Reynolds' Susan Ivey made $16.8 million in 2010

By Michael Felberbaum

Associated Press

Published: Friday, March 4 2011 7:52 a.m. MST

RICHMOND, Va. — Reynolds American Inc., the nation's second-biggest tobacco company, awarded its outgoing CEO Susan M. Ivey a compensation package valued at $16.8 million in fiscal 2010, up 4 percent from fiscal 2009, according to an Associated Press analysis of a regulatory filing.

The pay package came in a year when the maker of Camel and Pall Mall cigarettes, and Kodiak and Grizzly smokeless tobacco saw its net income grow more than 15 percent and its revenue excluding excise taxes increase 1.6 percent. The company, based in Winston-Salem, N.C., raised prices but sold 5.1 percent fewer cigarettes.

The compensation deal was disclosed in the company's preliminary annual proxy filing with the Securities and Exchange Commission late Thursday. Reynolds American also said it plans ask shareholders to allow it to double its number of authorized common shares.

Ivey's base salary grew about 3 percent to $1.31 million. She also received about $7.8 million for a performance-based bonus and cash settlement of a long-term incentive plan. Ivey, who retired in February, also received stock and options valued at about $7.5 million on the date granted.

Ivey, who had headed the company since January 2004, also was given other compensation worth $249,595, which included a $79,000 payment given in place of the company's old executive perks program, as well as the value of personal flights on company-owned planes.

Daniel M. Delen, who took over as CEO, received a pay package valued at $6.15 million for his previous job as CEO and chairman of subsidiary R.J. Reynolds Tobacco Co. That was an increase of about 4 percent over 2009. The company has said Delen's base salary would increase to $1 million when he assumed the new role. It was $870,700 in 2010.

Reynolds American also said it will hold its annual shareholders meeting May 6 at its headquarters.

The Associated Press formula for calculating executive compensation is designed to isolate the value that the company's board placed on the executive's total compensation package during the last fiscal year. It includes salary, bonus, performance-related bonuses, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year.

The calculations don't include changes in the present value of pension benefits, making the AP total different in some cases than the total reported by companies to the SEC.

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