RICHMOND, Va. (AP) — Smithfield Foods Inc. CEO C. Larry Pope received a pay package valued at $13.2 million in fiscal 2012, about 30 percent less than the previous year, according to an Associated Press analysis of a regulatory filing.
It came at the same time the Smithfield, Va.-based pork producer saw its net income fall more than 30 percent to $361.3 million for the fiscal year that ended April 29, 2012, and its revenue increase 7 percent to $13.1 billion.
Pork producers like Smithfield are caught in a tug of war with consumers. The company needs to increase prices to offset rising commodity costs, namely the corn it uses for feed. But consumers are still extremely sensitive to price changes in the current economy. By raising prices, Smithfield risks cutting into its sales should consumers cut back or buy cheaper meats, such as chicken.
The compensation package was disclosed in a preliminary annual proxy statement filed with the Securities and Exchange Commission this week.
Pope's salary remained at $1.1 million, the value of his stock options and stock awards grew 69 percent to more than $7 million, and his performance-based bonus fell 64 percent to $4.7 million from the previous year when the company saw record earnings.
The 57-year-old, who has led the company since 2006, also received other compensation worth $332,368, which included personal use of company aircraft, a personal car allowance and a charitable contribution match of $100,000.
Smithfield Foods, whose brands include Armour, Farmland and its namesake, also announced it will hold its annual meeting Sept. 19, where shareholders will elect four members to its board and vote on a proposal to declassify the company's board.
The Associated Press formula calculates an executive's total compensation during the last fiscal year by adding salary, bonuses, perks, above-market interest the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year. The AP formula does not count changes in the present value of pension benefits. That makes the AP total slightly different in most cases from the total reported by companies to the Securities and Exchange Commission.
The value that a company assigned to an executive's stock and option awards was the present value of what the company expected the awards to be worth to the executive over time. Companies use one of several formulas to calculate that value. However, the number is just an estimate, and what an executive ultimately receives will depend on the performance of the company's stock in the years after the awards are granted. Most stock compensation programs require an executive to wait a specified amount of time to receive shares or exercise options.
Michael Felberbaum can be reached at http://www.twitter.com/MLFelberbaum