By Robert MacMillan,  Reuters - Feb. 15 2006

 

NEW YORK, Feb 15 (Reuters) - Shareholders of Lucent Technologies Inc. (LU.N: Quote, Profile, Research) on Wednesday voted to restrict the pay of senior executives by tying 75 percent of their stock grants to the communications equipment maker's performance.

The shareholder votes are preliminary, and require board approval, said Lucent spokesman Bill Price. The final results will be released in a filing with the U.S. Securities and Exchange Commission that Lucent plans to submit in April or May.

The votes reflect investor dissatisfaction with the compensation of Lucent's senior management as the company struggles to grow amid a tough environment for spending on traditional telecommunications equipment.

It also comes as the SEC is moving to crack down on the disclosure of executive pay. The investor protection agency proposed last month that companies give more information on top officers' pay and perks.

"With the media coverage that's been given over the past year to shareowner issues and shareowner displeasure with corporations and executive pay, I would hope that the Lucent board would be good enough to read the tea leaves," said Ed Beltram, spokesman for the Lucent Retirees Organization.

Lucent Chief Executive Patricia Russo received about $6 million in cash in 2005, compared with $4.15 million in 2004. Her base pay was $1.2 million, which was held steady from the year before.

She also received a 2005 cash bonus of $1.95 million, down from $2.95 million in 2004, and an additional $2.85 million tied to a long-term incentive plan that pays out every three years, Price said.

Russo also received restricted stock and options valued at $8.7 million in 2005, compared with about $9.4 million in 2004. The options are currently valued below their exercise price, making them essentially worthless, Price said.

Lucent's stock, meanwhile, has fallen more than 50 percent since Russo became CEO in early 2002. The company also reported lower-than-expected revenue of $2.05 billion in its most recent quarter, a 12 percent drop from the same quarter a year before.

Shareholders also voted in favor of excluding credits from Lucent's pension program as a factor in determining how well executives performed.

Lucent already does not include pension credits as a factor in determining executive compensation, Price said. Credits generated by the company's pension program are reported as non-cash income.

A shareholder proposal to request that future executive cash bonuses or incentive compensation be contingent on the restoration of cut retiree benefits failed.

An SEC spokesman declined to comment on the Lucent vote.

Shareholders also voted to authorize the company to initiate a 1-for-5, 1-for-10 or 1-for-15 reverse stock split.

Lucent shares rose 2 cents, or 0.7 percent, to $2.85 in late-afternoon trade on the New York Stock Exchange.

(With additional reporting by Kevin Drawbaugh in Washington)