Vote On Bozo Bonus Next Week.

A week tomorrow, at ST’s AGM next Thursday (May 30th) in Amsterdam,  resolutions are planned to give CEO Carlo Bozotti up to 100,00 shares and a  ’special bonus’ to get him to ‘increase his efforts for the success of us.’

This is not before time.

 

According to IC Insights, ST’s revenues dropped 21% between Q1 this year and Q1 last year in a flat market, while ST’s share price has halved in the last twelve months and the company’s revenue run-rate is back to where it was seven years ago when Bozotti took over as CEO.

 

So you can see why the company wants to get the CEO to increase his efforts.

 

On the other hand, you might wonder if the company would have done better if he’d stayed in bed during FY 2011.

 

Two of the seven resolutions to be voted on by shareholders at next Thursday’s AGM  relate to extra remuneration for the CEO.

 

Resolution 5 is: ‘To approve the delegation to our Supervisory Board of the power to grant Mr. C. Bozotti a special annual bonus of up to 60% of his base salary, based on specific predetermined and quantifiable criteria as determined by our Supervisory Board upon the recommendation of its Compensation Committee (the ‘Special Bonus’), with the objective of creating long-term value for our shareholders. This would be part of a revision of the structure of the short term incentive from a maximum of 210% of his base salary payable in cash into an annual bonus of up to 150% of his base salary payable in cash based on budget and short term criteria and the mentioned special bonus of 60% of base salary.’

 

Resolution 5 goes on to say: ‘The Special Bonus is intended to provide an incentive to our President and CEO to increase his efforts for the success of us by offering him an opportunity to obtain or increase his proprietary interest in us through the vesting of the common shares under the Special Bonus to be granted to him, provided the applicable predetermined and quantifiable criteria as determined by our Supervisory Board upon the recommendation of its Compensation Committee are met.’

 

Resolution 6 is: ‘ To approve the delegation to our Supervisory Board of the power to grant Mr. C. Bozotti up to a maximum number of 100,000 common shares, in the form of Unvested Stock Awards, for services to be rendered in 2012 as our President and CEO, whereby the vesting of such Unvested Stock Awards will be tied to company performance, according to predetermined and quantifiable criteria to be fixed by our Supervisory Board upon the recommendation of its Compensation Committee, with the objective of creating long-term value for our shareholders.’

 

Resolution 6 goes on to say: ‘The Unvested Stock Awards are intended to provide an incentive to our President and CEO to increase his efforts for the success of us by offering him an opportunity to obtain or increase his proprietary interest in us through the vesting of the up to 100,000 Unvested Stock Awards to be granted to him, provided the applicable predetermined and quantifiable criteria as determined by our Supervisory Board upon the recommendation of its Compensation Committee are met.’

 

 According to Bloomberg Businessweek, Bozotti got total cash remuneration for 2011 of  $3.9 million made up of $1 million in salary, $1.5 million in bonus and $1.4 million in ‘other compensation’.

 

ST, of course, is largely owned by three big institutional shareholders; the French state-owned investment fund Fonds Strategique d’Investissement (FSI) which has an  11% stake in ST; the Italian state-owned investment fund Cassa Depositi & Prestiti (CDP) which has a 14% stake in ST and the French state-owned nuclear agency Commissariat a l’Energie Atomique (CEA) which has an 11% stake, so it is a racing certainty that the deal will be stitched up before Thursday’s vote.

 

However, it will be interesting to see if there’s any stomach for a Shareholder Spring uprising among the independent shareholders.

 

And, after the voting’s all over, it will be interesting to watch the CEO increasing his efforts.

 

Maybe he’ll devise a growth strategy.

Tags: base salary, bonu, delegation, ic insights, share price

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18 Comments

  1. David Manners
    June 09, 2012 11:52

    Yes, Mark, I remember the transition period when Pistorio and Bozo would go around together and whenever Bozo said something he would glance at Pistorio to see if it was approved. I thought then this was a very uncofident guy. Very unsure of himself. I wonder why he was chosen

  2. Mark
    June 09, 2012 05:16

    I remember full well Bozo’s introduction speech and all of our engineering dept said, “He has no vision. He has the temperament of a bean counter with little expertise.” We were right! Moving Carrollton to China has resulted in late deliveries and massive quality issues. Leadership? For this he gets rewarded??? That’s an indication of a inept board that put him there in first place.

  3. David Manners
    June 02, 2012 19:55

    Wow Anon, interesting. Thanks. The spiritual heirs to Machiavelli obviously live on in Agrate

  4. Anon
    June 02, 2012 09:44

    I would have liked to have voted but by a strange coinsidance my notification and voting forms arrived two days after the AGM. The company must have made sure any employees did not get to have their say on their impressive CEO’s performance bonus. The voting results are now in and as expected the bonus was approved but with a 47% turn out (I wonder how many other voting forms were delayed) 75% approved compared to over 99% for all other items on the agenda (source: http://www.st.com Investor Relations)

  5. Anonymous
    May 29, 2012 20:28

    As I stated in a previous post, I left ST after 10 great years in 1999 in the knowledge that Carlo would be taking over from PP. Lovely guy but absolutely useless. Only surprise is that it’s taken this long for him to push the company down the toilet.

  6. Rogue no. 1
    May 29, 2012 12:52

    More salary, more bonus and more compensation has a limit to incentivise. At this point less salary, less bonus, and less compensation will have more impact to incentivise. When will boards realise.

  7. David Manners
    May 25, 2012 15:39

    I think under the company’s Articles of Association, and maybe under company law as well, executive compensation has to be approved by the shareholders, frederique, and next Thiusday’s Annual General Meeting is when they’ll approve/disapprove of the 2011 remuneration package.

  8. frederique
    May 25, 2012 14:43

    i wonder why we are asked to vote on this subject this time! what happened?

  9. David Manners
    May 24, 2012 07:53

    I don’t know [Anonymous]

  10. Anonymous
    May 24, 2012 05:53

    Any idea how much Delfassy got paid off? Or what they are giving to Lamouche?

  11. David Manners
    May 23, 2012 18:14

    Pasquale’s total remuneration for 2004, his last full year of being CEO, was $1.38m, MGP-1. Made up of salary $770,000, bonus $423,500 and ‘non-cash beneftis’ of $188,000

  12. mgp-1
    May 23, 2012 17:03

    I wonder what Pasquale’s salary was? I doubt he would have needed extra bonuses just for doing the job he committed to do by accepting the CEO’s position. In fact quite the opposite, he took a massive salary cut when he left Motorola to join SGS (ST’s forerunner) because he was so completely committed to improving the company … which of course he did. Under his leadership ST grew twice as fast as Motorola’s growth rate and Motorola was broken up and fell from being one of the most revered firms in the business … maybe next week your poll should be “Should Bozotti get his extra bonus and shares or not”?

  13. David Manners
    May 23, 2012 16:16

    Yes, Bitter, the only thing that goes up at STM is Bozo’s remuneration. In 2005, the year he took over from Pistorio, ST’s revenues were $8.9bn. This year ST’s revenues are forecast to be $7bn. In 2005, ST’s market cap was $4.5bn; today it’s $4.3bn. And instead of the sack, Bozo gets a bonus. No wonder the Italian economy is such a mess.

  14. David Manners
    May 23, 2012 16:11

    You’re right Terry, the resolution should read that he gets his 100,000 shares and bonus if he stays in bed throughout FY 2012

  15. Bitter
    May 23, 2012 16:07

    “Maybe he’ll devise a growth strategy.”
    Yep he sure will, and that would most likely be a strategy to grow the rate of his own personal profiteering.

  16. Terry
    May 23, 2012 16:04

    Trying to compensate for a lack of skill by increasing one’s efforts just results in things going wrong faster.

  17. David Manners
    May 23, 2012 15:35

    In the Club Med countries, mgp-1, I understand that ‘increasing his efforts’ means that he returns to his office after lunch

  18. mgp-1
    May 23, 2012 15:31

    David … sorry for being stupid but am I missing something here? “The board is to vote on giving additional shares and a ‘special bonus’ to get their CEO to ‘increase his efforts for the success of us’.” Isn’t that what his salary is for? One also wonders what exactly is meant by ‘increase his efforts’?

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