Poring over as many proxies as we have been lately, we often come across familiar patterns, really language, that reminds us of something that we’ve read before. Part of that is undoubtedly due to the fact that the same handful of law firms, accounting firms and compensation consultants write most of what passes as proxy disclosure these days. But part of that is probably also due to an interest in replicating something that works.
We thought about that when we came across the proxy that DuPont Fabros (DFT) filed last Thursday afternoon, once the market was closed for the holiday weekend. That’s because CEO Hossein Fatah apparently decided over the last year to lower his salary to a mere $1, a technique that’s far more popular in Silicon Valley, than in New York City, where DuPont Fabros is based. As this Wired story points out, the list of Valley execs who agreed to just a buck impressively included the late Steve Jobs, as well as Jerry Yang, Meg Whitman, Sergey Brin, and most recently, Mark Zuckerberg.
But as it turns out, cutting Fatah’s salary to a buck actually represents a pretty nice increase in the CEO’s pay. That’s because as footnote #3 helpfully notes, “Pursuant to Mr. Fateh’s employment agreement, his annual base salary is $1.00, and he is provided with an annual aircraft allowance toward the use of a company-chartered aircraft for his personal travel.”
There’s also footnote #8, which states that “For 2011, consists of $464,000 that we paid to an aircraft charter company in connection with our procurement of an aircraft for Mr. Fateh’s personal travel, pursuant to the terms of his employment agreement.” The second part of that footnote adds that “Mr. Fateh received payments from a charter company related to such company’s leasing of Mr. Fateh’s aircraft to us in connection with his personal travel.”
Deeper into the proxy, in the related party transaction section, there’s some more additional disclosure under the heading “aircraft arrangements”. Here’s a snip:
So Fateh’s single dollar of salary is actually quite a bit more. Indeed, when you look at the “all other comp” in the summary compensation table for the company, you see that Fatah really racked up the frequent flyer miles in 2011. In 2010, he spent $207,695 on personal jet usage. (We’ll also note that the numbers for 2011 don’t quite add up, between what Fatah spent and what the charter company received).
We understand Fabros wanting to channel Steve Jobs here with the $1 salary. But as you can see from DuPont Fabros’ performance over the past year, it would be hard to confuse the company with Apple.
Image source: Gulfstream via Shutterstock
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