DETROIT - Former ArvinMeritor Inc. President William Hunt received compensation of $12.6 million last year, which made him one of the top paid auto executives, despite his early departure from the supplier.
Hunt, who settled for the No. 2 spot at ArvinMeritor Inc. after the July 2000 merger of Arvin Industries Inc. and Meritor Inc., outearned his former boss ArvinMeritor Chairman Larry Yost in 2001.
Yost, who was not paid a bonus last year and did not exercise any stock options, received $3.4 million in salary and other compensation. ArvinMeritor headquarters is in Troy, Mich.
Hunt reaped the windfall because his employment contract, negotiated before the merger, called for a large cash severance and other benefits should he be fired or quit.
"He (Hunt) had a contract, and when he left, the company honored it," says Lin Cummins, ArvinMeritor senior vice president of communications.
Hunt, 57, a graduate of Indiana University law school and the former labor relations lawyer for TRW Automotive, declined to comment, citing the terms of his employment contract.
Few auto executives could match Hunt's pay last year. Even CEO Richard E. Dauch of American Axle & Manufacturing Holdings Inc., whose stock price on April 24 was up 250 percent from a year earlier, received compensation of only $6.1 million last year.
Hunt also did much better than the $7.4 million median compensation paid to CEOs in the motor vehicles and parts sector during 2001, according to a study by consultants Pearl Meyer & Partners of New York.
The automotive sector ranked 13th out of 15 sectors in the Pearl Meyer study. That sector's median pay was well below the median $33 million paid to chief executives in the telecommunications sector last year.
Compensation specialist John Hauschulz said the decline in pay and bonuses for auto parts executives during 2001 followed lower profits for the automakers. "When DaimlerChrysler, GM and Ford get squeezed, they squeeze the suppliers," says Hauschulz, a consultant in the Southfield, Mich., office of Towers Perrin Corp., an international human resources consulting firm.
Hunt left ArvinMeritor on Aug. 18, 2001 - well before his contract as vice chairman and president was to end in October 2003. His tenure was marked by difficulties, many caused by the sagging economy and dramatic drop in Class 8 truck sales.
Carol Levenson, of the credit analysis firm Gimme Credit Publications Inc. of New York, said ArvinMeritor "was a classic case of a cyclical company coping with a merger and high leverage at the most inopportune time."
Hunt's 2001 pay included a salary of $736,923 and a bonus of $890,300. His big gain, fully $11 million, came from other compensation called for in his employment package. It included stock options that he exercised.
Since Hunt's departure, ArvinMeritor's fortunes as well as its stock price have risen. David Leiker, an analyst at Robert W. Baird & Co. Inc., in Milwaukee, said Yost's cost and debt-reduction efforts were behind the performance.
The company's share price on April 24 was $31.67, up 113 percent over the date at a year earlier.