According to a filing with the Securities and Exchange Commission (SEC) announcing Lucent's 2005 annual general meeting on February 16 in Wilmington, Delaware, "fiscal 2004 was a year of outstanding progress and strong accomplishments across a number of critical fundamentals."
Indeed, Lucent unveiled a profit for its full financial year (ending September 30 2004), its first in four years (see LU Finds New Revenue).
And it has been landing some impressive next-generation network deals, and looks well placed to further benefit from wireless operator consolidation (see Wireless Merger Favors Lucent, Nortel, Lucent Grabs Cingular Action, and Lucent Linked to More Cingular Booty).
Lucent's share price is healthier as a result. At a closing price of $3.78 yesterday (valuing the company at $16.7 billion), Lucent's share price is 32 percent higher than a year ago, when it stood at $2.88.
In the SEC filing, the compensation committee notes that it, and the company's board, "are proud of Lucent’s performance during 2004 and believe that the results achieved are due to the caliber and motivation of all employees and the focus provided by Lucent’s senior leaders."
All of which spells good news for Russo's bank balance. The table below shows her total compensation in 2004 came to more than $13.6 million. That includes a annual cash bonus of $2,950,000, about 2.5 times her base salary.
The size of Russo's annual bonus, states the compensation committee, is "in recognition of the company’s performance and her role in driving those outstanding results."
The table also shows that Russo isn't the only person pulling in multi-million dollar bonuses. CFO Frank D'Amelio ends 2004 more than $6 million to the good.
Table 1: Lucent FY 2004 Salaries, Bonuses & Options
| Name | Position | Salary FY 04 | Annual Bonus FY 04 | Restricted Stock Award | Stock Options Granted |
| Patricia Russo | Chairman, CEO | $1.2 million | $2.95 million | $4.8 million | 2.5 million, valued at $4.58 million |
| Frank D'Amelio | CFO | $662,500 | $4.2 million | None | 1 million, valued at $1.83 million |
| James Brewington | President, Developing Markets | $550,000 | $3.06 million | None | 650,000, valued at $1.19 million |
| Janet Davidson | President, Integrated Network Solutions (INS) | $550,000 | $3.06 million | None | 650,000, valued at $1.19 million |
| Bill O'Shea | President, Bell Labs | $700,000 | $2.86 million | None | 700,000, valued at $1.282 million |
| Source: Lucent SEC filing | |||||
The compensation committee is gushing in its praise of Russo. It says that under her leadership, "Lucent is positioned to be the industry’s thought leader in next-generation convergence, with the company growing or maintaining share during 2004 in a number of key product segments that should enable further growth and expansion at or above the overall market rate over the next few years."
It adds: "In addition, Lucent improved customer satisfaction results for the year, achieved increased employee engagement results in several key areas, and strengthened the leadership team through strategic hiring and various management development initiatives."
But there are concerns about whether Lucent can maintain its run of positive financial form, given the vendor's reliance on pension credits to bolster its bottom line (see Lucent Numbers Raise Pension Question).
Unsurprisingly, the company's pensioners aren't too happy about the size of the executive bonuses. A representative of the Lucent Retirees Organization told New Jersey newspaper The Star-Ledger that the vendor's senior executives are getting bonuses that "most retirees feel is beyond reason, based on what has happened to the retiree benefits."
The retirees have seen their health benefits cut in recent years as Lucent has looked at all ways it can cut its costs, and is seeking an investigation into the company's pension fund (see Lucent Cuts Retiree Healthcare, Lucent Retirees Get the Schacht, and Lucent Retirees Ask SEC for Help).
— Ray Le Maistre, International News Editor, Light Reading
I, for one, am totally disgusted with the level of compensation provided to Lucen Senior Management. From my perspective, these individuals have done NOTHING to dramatically improve the company's worth. The only thing I have seen from senior management is "expense reduction"...reducing headcount, offshoring (again, head count reduction),benefit reductions for retirees and passing additional cost of benefits to the workers. This is the easy road. There is no vision or direction for Lucent from senior management other than the myoptic idea of "convergence". Its another example of Lucent's inability to be visionary in terms of the market, to create and drive a "shared vision" within the company with clear, concise goals and metrics and, once again, Lucent's late entry into the current cash flow stream- i.e- follow the buck after someone else has led the way.
If management were worth their weight in salt they would be able to steer the ship into clear and profitable harbors. These folks are supposed to be the captains of this ship. Its more like they are pirates taking away the booty after keelhauling the crew.
Lastly, receiving bonuses worth, in Pat Russo's case, 13x her annual salary, is preposterous. There is probably not a rank and file person within Lucent that received a bonus worth anywhere near 13x their salary...the stockholders and employees at Lucent have been taken. There needs to be an uprising by the shareholders to prevent this kind of pilaging. If the stock had risen 1300% I might be more sympathetic to this level of bonus but it didn't so I'm not.