By Paul Hodgson – CCO and Senior Research Associate
Well, Michael Johnson of Herbalife may have been the highest paid CEO in 2011 at the time of our Preliminary CEO Pay Survey, but it didn’t last long. Not when the likes of J.J. Mulva, CEO of ConocoPhillips, is sitting on around three and a half million stock options, thank you very much.
Johnson’s $89.4 million starts to look a little paltry alongside Mulva’s $154.7 million. As you can see from the proxy statement, Mulva exercised 3,478,000 options in 2011 (they were all due to expire in October and November of that year) for a profit of $140,853,640. The 478,000 options were awarded as part of the standard annual option grant practice, but the three million were special grants awarded in connection with the merger between Phillips, where Mulva worked, and Conoco.
Now, admittedly, the company’s stock price has gone from about $20 around the time the options were granted to around $60 when he exercised them, but which oil company wouldn’t be able to say the same? Isn’t it how much better ConocoPhillips did than all the rest what really matters? And like I said in CEO Pay and the Sleeping Time Bomb of Stock Option Grants when you get THAT many stock options, it’s almost impossible not to make a very large amount of money out of them, especially if you just sit on them for 10 years.
Expect more “You’re joking, surely” moments as this proxy season progresses.