Alex Molinaroli, chairman, president and chief executive officer of Glendale-based Johnson Controls Inc., failed to comply with the company’s ethics policy when he engaged in a relationship with a consultant for the global multi-industrial firm, according to a proxy statement the company filed with the U.S. Securities and Exchange Commission on Dec. 9.
The executive committee hired an independent outside counsel to advise it on Molinaroli’s relationship with Kristin Ihle and its impact on the firm. The findings indicated no misuse of corporate assets and that the assignments and compensation awarded to Ihle’s firm, Lichter & Ihle, had not been improperly influenced by Molinaroli.
But the analysis did find Molinaroli violated the Johnson Controls ethics policy, which required he alert the audit committee in a timely manner of a situation that could be perceived to raise issues of conflict of interest, the proxy statement said.
“As a result, the compensation committee exercised discretion to reduce Mr. Molinaroli’s fiscal year 2014 Annual Incentive Performance Program payment by 20 percent,” the statement said.
In fiscal 2014, which ended Sept. 30, Molinaroli received total compensation of $19.5 million. Of that $19.5 million, about $3.9 million was attributed to the Annual Incentive Performance Plan.
The board also terminated Lichter & Ihle in September and its projects already in process will be completed by January 31, 2015.
“The board concluded, in the exercise of its business judgment, that no further action be taken in respect of this matter. It also expressed its confidence in Mr. Molinaroli’s leadership of the Company as its CEO, which it also deemed to be in the best interests of the shareholders,” the statement said.
The report also indicates Molinaroli received a 40 percent base salary increase in October 2013 associated with his promotion to president and CEO, and will be getting a significant raise over the next two years.
“Consistent with our philosophy, we plan to increase Mr. Molinaroli’s total direct compensation (consisting of base salary, annual incentives, and long-term incentives) significantly over the next two years to align his compensation with competitive market data and then normalize thereafter,” it says.
