Yet there on page 35 of the proxy filed by consumer-products conglomerate Fortune Brands Inc. (FO) is a table laying out the Form W-2 Box 1 income for its top five officers. “We are providing this supplemental table,” the proxy notes, “to highlight the difference between compensation reported under the SEC rules and compensation amounts realized and reports as taxable income on Forms W-2.”

Just how big are those differences? For Bruce A. Carbonari — chairman and chief executive of the company that markets Jim Beam bourbon, Titleist golf balls and Master Lock padlocks — it comes to as much as $9.5 million in 2009, with SEC-reported total compensation of $10.7 million and IRS reported “wages, tips and other compensation” of $1.3 million. For Craig P. Omtvedt, senior vice-president and chief financial officer, there’s a $3.9 million gap.

Of course, in many ways, the comparison is apples and oranges. The IRS looks at what taxpayers actually collect in a year, and Fortune Brands’ executives, like most, get a lot of pay that won’t necessarily land in their pockets for months or years. Cabonari’s compensation last year included $6 million in stock awards and $1.5 million in stock options, valued under SEC reporting rules, as well as $432,468 in gains on pension and deferred-comp plans. Stock options are generally taxed when exercised, and pension and other deferred compensation aren’t usually taxed until they are paid out.

One factor at Fortune Brands may actually have pushed up the taxable income some executives reported: paying out certain retirement benefits in advance, into trusts set up for the executives’ exclusive benefit. Ordinarily, executive pensions are merely IOUs from the company to the individual, payable at retirement. But that leaves executives at risk of losing their pensionsif the company fails — they have to get in line like other creditors in bankruptcy. The special trusts for some of Fortune’s top officers protect them against that, at the expense of paying taxes now instead of later. To ease that burden, Fortune Brands grosses up the payments to cover taxes on the trusts’ earnings each year — some $29,846 in 2009.

We’ll just have to wait and see whether other companies begin pointing to IRS pay figures to contrast with the SEC’s disclosure rules. In the meantime, we’re pretty sure Carbonari and his colleagues got some value out of the pay that hasn’t yet appeared on their W-2s.

<em>Image source: adonis hunter / ahptical via Flickr

Fast forward to yesterday when Boeing filed an 8-K with this consulting agreeement for Carson — something that we don’t recall reading about in the Aug. 31 press release. A quick scan of Boeing’s current releases also comes up empty, despite the fact that Boeing plans to pay Carson $1.5 million as a retainer over the next two years. As the contract notes, Carson will serve as a consultant through March 2012. In exchange for the fee, which essentially works out to his base compensation, he’ll be required to work “no more than 75 hours a month.”

Since it’s probably a pretty safe assumption that Carson was working 75 hours a week (if not more) when he was running the Commercial Airplanes unit, the consulting agreement works out to a pretty nice raise. We also didn’t see anything in the contract that precludes Carson from spending some of the non-Boeing hours — there’s roughly 730 hours in a typical month — consulting for anyone else.

That’s not to say the contract doesn’t have its restrictions. Boeing won’t pay for any alcoholic beverages and the contract won’t enable Carson to wine and dine on Boeing’s dime. Indeed, the agreement is pretty strict on this point, noting that “No entertainment is authorized under this Agreement and no entertainment expenses will be reimbursed. Entertainment includes the purchase of meals or refreshments for any individual (including Boeing employees) other than you.”

Still, given that this deal is essentially part-time work for full-time pay, we’re guessing that Carson won’t sweat too much having to dip into his pocket for some Glenlivet every now and then.

Image source: Glenlivet

But pay $87,378 for automotive transportation for one executive in a year? That’s the value Sonic Automotive Inc. (SAH) pegged in its recent proxy for the personal use of company vehicles last year by Chairman and Chief Executive O. Bruton Smith, the founder of the dealership chain. For President and Chief Strategic Officer B. Scott Smith (Bruton’s son), the Charlotte, N.C. company valued the perk at $35,427. But for three other executives, “the incremental cost of demo vehicles is not calculable because those vehicles are provided to the executive by our dealership subsidiaries.” (Do dealerships really have that much trouble putting values on their inventory?)

Just for the record, with that kind of cash, Bruton could pick up a 2010 Jaguar XK Coupe outright, with a little left over for vanity plates and a pair of fuzzy dice — or as many as five of the 2010 Honda Civic VP Sedans it’s offering through its Honda dealership in Tyson’s Corner, Va.

In its filing, Sonic Automotive calls personal use of company vehicles “a common competitive perquisite afforded to executives in the automobile dealership industry.”

Sonic Automotive isn’t the only company getting personal with automotive perks. Home BancShares Inc., a Conway, Ark., bank holding company that got $50 million in federal bank-bailout funds in January 2009, pays to fill up the tanks of executives’ personal vehicles. Chairman John W. Allison got $2,117 in gas last year, according to its latest proxy. At last year’s average price in Arkansas, it works out to more than 800 gallons. And that’s on top of an $18,000 “auto allowance” and $16,500 in personal flight services from the pilot who flies the plane Sonic leases — from a firm owned by Allison.

Image source: macieklew via Flickr

Late last Friday afternoon, Leucadia filed this 8-K and an attached letter agreement to set out Wheeler’s new deal with the company.  According to the document, the new terms were “…intended to induce you to remain in the employ of Leucadia National Corporation.”

Frankly, why would he refuse?

Dated March 1, 2010, the agreement states that if within the next five years Wheeler continues to be an executive officer of Leucadia, but neither Ian M. Cumming (Chairman of the Board) nor Joseph S. Steinberg (president) is then serving as Leucadia’s Chief Executive Officer, then Wheeler can make a profitable departure.  If he exercises his written option to do so within six months of the stated change in control, he can terminate his employment and receive $2.5 million.  That amount can be reduced if it would subject Wheeler to Excise tax liability or if he were to act negligently or breach his duties to the company.

(Of course, if either Cumming or Steinberg leaves the company under certain circumstances between now and 2015, provisions at the bottom of p. 28 of the April, 2009 proxy obligate the company to pay each man $5.1 million. However, that is not a new disclosure.)

But even if Cumming or Steinberg don’t leave, Wheeler may get the money anyway. The second page of the letter states:

7.) At the end of the five year period from the date hereof and if a “Change of Control” has not occurred, the Board of Directors of LUK, may upon the recommendation of LUK’s Compensation Committee, choose, in its sole discretion, and based upon its evaluation of your performance during the five year period, to award you all or any portion of the Payment.

So regardless of whether the company changes hands, or whether Wheeler stays or leaves at the end of 2015, he may get $2.5 million – just to continue doing his job.

Image source:  Gala Darling

Occasionally, though, the scrutiny pays off, as it did when we reviewed the 10-K that Hess Corp. (HES) filed recently on the Friday before the big March 1 deadline.  Weighing in at a relatively modest 163 pages (compared to other companies’ 10-Ks, that is), we hummed along until we came to Exhibit 10(20), an employment offer letter from the company to Timothy Goodell.   Oddly enough, the letter is dated September 19, 2008, but for some reason it wasn’t filed with the SEC until now.

Hess Corp. hired Goodell to be its Senior Vice President, General Counsel. (Prior filings indicate that Goodell’s relationship with the company started years ago, when he worked in a private firm that did legal work for Hess.)

In addition to a base salary of $650,000, the company gave Goodell a signing bonus of $1.5 million (half of which was to be paid within 30 days of his hiring; the other half was to be paid in September, 2009). He also got a guaranteed bonus of $650,000 in 2009, as well as restricted stock and options with an approximate value of $2.25 million.

The only thing we couldn’t find was an explanation of why it took a year and a half for that contract to make its way into Hess’s filings.  But perhaps with all that paper, maybe the exhibit got lost in the shuffle?

Image source:  Brodeur

Pursuant to Mr. Arison’s request Carnival Corporation donated the entire amount of Mr. Arison’s Non-Equity Incentive Plan Compensation to the following relief organizations: UNICEF, the University of Miami’s Project Medishare, American Red Cross, and Save the Children to aid in the relief efforts in Haiti following the devastating earthquake in January 2010.

What’s surprising here is that this is the type of thing a company — particularly one as media savvy as Carnival, which counts over 13,000 followers on Twitter — would tout in a press release as opposed to burying in a footnote to a proxy statement. While Carnival did put out a press release announcing a $5 million corporate donation to Haiti relief efforts back on Jan. 18 and even quoted Arison in the release, the only disclosure about Arison’s personal donation was that footnote in the proxy statement. A Carnival spokeswoman confirmed this morning that Arison’s $2.2 million donation was part of the $5 million announced in January.

If companies start burying good things in the footnotes in their routine filings, what’s next? World peace?

Image source: Carnival Cruise Lines

When we looked at the 10-K that Forestar Group Inc. (FOR) filed yesterday, we noticed an interesting example that illustrates an important point:  Shareholders need transparency and full disclosure in SEC filings.  And when that’s lacking, they can’t know whether the company’s executives are running the company with everyone’s interests in mind, or just their own.

On page 31, in the 2009 section under the heading “Significant aspects of our results of operations follow”, we found the following:

General and administrative expense includes about $3,200,000 paid to outside advisors regarding an evaluation by our Board of Directors of an unsolicited shareholder proposal and $2,213,000 in non-cash impairment charges related to our undivided 15 percent interest in corporate aircraft contributed to us by Temple-Inland at spin-off. Other general and administrative expenses have declined as result of execution of our near-term strategic initiatives to lower costs.

Admittedly, this is not the kind of mystery that involves deep secrets like “Who killed J.R.?”  However, we – and therefore perhaps shareholders – found ourselves wondering:  “$3.2 million to outside advisors?  Who are they? Do these advisors have a connection to anyone at the company?  Or, at a minimum, what kind of advisors are they?  What is the general nature of this ‘unsolicited shareholder proposal’?”  Was this a lame shareholder proposal, or something that really required a lot of due diligence and time to consider?

Another sentence or two to provide some context could have easily answered these questions.

When we researched the point, we discovered that Forestar actually first disclosed this expense in an 8-K filed last May.  But in the handful of documents that refer to the expense which the company has filed since then, it always uses the same phrase, with no further detail.

We understand that companies can’t reveal information that would jeopardize their competitive edge.  However, if a matter doesn’t fall into that category – as this one presumably doesn’t, since it was a shareholder proposal – then companies could use their filings as an opportunity to reassure shareholders that they value transparency and are working with their interests in mind.

So, sadly, in this case we can’t tell you Whodunnit.  Nor can we tell you why.

Update: a valued footnoted reader, Steven Friedman, gets the coveted “Sam Spade for the Day” award for helping us solve the mystery.  Thank you for helping us, Steven!  He writes:

this was the takeover offer last year. http://uk.reuters.com/article/idUKN2330853720090123

Offer was at $15 and stock is higher now so the defense money was probably good ROI for shareholder. The private jet on the other hand….oh well

Image source:  National Geographic

On March 8th, J. Patrick Doyle will replace David Brandon as President and CEO. And as Doyle’s employment agreement shows, (filed yesterday as an exhibit to Dominos’ annual report), the company is investing a lot in its new leader.

The contract runs for three years and starts with a base salary of $750,000 a year. But Doyle may earn as much as another $1.5 million in the form of a bonus if the company meets the targets set out in the Senior Executive Annual Incentive Plan. The company also gave him stock options to purchase 250,000 shares and a performance share award (which vests over three years) of 75,000 shares of stock.

And then there’s the plane. Section 4.7.3 (bottom of p. 4) starts by saying:

The Company acknowledges its obligation to furnish the Executive (which for purposes of this Sub-Section 4.7.3 includes the Executive’s spouse, family and guests when accompanying him), with transportation during the term hereof that provides him with security to address bona fide business-oriented security concerns, and shall, at the Company’s expense, make available to the Executive, Company or other private aircraft for business and personal use at his discretion, provided that any such personal use shall be limited to thirty-five (35) hours per calendar year (the “Yearly Aircraft Hours”).

The 35-hour limit is invoked again in the Time Sharing Agreement that gives Doyle the right to use Dominos’ Dassault Falcon 2000.  (His contract also provides for a gross-up benefit, which means Dominos will pay any taxes that Doyle would otherwise owe personally.)

But while the parties may intend to invoke that 35-hour limit, we noticed an ambiguity that arguably gives Doyle unlimited personal use of the plane. That’s because the agreement also says:

It is recognized that travel by the Executive on Company or other private aircraft is required for security purposes and, as such, all uses by the Executive shall constitute business use of the aircraft and shall not be subject to reimbursement by the Executive.

Meanwhile, David Brandon, the departing CEO, will remain on the Dominos payroll for a while.  For starters, even though he’s turning over the reins to Doyle next Monday, he’ll earn his regular base salary of $70,621.83 for the month of March (the calculation comes from the 2009 proxy). After that, he’ll earn $25,000 per month in the newly created role of “Special Advisor to the President and Chief Executive Officer”, a position that will last through January 10, 2011. He will also continue to participate in the Annual Incentive Plan, and he keeps the right to use his “Yearly Aircraft Hours” on the company’s plane through the end of FY 2011, or until he stops serving on Dominos’ board.

Brandon’s next career will be as the Director of Intercollegiate Athletics at the University of Michigan, where he will reportedly earn a base salary of $525,000 and $100,000 a year in deferred compensation. While that’s certainly a significant pay cut, when combined with his new gig as an advisor to Doyle, he will still probably have enough to treat the kids at Michigan to an occasional pizza.

Image source:  Culinet

In the filing, which was significantly longer than the 2008 10-K, the company disclosed that total compensation for one of its directors was over $600,000 in 2009. Eight other directors collected more than $300,000 and two received a little less than $250K.  Kenneth Frazier, Merck’s Executive Vice President of Global Human Health and a new bee to Exxon’s Board of Directors last year, made the most: $614,283, though to be fair, the bulk of that was in stock awards as opposed to cash compensation. While the other 10 directors took home $201,263 in stock awards, Frazier’s award was valued at $554,280. The footnotes reveal Frazier received a one-time grant of 8,000 restricted shares upon being first elected to the Board in May 2009. The valuation of this award is based on a market price of $69.29 on the date of grant, which is actually higher than Exxon stock is currently trading at.

Our find on Exxon’s director pay was just one of a few gems buried in last weeks’ filings. Other companies that fueled up their director’s pay in 2009 were Baker Hughes (BHI), Brocade Communications (BRCD) and Arkansas Best (ABFS). Directors at Brocade and Baker Hughes received more than $200K, while Robert Young of Arkansas Best pocketed $280K. Young’s perquisite value included personal use of the company’s aircraft and a hunting lodge, an administrative assistant, a nominal gift related to business activities and a Christmas gift from the Company.

This post was written by footnoted intern Kristen Scholer, who is a junior at Northwestern University.