Merger vaults Molinaroli amongst highest-paid CEOs

Award, lump sum payments boost compensation above $45 million

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Johnson Controls chief executive officer Alex Molinaroli was already among the 200 highest-paid CEOs in the U.S., but JCI’s merger with Tyco International will likely vault him into him into the top 10 or 15, at least for a year.


Molinaroli’s total compensation from Johnson Controls International plc for fiscal 2016 was roughly $45.6 million after excluding changes in pension value. That total would have put him eighth on executive compensation data firm Equilar’s 2016 list of highest-paid CEOs, up from 91st and just ahead of Walt Disney Co. chairman and CEO Robert Iger.

Where Molinaroli will land on the 2017 version of the list remains to be seen as Equilar, which produces the list on conjunction with the New York Times, uses proxy statement’s filed by April 30 to compile its rankings and a number of companies will be filing updated information in the coming months.

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The list also is also subject to variation from year to year. In 2015, for example, $45.6 million would have ranked 11th. David Zaslav, Discovery Communications president and CEO, topped the list that year at $156 million, but was down to $32.4 million in 2016.

Molinaroli also isn’t likely to stay among the top paid CEOs. His 2016 pay was boosted by a $20 million restricted share unit award that was part of a renegotiated employment agreement as part of the merger. The merger also triggered other lump sum payments from Johnson Controls deferred payment plans.

The total figure also does not include Molinaroli’s salary earned for 11 months prior to the merger at the legacy Johnson Controls Inc. company.

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The merger agreement calls for Molinaroli to move from CEO to executive chairman 18 months after the deal is complete. The move is part of a succession plan that will promote former Tyco CEO George Oliver, currently JCI’s chief operating officer, to CEO of Johnson Controls.

Under his previous employment agreement, moving to executive chairman would likely have given Molinaroli “good reason” to collect a cash severance payment valued at $41 million at the end of the company’s most recent fiscal year, according to SEC filings.

Instead, Molinaroli won’t receive any severance payment in connection with the merger. The company’s filings note legacy Johnson Controls compensation committee felt the $20 million grant was “a shareholder friendly vehicle to facilitate the consummation of the merger and the success of the integration.”

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Molinaroli’s total compensation from the new combined company included a $135,167 base salary (covering roughly one month after the merger closed, about $1,622,000 million annually), $27 million in stock awards, about $5.5 million in non-equity compensation, and $13.1 million in lump sum payments from deferred compensation plans triggered by the merger.

In contrast, Molinaroli had a base salary of $1,575,000 in 2015 and was awarded $10.6 million in stock and options, $4.6 million in non-equity incentives and $526,059 for all other compensation.

The other named executive officer of the new company also saw a boost to their total compensation. Oliver’s total increased from $8.9 million to $9.6 million. Like Molinaroli, the merger would have triggered a change of control payment for Oliver, but he renegotiated his employment agreement. His base salary will increase from around $1 million to $1.25 million and other incentives have been set. Oliver would have been in-line for a roughly $15 million payout because of the merger.

Other executives who made the move from Johnson Controls to the new combined company included Brian Stief, now executive vice president and chief financial officer, and William Jackson, now president for global products, building technologies and solutions. Stief’s compensation increased from $4.3 million to $5.9 million, plus 11 months of salary from JCI. Without his JCI salary included, Jackson decreased slightly from $4.7 million to $4.6.

Both men benefited from restricted stock awards as part of the merger and lump sum payments from deferred compensation.

Bruce McDonald, now chairman and CEO of Adient, saw his total compensation increase from $9 million to $12.6 million, excluding pension changes and his legacy JCI salary. Adient, formerly the automotive seating business at Johnson Controls, was spun off from the new combined company at the end of October.


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