PW: Borders Execs Take Stock in Lieu of Cash

Despite the company's steady erosion in stock price over the past several years, in 1999 Borders chairman Bob DiRomualdo and vice-chairman George Mkronic took stock options in lieu of cash for salaries and bonuses. This is the third year they have done so.

According to the company's proxy statement, DiRomualdo received 194,826 options last year instead of a salary or bonus, up from 123,947 options the previous year. He also received 60,000 options in long-term incentive pay. DiRomualdo was entitled to a salary of $474,553 and a similar bonus. The options are exercisable at $17.13, $14.19 and $13.88 a share. Borders's stock price was $15.75 per share on April 26. Last year, DiRomualdo exercised 224,948 of his shares for a realized value of $2.1 million.

For his part, last year Mrkonic received 94,322 options with an exercise price of $17.13, and received another 30,000 shares in long-term incentive pay, with a $13.88 exercise price. Mrkonic was entitled to a salary of $257,500 as well as a $257,500 bonus.

Also according to the proxy, Phil Pfeffer, who was CEO for five months before abruptly resigning a year ago, was paid $2.4 million in severance and $1.5 million as part of a noncompetition clause. Borders is applying the payments toward the repayment of a $6.3-million promissory note that Borders issued to Pfeffer to permit him to buy shares in the company. As of March 29, Pfeffer still owed $2 million on the note.