Despite Owens Corning's Oct. 5 bankruptcy filing and a 96-percent plunge in the company stock last year, Chief Executive Glen Hiner received a bonus of $2 million.
And he wasn't alone.
The top five executives of the Toledo building products manufacturer received bonuses of nearly $4.3 million in 2000, according to an annual financial report filed by the firm yesterday with the U.S. Securities & Exchange Commission.
The bonuses were down an average of 30 percent from 1999, but none was under $400,000 for the year ending Dec. 31.
The checks were on top of salary increases ranging from 3 percent for Mr. Hiner to 31 percent for the firm's chief financial officer.
Stockholders, whose holdings peaked at more than $21 a share last year only to plummet to 75 cents after the bankruptcy, have no easy venue in which to question the compensation. The Fortune 500 company, given its Chapter 11 bankruptcy status, is not holding an annual shareholders meeting next month, as is customary.
A company spokesman couldn't be reached for comment on the compensation.
But an expert on executive salaries said the bonuses and salary increases are not unusual.
Officials of bankrupt companies typically are paid well enough so they will continue to run the business and help the restructuring instead of going elsewhere, said compensation expert Ali Fatemi.
“It all goes back to one putting himself or herself in the shoes of those executives: What would you do with your talents and capabilities?” added Mr. Fatemi, chair of the finance department for the Kellstadt Graduate School of Business at DePaul University in Chicago.
At OC, salaries and bonuses of top officials are set by a compensation committee of the board of directors. Factors considered in the past included meeting performance goals for business units and the firm's share price.
OC lost $478 million on sales of $4.9 billion last year. Much of the loss was attributed to asbestos liability expenses. But profits also were hurt by a slowdown in housing construction and rising oil prices that boosted raw material costs.
OC spokesmen have said these executives aren't responsible for the asbestos liability problems that drove the firm into bankruptcy. The company, best known for its shingles and insulation and its Pink Panther mascot, must deal with billions of dollars in liability claims filed by people exposed to asbestos insulation it made until 1972.
The chief executive's bonus was on top of a $1 million salary, up slightly from $971,000 in 1999. His bonus that year was $3 million.
The second-highest bonus went to Domenico Cecere, former chief operating officer, who left the company this year. He received $715,000, down from $995,000 in 1999. His salary was $498,000, up from $450,000 in 1999.
Legal chief Maura Abeln Smith, who is in charge of the firm's restructuring, got a bonus of $705,000, down from $950,000 the year before. Her salary was $498,000, compared with $450,000 in 1999.
David Brown, executive vice president and chief operating officer, received $344,000 in salary and a bonus of $425,000. He had a salary of $300,000 and a bonus of $772,000 last year.
Finance Chief Michael Thaman was paid $363,000 and a bonus of $405,000. That was a change from $275,000 and $497,000 in 1999.
Executives received no stock options in 2000, apparently as a result of uncertainty about the value of the stock, which could be voided when the firm emerges from bankruptcy and, almost certainly, will be diluted. The stock closed down 29 cents at $2.91 a share yesterday on the New York Stock Exchange.
The executives will be eligible for added bonuses if the firm gets out of bankruptcy before 2005.