According to Ciena Corp.'s proxy filing today, compensation declined significantly for its top four executives, including CEO Gary B. Smith (above), in 2010.
The Linthicum-based company, which makes networking gear that's used by major telecommunications companies around the world, last year bought Nortel's Metro Ethernet Networks division for $769 million. The acquisition of the Nortel division, which is based in Canada, doubled Ciena's size. Ciena's stock price roughly doubled last year.
In all four executives' cases, their salaries remained the same but their stock awards contributed to most of the drop in their compensation.
* Smith earnings dropped almost in half to $2.2 million in 2010 -- compared with $4.1 million in 2009. Smith's salary remained the same at $650,000, but his stock awards dropped from $3.5 million to $1.5 million.
* Chief financial officer James E. Moylan Jr. had a total compensation of $1.2 million compared to $1.8 million in 2009.
* Compensation for Stephen B. Alexander, chief technical officer, nearly dropped in half, declined to $1 million for $2.1 million.
* Michael G. Aquino, senior vice president of global field operations, declined to $1.1 million from $1.3 million.
A fifth executive, Philippe Morin, senior VP of global products, apparently was hired last year and earned a salary of $1.8 million.
UPDATE: I asked Ciena for an explanation on the compensation changes and specifically, I asked about the changes in stock awards. Spokeswoman Nicole Anderson gave me some good context in an email:
"...[E]xecutive compensation is determined by the independent directors on the Compensation Committee of Ciena's Board of Directors, and a number of factors are considered in during the process. I’d also remind you that 2010 compensations decisions were made in the fall of 2009, so under a different set of market circumstances, etc.
On your first question:
• There was no increase in base salaries from 2009 to 2010.
• Executives were not eligible for incentive cash for half of fiscal 2010, as the company placed more scrutiny on cash expenses given uncertain market dynamics.
o They were eligible in the second half, but no payments were made under the plan.
On your second question:
• 2009 was unique in nature with respect to stock awards as the Compensation Committee was focused on improving the retention profile given the lack of unvested equity at the time.
Also, the Compensation Committee was concerned with the low share count under the plan at the time."
[Photo by David Hobby, Baltimore Sun]