Adobe CEO's salary dropped 10% (but he got $10.5 million in stock options)

[Bush_Eats_Beef]

Adobe CEO pay down, but he realizes $10.56M in options

http://www.bizjournals.com/sanjose/stories/2006/02/20/daily46.html?f=et79&hbx=e_du

Adobe Systems Inc. said on Friday that Chief Executive Officer Bruce R. Chizen's pay, minus options, dropped about 10 percent, but he realized $10.56 million by exercising options in 2005. Chizen's package of base salary, bonus and other compensation for the fiscal year ended Nov. 30 dropped from $2.2 million in 2004 to $1.9 million in 2005. The number of options he was granted also dropped by more than half, from 900,000 in 2004 to $425,000 in 2005.

In its annual proxy statement filed with the Securities and Exchange Commission, San Jose-based Adobe (NASDAQ:ADBE) estimated the 2005 options will be worth $5.6 million if the company's stock rises an average of 5 percent a year, or $13.1 million if it rises by 10 percent a year.

Adobe's 2005 net income of $602,839 was about 34 percent higher than in 2004. Its revenue grew about 18 percent to $1.97 billion.

It's stock rose about 18 percent in 2005, closing at $36.96 a share on Dec. 30. It closed trading on Thursday at $38.77.

[corporate_mike]

1. nice job if you can get it

[PA Democrat]

2. Isn't it advantageous from a tax standpoint

to receive stock options rather than salary?

[LoZoccolo]

3. Not necessarily.

If you do a cashless exercise, where you exercise the options and sell the shares the same day, the profit is taxed as regular income.

If you don't sell the same day and hold them long enough you only pay capital gains, which is less, but you assume the risk that the shares might actually drop in that time.

It's actually seems somewhat fairer to give a CEO stock options because they pay off if you can get the stock price to rise by increasing the value of the company.