NEW YORK (AP) -- Dow Chemical Co. said its chairman and CEO has repaid almost $720,000 in personal expenses that the company mistakenly paid for over four years, an error discovered after Dow audited its internal customer events department.
The audit "found shortcomings in record-keeping and processing," Dow said in a filing with the Securities and Exchange Commission on Friday. Andrew Liveris "promptly reimbursed" Dow $719,923, and the company said it has revised and strengthened its policies to ensure that its process for reimbursement requests moves faster.
Dow's customer events department organizes and runs marketing and business development meetings around the world, including arranging meals and accommodations and procuring tickets to major global sporting and entertainment events. These meetings and events are hosted by Dow executives and other employees. The Midland, Mich.-based company did not detail the expenses that the audit found it incorrectly paid on Liveris's behalf, but said they were not primarily business-related or should have been billed to Liveris as personal items. The expenses were incurred between 2007 and 2010.
Liveris received $17.7 million in compensation in 2010, up 13 percent from his 2009 package, according to Associated Press calculations of data filed with regulators Friday. The increase mainly came from a rise in the value of stock options that he was granted, and receipt of a performance-based bonus for the year, compared with no bonus for 2009. Dow's net income rose nearly six-fold in 2010 to $1.97 billion, or $1.72 per share, as revenue climbed about 20 percent to $53.67 billion.
The Associated Press formula calculates an executive's total compensation during the last fiscal year by adding salary, bonuses, perks, above-market interest the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year. The AP formula does not count changes in the present value of pension benefits. That makes the AP total slightly different in most cases from the total reported by companies to the Securities and Exchange Commission.
The value that a company assigned to an executive's stock and option awards for 2010 was the present value of what the company expected the awards to be worth to the executive over time. Companies use one of several formulas to calculate that value. However, the number is just an estimate, and what an executive ultimately receives will depend on the performance of the company's stock in the years after the awards are granted. Most stock compensation programs require an executive to wait a specified amount of time to receive shares or exercise options.