HARRISBURG, Pa. (AP) — Neither the new chief executive of The Hershey Co. nor the man he replaced received a bonus in 2007 after a disappointing year in which the nation's largest candy maker struggled to sell its chocolate and cope with rising costs.
David J. West received compensation valued at $4.4 million from Hershey after taking over as president in October and CEO in December from Richard H. Lenny, who abruptly announced his decision to leave.
Lenny, who also served as chairman until Jan. 1, received compensation valued at nearly $6.2 million in 2007, down from the $6.6 million he received in 2006.
With disappointing results in 2007, a newly installed board eliminated salary increases, payments from the annual incentive program and performance stock unit payments for its executives, unless a special condition applied.
Earnings have dropped as the cost of energy and dairy soared and the company spent heavily to close plants in North America and expand in growing regions of the world. Sluggish sales and rising competition also forced Hershey to restore the marketing budget it had slashed in previous years.
For all of 2007, Hershey's sales slowed to $4.95 billion — up only $2.5 million — while its earnings were more than halved — down to $214.2 million, or 93 cents per share —compared with $559.1 million, or $2.34, in 2006. The value of company shares closed the year 20 percent lower than when it began.
A Citigroup analyst called 2007 a ''disaster'' for Hershey. In the fall, the company's largest shareholder, the Hershey Trust Co., made plain its unhappiness over the company's yearlong slump, and forced out much of the board.
According to Hershey's annual proxy filing Monday with the Securities and Exchange Commission, West, 44, received $737,165 in salary.
He also got $73,295 for perks that included use of the company's aircraft, contributions to retirement plans and financial counseling.
West also received stock and option awards valued at $3.6 million when they were granted last year.
Lenny, 56, received $1.1 million in salary — the same as in 2006 — and $309,825 in perks that included use of the company's aircraft, contributions to retirement plans and $243,269 in payment for his unused vacation days. Lenny also received stock and option awards valued at $4.7 million when they were granted in 2007.
Neither West nor Lenny received a performance award, which is based on fulfilling the company's business plan and goals, such as annual revenue growth of at least 3 percent. Lenny's maximum performance award had been $3 million; West's had been 100 percent of his salary, according to the proxy.
The Associated Press calculations of total pay include executives' salary, bonus, incentives, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year.
The calculations don't include changes in the present value of the pension benefits and they sometimes differ from the totals companies list in the summary compensation table of proxy statements filed with the Securities and Exchange Commission.
Apart from his compensation, Lenny also realized just over $6 million from 145,000 stock awards that vested in 2007.
