Conseco execs get stock bonus

CARMEL, Ind. -- Top Conseco Inc. executives who helped the insurer emerge from the third-largest bankruptcy in U.S. history were rewarded with nearly $34 million in compensation last year.\nHowever, those executives won't realize much of their gains for years, because about two-thirds of the compensation is in the form of restricted stock awards that vest over time.\nPapers filed last week with the Securities and Exchange Commission show nearly half of last year's compensation -- $16.7 million -- went to William J. Shea, who took over as Conseco's chief executive following the company's Chapter 11 filing in December 2002.\nShea received $13.6 million in restricted stock on top of $1 million in base salary and $2 million in bonuses, the company's annual report stated. Shea also got $68,739 in other compensation.\nMost of the compensation for Shea and other top executives came in the form of stock awards for guiding Conseco through Chapter 11 reorganization.\nConseco entered bankruptcy protection in December 2002 and emerged last September. This month, the Carmel-based company reported its first profitable quarter in two years.\n"These performance incentives were designed to retain each executive through the difficult emergence period and reward him for completing the reorganization," Conseco spokesman Jim Rosensteele told The Indianapolis Star for a story published Friday. "They also reward each executive for continuing to drive long-term performance for shareholders after emergence."\nThe compensation paid to top officers was more than twice the $14.8 million Conseco's key executives made in 2002 as the company slid toward bankruptcy. The contracts for Shea and the other two top-paid officers were negotiated last year while the company was in federal bankruptcy court, Rosensteele said.\nChief Financial Officer Eugene M. Bullis made $8.6 million and 40/86 Advisors Inc. President Eric R. Johnson made $3.7 million. The bulk of the compensation was in restricted stock and bonuses.\nThe restricted stock awards increase in value over time through vesting. For example, an owner might only be able to sell one-third of stock during the first year of ownership, then two-thirds by the second year and all of it once it fully vests in the third year.\nCompanies emerging from bankruptcy typically work out compensation to reward executives who stay on, an expert said.\n"It's a pretty high-risk job for an executive to take on," said Paul Hodgson, senior research associate at The Corporate Library, a Maine-based independent investment research firm.\n"In most cases, companies that make such payments coming out of bankruptcies are focused on retaining their executives for the critical period."\nCompensation to other top executives was as follows: Max Bublitz, senior vice president of investments, $2.0 million; John Kline, senior vice president and chief accounting officer, $1.5 million; Edward Berube, Bankers Life (Conseco subsidiary) president, $1.3 million.\nMarch 11, Conseco reported fourth-quarter net income of $49.6 million.