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United Technologies’ CEO Leaves With $172 Million Package
Bloomberg
By Richard Clough, Laura Marcinek and Brandon Kochkodin 5 hours ago
Louis Chenevert, who retired as chief executive officer of United
Technologies Corp. (UTX) in a surprise move on Sunday, will leave with a
nest egg of about $172 million.
That sum includes $109 million of vesting option awards and $32 million of
vesting performance-based restricted-stock awards, based on yesterday's
closing price, and a pension worth $31 million as of Dec. 31, according to
data from the company's proxy filing released earlier this year.
More from Bloomberg.com: Germany Vows to Keep Russia Sanctions for Ukraine
Impasse
The reasons behind Chenevert's abrupt departure remain unknown and it came
as a surprise to the investment community, which had been anticipating his
appearance at an investor meeting on Dec. 11. A company spokesman said
Chenevert's leaving wasn't related to financial performance. His corporate
bio was already expunged from United Technologies' website yesterday, just
hours after the company announced the management change, and the list of
board members also disappeared.
"To say this was unexpected would be a mild understatement," Nigel Coe, an
analyst at Morgan Stanley, wrote in a note to investors today. Though it's
conceivable that he left for personal reasons, "we cannot rule out the
possibility of an internal rupture over UTC's weak relative performance
during 2014 and since Chenevert took the reins," Coe wrote.
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United Technologies' share price climbed 54 percent during Chenevert's
tenure that began in April 2008, though it fell 1.8 percent this year,
trailing the 12 percent rise in the Standard & Poor's 500 Index. Shares rose
2.7 percent to $111.71 at the close in New York today.
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Chenevert's compensation package is in line with other executives from big
companies, said Alan Johnson, a managing director of compensation-consulting
firm Johnson Associates.
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John Moran, a spokesman for United Technologies, declined to comment on
Chenevert's compensation.
"While seemingly the number is large, the share value from the date of grant
to now has actually increased significantly," said Frank Glassner, CEO of
Veritas Executive Compensation Consultants, in an interview. "He's been key
in a lot of the product and technology that they have put out."
United Technologies has a provision that restricts retiring executives from
engaging in behavior that would be detrimental to the company, Glassner said
, citing the company's proxy. That includes disclosing information and
soliciting employees. Violations could result in a clawback of long-term
awards, according to proxy filing.
Chenevert's Shares
Chenevert also owns 572,480 United Technologies shares directly and
indirectly, according to data compiled by Bloomberg, worth about $64 million
as of today's price.
Gregory Hayes, chief financial officer for the past six years, assumes the
top post as United Technologies prepares a major new engine program in its
Pratt & Whitney division and faces challenges to expand its Otis elevator
business in China.
Chenevert, 57, retired after a six-year tenure as CEO during which he led
the $16.5 billion acquisition of Goodrich Corp. and reshaped United
Technologies' business lines around aerospace and building services. After
joining Pratt in 1993, Chenevert was considered a leading driver of the unit
's development of a new geared turbofan engine, which has cost more than $1
billion to produce.
Pratt suffered a pair of high-profile setbacks this year involving its
engines. A fire broke out in a prototype of the geared turbofan power plant
on a Bombardier Inc. (BBD/B) CSeries commercial test plane in May. A month
later, an engine blowout in Lockheed Martin Corp.'s F-35 Joint Strike
Fighter grounded the aircraft.
Strategic Direction
The executive changes raised questions among analysts about the strategic
direction of the company. United Technologies has become more focused on its
aerospace business in recent years and the company may now focus on its
building services side, Julian Mitchell, a New York-based analyst with
Credit Suisse, said yesterday in a note.
"We would expect an increased discussion now in the investment community of
potential large strategic moves by UTX –- our view remains that a large
acquisition is far more likely than a split-UNp of the company," he said.
Mitchell, who rates the stock outperform, said the company may consider
selling its Sikorsky helicopter unit.
Bloomberg
By Richard Clough, Laura Marcinek and Brandon Kochkodin 5 hours ago
Louis Chenevert, who retired as chief executive officer of United
Technologies Corp. (UTX) in a surprise move on Sunday, will leave with a
nest egg of about $172 million.
That sum includes $109 million of vesting option awards and $32 million of
vesting performance-based restricted-stock awards, based on yesterday's
closing price, and a pension worth $31 million as of Dec. 31, according to
data from the company's proxy filing released earlier this year.
More from Bloomberg.com: Germany Vows to Keep Russia Sanctions for Ukraine
Impasse
The reasons behind Chenevert's abrupt departure remain unknown and it came
as a surprise to the investment community, which had been anticipating his
appearance at an investor meeting on Dec. 11. A company spokesman said
Chenevert's leaving wasn't related to financial performance. His corporate
bio was already expunged from United Technologies' website yesterday, just
hours after the company announced the management change, and the list of
board members also disappeared.
"To say this was unexpected would be a mild understatement," Nigel Coe, an
analyst at Morgan Stanley, wrote in a note to investors today. Though it's
conceivable that he left for personal reasons, "we cannot rule out the
possibility of an internal rupture over UTC's weak relative performance
during 2014 and since Chenevert took the reins," Coe wrote.
More from Bloomberg.com: Odell Beckham Catch Means $2.2 Million for Nike
Gloves
United Technologies' share price climbed 54 percent during Chenevert's
tenure that began in April 2008, though it fell 1.8 percent this year,
trailing the 12 percent rise in the Standard & Poor's 500 Index. Shares rose
2.7 percent to $111.71 at the close in New York today.
Related Quotes
BBD-B.TO4.40+3.29%
UTX111.71+2.68%
Bombardier Inc. Watchlist
4.40+0.14(3.29%)
TorontoTue, Nov 25, 2014 4:48 PM EST
United Technologies’ CEO Leaves With $172 Million Package
Bloomberg 5 hrs ago
Air Arabia Studying Jet Purchase
The Wall Street Journal q 16 hrs ago
More
Path Forward
Chenevert's compensation package is in line with other executives from big
companies, said Alan Johnson, a managing director of compensation-consulting
firm Johnson Associates.
More from Bloomberg.com: More Medicine Goes Off Limits in Drug-Price
Showdown
John Moran, a spokesman for United Technologies, declined to comment on
Chenevert's compensation.
"While seemingly the number is large, the share value from the date of grant
to now has actually increased significantly," said Frank Glassner, CEO of
Veritas Executive Compensation Consultants, in an interview. "He's been key
in a lot of the product and technology that they have put out."
United Technologies has a provision that restricts retiring executives from
engaging in behavior that would be detrimental to the company, Glassner said
, citing the company's proxy. That includes disclosing information and
soliciting employees. Violations could result in a clawback of long-term
awards, according to proxy filing.
Chenevert's Shares
Chenevert also owns 572,480 United Technologies shares directly and
indirectly, according to data compiled by Bloomberg, worth about $64 million
as of today's price.
Gregory Hayes, chief financial officer for the past six years, assumes the
top post as United Technologies prepares a major new engine program in its
Pratt & Whitney division and faces challenges to expand its Otis elevator
business in China.
Chenevert, 57, retired after a six-year tenure as CEO during which he led
the $16.5 billion acquisition of Goodrich Corp. and reshaped United
Technologies' business lines around aerospace and building services. After
joining Pratt in 1993, Chenevert was considered a leading driver of the unit
's development of a new geared turbofan engine, which has cost more than $1
billion to produce.
Pratt suffered a pair of high-profile setbacks this year involving its
engines. A fire broke out in a prototype of the geared turbofan power plant
on a Bombardier Inc. (BBD/B) CSeries commercial test plane in May. A month
later, an engine blowout in Lockheed Martin Corp.'s F-35 Joint Strike
Fighter grounded the aircraft.
Strategic Direction
The executive changes raised questions among analysts about the strategic
direction of the company. United Technologies has become more focused on its
aerospace business in recent years and the company may now focus on its
building services side, Julian Mitchell, a New York-based analyst with
Credit Suisse, said yesterday in a note.
"We would expect an increased discussion now in the investment community of
potential large strategic moves by UTX –- our view remains that a large
acquisition is far more likely than a split-UNp of the company," he said.
Mitchell, who rates the stock outperform, said the company may consider
selling its Sikorsky helicopter unit.