D. Nord-hoff, executive vice president; and Robert W. Schroeder, vice president and general manager of McCormick/Schilling.

The company wouldn't identify the other three executives, saying such disclosure was not required by federal rules.

The plan, which won the approval of about 91 percent of the shares voted, is being adopted after a year in which compensation for most top executives rose.

Higher bonus, salary

Lawless, whose salary as president and chief operating officer lTC was $359,567 in 1996, earned $479,567 last year as president and chief executive officer -- up 33 percent. His bonus increased threefold, from $123,540 to $385,000.

Bonuses to four other top executives in 1997 ranged from $111,480 to $195,240.

McCormick, who earned a bonus of $193,300 in 1996, received a bonus of $124,500 -- a 36 percent decrease. His consulting fee, $600,000 in 1996, dropped 62 percent to $227,000 last year. McCormick relinquished the CEO job to Lawless at the beginning of 1997.

In a generally upbeat meeting attended by about 1,000 people, McCormick, grandnephew of the company's founder, announced his second retirement as chairman. McCormick, who will turn 70 in May, said he would retire "at this time next year" -- consistent with a policy that requires directors to retire by age 71.

"It's been exhilarating for me to participate as a member of the current management team amid positive actions that have taken place and are taking place," he said.

McCormick, who was chairman from 1988 to 1993, returned as chairman in July 1994 when Bailey Thomas -- then chairman and chief executive -- died of a heart attack.

Thomas' successor as chief executive, Eugene Blattman, retired the end of 1995 because of a heart ailment. McCormick took the CEO job Jan. 1, 1996, and held it for one year.

Rival turned away

During his second tenure as chairman, the company executed a strong turnaround and staved off a challenge by Burns Philp & Co., an Australian upstart that tried to overthrow McCormick as the world's No. 1 spice company.

As if to make that point, McCormick shares closed up $2.25 yesterday to $33.25 -- an all-time high.

After the meeting, McCormick said he was ready, again, to retire. This time I hope it's for good," he said.

Pub Date: 3/19/98

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