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Posted on Wed, Jun. 23, 2004
TXU chief generating megabucks for himself
By Mitchell Schnurman
Star-Telegram Staff Writer
This is the kind of quick payday that would make A-Rod blush.
In John Wilder's first 100 days as chief executive of TXU Corp., he earned $40 million.
With no strings attached.
The huge performance payoff was the reward for a quick run-up in TXU's stock price. Wilder came to Dallas with big plans, and he's being well compensated for them.
If Wilder wants to leave tomorrow for IBM or Tahiti, the money is all his. And if TXU's stock drops by half next month, he'll still be a very rich man.
Wilder isn't going anywhere, which is good, because TXU's turnaround has hardly begun. Besides, TXU has given him a lot more reasons to hang around.
If Wilder stays at TXU for three years, he gets stock worth an additional $10 million. After six years, $10 million more.
And if TXU's stock stays hot, Wilder is promised at least an additional $30 million by 2007.
That doesn't include his salary and bonus, worth about $4 million annually.
These are mind-boggling numbers, even at a big corporation facing a turnaround.
For some perspective, compare Wilder with Gerard Arpey, who was named American Airlines' CEO a year ago and has been working 24/7 to reinvent the world's biggest carrier.
Both leaders are 45, both have MBAs from the University of Texas, and both are in their first stints as CEO. Arpey probably faces a stiffer challenge and has already overseen a sharp rebound in his company's stock price.
But Arpey's first-year pay as chief executive was $535,000, with no stock options. In his first quarter, Wilder was paid 75 times more.
The fact that the state's biggest utility is signing Wilder's check makes it even more remarkable -- or outrageous, depending on your point of view.
Is Wilder that good or TXU that bad?
And how could the TXU board approve a pay package with so much upside and such weak handcuffs?
This can't play well with TXU customers. Since Wilder arrived, TXU has raised electric rates and requested a second increase. Rising natural gas prices are the reason, but some are sure to say the company needs the money to pay the boss.
A spokeswoman said Wilder wouldn't elaborate on his pay, but others say he's earned the big bucks. After a disastrous foray into Europe, TXU's stock price was stuck in the mid-20s before Wilder agreed to come aboard.
The stock immediately jumped 12 percent and kept climbing as Wilder unveiled new initiatives. The stock is up 59 percent since he arrived in late February.
"Ask people how they feel about the $4 billion increase in market cap," James Oesterreicher, the former J.C. Penney chief who heads TXU's compensation committee, told me Tuesday. "That cost us only 1 percent."
My beef is that the pay threshold isn't that high, and there's little requirement that the gains stick. The stock topped $56 two years ago, and Wilder only had to boost the lagging stock price by a third to hit the performance standards.
If the stock hit $33 a share -- and held that level for 30 days -- he got 1 million shares.
By late May, Wilder was deep in the green. At Tuesday's close of $39.47, plus his $1 million signing bonus and $1.25 million salary, he's already above $40 million, before taxes.
Wilder has been busy. He has pushed TXU to sell assets worth billions, outsource 2,700 jobs (including some at Dallas headquarters) and form a joint venture with an investment firm.
Wilder has also shuffled the management team and reorganized the business units -- pretty standard fare for a turnaround but groundbreaking at a utility.
Oesterreicher, reached at his Texas lake house, said that Wilder has impeccable character and predicted that he would fulfill his five-year contract. He also said the executive is worth the big incentives.
"We're very fortunate at TXU to have attracted the top man in the industry," Oesterreicher said.
Wilder had been chief financial officer at Entergy Corp. in New Orleans and is the first outsider to take TXU's top job.
His arrival may be the real thing, akin to Len Roberts coming to RadioShack in 1993. Roberts reinvigorated the chain and rebuilt the brand name, and he's stayed around for more than a decade.
Or Wilder could be more like Dick Brown, brought in to rescue Electronic Data Systems in 1999. Brown was booted out in 2003, after EDS had lost two-thirds of its market value and was the target of a securities investigation.
In 2001, when EDS appeared to be flying high, Brown's pay package was valued at $55 million. Shareholders complained, but Brown joked that he had an expensive wife.
Despite the damage at EDS, Brown walked away with a $37 million severance deal. He netted about $72 million, not including stock options, in a little more than four years on the job.
No one knows how TXU will perform under Wilder, but his golden welcome ensures that he'll do just fine, regardless.
It's telling that Wilder already holds more stock than Erle Nye, the executive he replaced.
Nye, still chairman, has worked at TXU for 44 years and led the company since the mid-1990s. But the new guy has three times the number of TXU shares.
TXU was a good marriage for Nye. But the honeymoon belongs to Wilder.
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Mitchell Schnurman's column appears Wednesdays and Sundays. (817) 390-7821 [email protected]
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© 2004 Star-Telegram and wire service sources. All Rights Reserved.
http://www.dfw.com
Posted on Wed, Jun. 23, 2004
TXU chief generating megabucks for himself
By Mitchell Schnurman
Star-Telegram Staff Writer
This is the kind of quick payday that would make A-Rod blush.
In John Wilder's first 100 days as chief executive of TXU Corp., he earned $40 million.
With no strings attached.
The huge performance payoff was the reward for a quick run-up in TXU's stock price. Wilder came to Dallas with big plans, and he's being well compensated for them.
If Wilder wants to leave tomorrow for IBM or Tahiti, the money is all his. And if TXU's stock drops by half next month, he'll still be a very rich man.
Wilder isn't going anywhere, which is good, because TXU's turnaround has hardly begun. Besides, TXU has given him a lot more reasons to hang around.
If Wilder stays at TXU for three years, he gets stock worth an additional $10 million. After six years, $10 million more.
And if TXU's stock stays hot, Wilder is promised at least an additional $30 million by 2007.
That doesn't include his salary and bonus, worth about $4 million annually.
These are mind-boggling numbers, even at a big corporation facing a turnaround.
For some perspective, compare Wilder with Gerard Arpey, who was named American Airlines' CEO a year ago and has been working 24/7 to reinvent the world's biggest carrier.
Both leaders are 45, both have MBAs from the University of Texas, and both are in their first stints as CEO. Arpey probably faces a stiffer challenge and has already overseen a sharp rebound in his company's stock price.
But Arpey's first-year pay as chief executive was $535,000, with no stock options. In his first quarter, Wilder was paid 75 times more.
The fact that the state's biggest utility is signing Wilder's check makes it even more remarkable -- or outrageous, depending on your point of view.
Is Wilder that good or TXU that bad?
And how could the TXU board approve a pay package with so much upside and such weak handcuffs?
This can't play well with TXU customers. Since Wilder arrived, TXU has raised electric rates and requested a second increase. Rising natural gas prices are the reason, but some are sure to say the company needs the money to pay the boss.
A spokeswoman said Wilder wouldn't elaborate on his pay, but others say he's earned the big bucks. After a disastrous foray into Europe, TXU's stock price was stuck in the mid-20s before Wilder agreed to come aboard.
The stock immediately jumped 12 percent and kept climbing as Wilder unveiled new initiatives. The stock is up 59 percent since he arrived in late February.
"Ask people how they feel about the $4 billion increase in market cap," James Oesterreicher, the former J.C. Penney chief who heads TXU's compensation committee, told me Tuesday. "That cost us only 1 percent."
My beef is that the pay threshold isn't that high, and there's little requirement that the gains stick. The stock topped $56 two years ago, and Wilder only had to boost the lagging stock price by a third to hit the performance standards.
If the stock hit $33 a share -- and held that level for 30 days -- he got 1 million shares.
By late May, Wilder was deep in the green. At Tuesday's close of $39.47, plus his $1 million signing bonus and $1.25 million salary, he's already above $40 million, before taxes.
Wilder has been busy. He has pushed TXU to sell assets worth billions, outsource 2,700 jobs (including some at Dallas headquarters) and form a joint venture with an investment firm.
Wilder has also shuffled the management team and reorganized the business units -- pretty standard fare for a turnaround but groundbreaking at a utility.
Oesterreicher, reached at his Texas lake house, said that Wilder has impeccable character and predicted that he would fulfill his five-year contract. He also said the executive is worth the big incentives.
"We're very fortunate at TXU to have attracted the top man in the industry," Oesterreicher said.
Wilder had been chief financial officer at Entergy Corp. in New Orleans and is the first outsider to take TXU's top job.
His arrival may be the real thing, akin to Len Roberts coming to RadioShack in 1993. Roberts reinvigorated the chain and rebuilt the brand name, and he's stayed around for more than a decade.
Or Wilder could be more like Dick Brown, brought in to rescue Electronic Data Systems in 1999. Brown was booted out in 2003, after EDS had lost two-thirds of its market value and was the target of a securities investigation.
In 2001, when EDS appeared to be flying high, Brown's pay package was valued at $55 million. Shareholders complained, but Brown joked that he had an expensive wife.
Despite the damage at EDS, Brown walked away with a $37 million severance deal. He netted about $72 million, not including stock options, in a little more than four years on the job.
No one knows how TXU will perform under Wilder, but his golden welcome ensures that he'll do just fine, regardless.
It's telling that Wilder already holds more stock than Erle Nye, the executive he replaced.
Nye, still chairman, has worked at TXU for 44 years and led the company since the mid-1990s. But the new guy has three times the number of TXU shares.
TXU was a good marriage for Nye. But the honeymoon belongs to Wilder.
--------------------------------------------------------------------------------
Mitchell Schnurman's column appears Wednesdays and Sundays. (817) 390-7821 [email protected]
--------------------------------------------------------------------------------
© 2004 Star-Telegram and wire service sources. All Rights Reserved.
http://www.dfw.com
