NEW YORK -- The CEO of bookstore chain Barnes & Noble's compensation skyrocketed to $10 million from just $1.6 million last year, due to a hefty stock option grant, as the company sought to compensate William Lynch for his work on expanding Barnes & Noble's digital business.
But a filing with the Securities and Exchange Commission shows the company planned to give CEO William Lynch double the $5.3 million in stock options it granted, but found it couldn't due to its 2009 incentive plan rules.
Lynch, 42, received a base salary of $1.1 million, up 22 percent from his base salary of $900,000 last year. He received a $450,000 bonus and other compensation of $32,750 for insurance and retirement payments, a car allowance and relocation costs.
He received stock awards worth $3.1 million and stock options worth $5.3 million. The stock option grant, for 500,000 shares, is half the original number of 1 million shares granted to Lynch.
Barnes & Noble says that the interest of "aligning pay to business objectives and long-term strategy," it will seek approval of a new incentive plan that will allow a grant of 500,000 more options to Lynch by stockholders at its annual meeting on Sept. 11. That would boost Lynch's total compensation to about $15.3 million.
Barnes & Noble said Lynch's compensation reflects the "critical role he plays in the company's digital and technology-based global strategy."
Facing tough competition from online retailers and discount stores, Barnes & Noble, the largest traditional U.S. book retailer has invested heavily in the Nook e-reader and e-books. For the fiscal year, Nook sales rose 34 percent to $933 million.
Lynch joined Barnes & Noble in 2009 as president and became CEO in October 2010.
The AP formula for CEO pay includes salary, bonuses, perks, above-market interest the company pays on deferred compensation and the estimated value of stock and stock options awarded. 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 2011 was the present value of what the company expected the awards to be worth over time. Companies use one of several formulas to calculate that value. But the number is just an estimate and what an executive ultimately receives will depend on the performance of the company's stock.Most stock compensation programs require an executive to wait a specified amount of time to receive shares or exercise options.