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Lucent execs get pay hike, no bonus

In a dreadful year featuring steep losses and layoffs, company executives manage to come away with higher salaries compared with last year.

In a dreadful year featuring steep losses and layoffs, Lucent Technologies executives managed to come away with higher salaries compared with a year ago, according to a filing made Friday with the Securities and Exchange Commission.

Chairman and CEO Henry Schacht, the former CEO who returned to the post in October 2000, to turn the company around, had a salary of $1.1 million, on par with his predecessor, Richard McGinn, according to a proxy filing. In 2000, Schacht didn't have a salary.

Schact didn't receive a bonus because of the company's financial performance. Other executives also enjoyed raises from a year ago, although they didn't receive bonuses either.

Schacht, however, garnered three option grants, covering a total of 3,544,512 shares. Two options, covering one million shares each, were awarded during Lucent's annual grant program. The remaining option covered 1,544,512 shares and was granted through the special "1 for 2" stock-option grant.

The 1-for-2 program was designed to keep employees in the fold as Lucent's share price tumbled, the company said. Under the terms of the grant, Lucent employees were issued an option of one share for every two outstanding shares in their previous option program.

For the year, Lucent lost $14.2 billion, or $4.18 per share, including a total of $11.4 billion in restructuring charges. Lucent's share price tells the tale: A $100 investment in Lucent on Sept. 30, 1996 was worth $53.48 on the same date in 2001. In between, however, that $100 Lucent investment peaked as high as $570.13 in 1999.

Vice Chairman Ben Verwaayen earned $741,667 in 2001, up from $700,000 in 2000; Executive Vice President Robert C. Holder earned $708,333, up from $483,333; William O'Shea, executive vice president of corporate strategy and business development, earned $541,667, up from $491,667; and Arun Netravali, president of Bell Labs and Lucent's chief technology officer, earned $491,667, up from $430,833.

McGinn, who was ousted in October 2000, earned $183,333 in 2001, down from $1.1 million in 2000, but Lucent indicated that he will be well provided for. According to Lucent's filing, McGinn receives a pension of $870,000 a year. In 2001, McGinn provided consulting services to Lucent.

Among other items in Lucent's filing:

  • The company paid PricewaterhouseCoopers a total of $54,967,000 in 2001 for "professional services rendered."

  • Lucent's board of directors nominated Paul A. Allaire and John A. Young to be elected as directors with terms that expire in 2005. The board has also nominated Schacht for election as a director, whose term will expire in 2004. All three are current directors.

  • Evelyn Y. Davis, a Washington, D.C., shareholder of 700 Lucent shares, has proposed that the company elect directors annually. Lucent recommended that shareholders vote against Davis' proposal because the company's staggered terms "assures continuity and stability of the company's business strategies and policies."

    Lucent said it will hold its annual meeting Feb. 20 in Wilmington, Del.