Viacom and McKesson Dole Out Largest Equity Awards in May

Every month, Compliance Week publishes a list of the largest stock option grants and restricted stock awards during the previous period. The data and analysis are provided by compensation research firm Equilar.

Last year, Philippe Dauman, president and CEO of Viacom, received the largest compensation package in Corporate America, with a total award of $84.5 million, including $54.4 million in options and restricted stock. And it doesn't look like Viacom is done loading him up with options. The New York-based media company gave him 524,476 options on May 25 with a strike price of $49.95, implying a face value of $26.2 million. That same day the company also gave 419,580 options to Thomas Dooley implying a face value of $21 million. Dauman and Dooley signed five-year contract extensions last year with the company, which owns MTV, Comedy Central, and Paramount pictures.

Healthcare information technology company McKesson gave out the second largest options package last month when it awarded Chairman and CEO John Hammergren 301,000 options on May 24 with a strike price of $83.51 implying a face value of $25.1 million. McKesson also gave Paul Julian, executive vice president and group president, 167,000 options with an implied value of $13.9 million.

Citigroup gave a vote of confidence to CEO Vikram Pandit—once thought to be on his way out—by granting him 500,000 options on May 17, with a strike price of $47.42, implying a face value of $23.7 million. For the first time in several months the top 10 equity awards consisted entirely of stock options, bucking a trend toward granting hybrid packages of options and restricted stock.

The top restricted stock award went to Stuart Essig, chief executive officer of Integra Lifescience, a medical device company. He received 335,000 shares on April 13 at a strike price of $39.88 worth $13.4 million.

Other top equity awards went to Kenneth Frazier, president and CEO of Merck; Steven Temares, CEO of Bed Bath & Beyond; and Michael Balmuth, vice chairman and CEO of Ross Stores.

Trends, Performance

Equilar noted that companies continue to issue performance-based restricted stock. For example, Kohl's granted restricted stock to two executives that carried the following performance-related footnote:

“The restricted shares vest in three equal annual installments on the third, fourth, and fifth anniversaries of the Grant Date. Vesting is contingent upon the company achieving net income of at least $1,000,000,000 in either fiscal year 2011 or fiscal year 2012.”

Red Hat also granted performance-based restricted stock to six executives, and noted the stock could be lost entirely if the firm didn't meet performance hurdles. The footnote read:

“Represents a performance-based restricted stock award vesting over four years, subject to the achievement of a financial performance objective. If the performance objective is not achieved, the entire award is forfeited. If the performance objective is achieved, the award vests: (i) 25 percent on July 16, 2012 and (ii) ratably on a quarterly basis over the subsequent three-year period subject to continued service.”

Only one company granted premium-priced options. Office Depot granted stock options to seven executives with an exercise price 25.1 percent higher than the company's closing stock price at issue of $4.27.

A downloadable spreadsheet of the top 10 equity awards in May can be found in the box above, right. Also available are data from 2004-2010.