Feb. 28--United Technologies Corp. paid Chairman George David $4 million in salary and bonus last year -- $400,000 more than in 2002. But the great bulk of David's gains came from exercising stock options.
Those previously reported options had a total value of $66.2 million, according to the company's proxy statement filed Friday with the Securities and Exchange Commission.
David, 61, kept $32 million in cash, added 161,000 shares to his UTC holdings and used the rest to pay fees and taxes, the company said. David also was granted 325,000 new stock options valued at $6.76 million.
A company spokesman said David "exercised options in 2003 that go back nearly 10 years, and were close to expiring."
The big pay package came during a strong year for UTC, with the stock price rising 54 percent during 2003 and David making a large acquisition -- security services company Chubb PLC -- that gave UTC a new avenue for growth.
The SEC filing says the company's total shareholder return has topped the rise in the Dow Jones industrial average and the Standard & Poor's 500 index during the past decade.
"UTC delivered strong financial performance in spite of weak business conditions," the board of directors' compensation committee wrote in the proxy.
In response to a shareholder resolution seeking to place greater restrictions on executive stock options, the board said the company's current option program rewards executives for sustained good performance.
"The board believes that the value realized from stock options reflects UTC's performance and not a windfall attributable to general stock market appreciation," the proxy says.
David, who has run the company for 10 years, received the same base salary -- $1.2 million -- he received in 2002. His bonus increased from $2.4 million to $2.8 million, bringing the package total to $4 million, 11 percent higher than 2002.
The SEC filing also outlines additional benefits David and other top executives received last year. For example, the company spent $123,700 for additional perquisites for David, $86,479 for his use of corporate aircraft, $67,709 for his life insurance policy and $15,659 for a leased car.
Asked what is included in the perquisites expenses, Paul Jackson, a UTC spokesman, said that is primarily for extra costs, such as financial and tax planning.
At the end of 2003, David held exercisable options valued at about $183 million.
Stephen F. Page, David's top deputy as vice chairman and chief financial officer, received $2 million in salary and bonus, up slightly from the $1.92 million he got in 2002. Page received additional compensation totaling $180,765, an increase of 4.2 percent.
Page, who is retiring this spring, also exercised 195,000 options, for a realized value of $11.1 million, the company said.
The one executive among the five highest-paid whose total pay declined was Louis Chenevert, president of Pratt & Whitney. Chenevert received $850,000 in salary and bonus, compared with $1.025 million in 2002.
Chenevert's salary increased from $500,000 to $525,000, but his bonus -- based on Pratt's performance in a tough commercial aerospace market -- dropped $200,000, from $525,000 in 2002 to $325,000 in 2003.
The total package was down about 17 percent.
With Carrier Corp. reporting improvements in its profit margins -- in part by cutting its American workforce -- Geraud Darnis, division president, saw his salary and bonus increase. The total package was up 16 percent. Darnis received $955,000 in salary and bonus, compared with $818,846 in 2002.
Ari Bousbib, president of UTC's Otis Elevator division, received $1.125 million in salary plus bonus, compared with slightly more than $1.005 million in 2002. He received increases in both categories. The total package increased almost 12 percent.
The proxy also includes several shareholder resolutions, all opposed by UTC directors. The proposals call for greater disclosure of executive salaries, new ethical standards for seeking military contracts, new performance-based standards for senior executive stock options and an independent chairman of the board.
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