Altria Group CEO Martin J. Barrington's pay package rises about 69% to nearly US$17.5M for fiscal 2013, according to AP analysis of regulatory filing

Nevin Barich

RICHMOND, Virginia , April 9, 2014 (Associated Press) – Marlboro maker Altria Group Inc. CEO Martin J. Barrington's pay package jumped about 69 percent to nearly $17.5 million for fiscal 2013, according to an Associated Press analysis of a regulatory filing.

The pay package came in a year when the Richmond, Va.-based owner of the nation's biggest cigarette maker, Philip Morris USA, saw its net income grow 8.5 percent to $4.5 billion. Revenue excluding excise taxes rose slightly to $17.7 billion. Cigarette volumes fell about 4 percent to 129.3 billion cigarettes and it had 50.6 percent share of the U.S. retail market. Smokeless tobacco volumes grew about 3 percent and it claimed 55 percent of the U.S. retail market.

The compensation deal was disclosed in an annual proxy filing with the Securities and Exchange Commission.

Most of the increase in Barrington's compensation was the payout of a long-term performance-based bonus of $8 million that ran from 2011 to 2013. He received a salary of $1.19 million and an additional performance-based bonus of $2.5 million and the value of his stock awards was $5.4 million.

The 60-year-old Barrington, who took over as chairman and CEO in May 2012, also received other compensation worth $297,555, including money the company put into a defined-contribution retirement plan, as well as the cost of the personal use of the company's aircraft and personal security.

In 2012, Barrington's compensation was valued at $10.3 million.

Altria also announced that it will hold its annual meeting on May 14 in Richmond, where shareholders will elect 11 directors to its board and vote on two shareholder proposals, including one requiring the company to develop materials informing poor and less formally educated tobacco users about the health consequences of smoking.

In addition to Philip Morris USA, Altria owns U.S. Smokeless Tobacco Co., maker of brands such as Copenhagen and Skoal, and Black & Mild cigar maker John Middleton Co. The company also owns a wine business and holds a voting stake in brewer SABMiller.

The Associated Press formula calculates an executive's total compensation during the last fiscal year by adding salary, bonuses, perks, above-market interest that 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 for 2013 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.

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