Philip Morris

Proxy issued:                     3/26/2015

Annual meeting:              5/6/2015

CEO André Calantzopoulos received total compensation of over $14 million in 2014, an increase from the $10 million of 2013. A significant component of this increase – as it has been at many companies this year – was an increase in in the value of Calantzopoulos’s pension value.

Of greater concern, however, is the increase in non-equity incentive pay to $2.9 million this year, despite the one and three year decline in TSR, a level the company characterizes as “woeful”.  This bonus was “earned” because the goals were lowered from 2013 to 2014.

The company contends that such lowering of the bar was appropriate given external factors, with repeated references to currency issues and the troubles caused by the “strength of the US dollar.” Apparently, only 10% of company revenues are “denominated in dollars,” suggesting anti-smoking campaigns have had some considerable success. In any case,  the performance measures chart showing target range and actual results includes footnotes that show that currency was excluded from calculations on a number of factors.

A salary is what you get in good times and bad. A bonus is to be earned by performance. Lowering the goalposts suggests an assumption that at Philip Morris the bonus has become an expected factor of compensation that must be delivered, even when performance is down.

Both Glass Lewis and ISS have recommended against this say on pay proposal, according to a filing by the company.