Union Carbide CEO Joyce Awarded Options Valued at Up to $21 Mln

Danbury, Connecticut, March 13 (Bloomberg) -- Union Carbide Corp., which is being acquired by Dow Chemical Co., paid Chairman and Chief Executive William Joyce $2.1 million in salary and bonuses and awarded stock options with a potential value of as much as $21 million, according to a regulatory filing.

Joyce also stands to gain $17.7 million after the pending Dow Chemical merger if he resigns or is fired, based on current compensation and the terms of the merger. Union Carbide awarded Joyce options to buy 220,000 shares with an exercise price of $60.4375 that expire December 2009. The value of those options will be $8.4 million if the stock price rises 5 percent annually, and $21.2 million if the stock rises 10 percent annually, Union Carbide said. Joyce was given 175,000 stock options in 1998.

The stock options usually can't be exercised until two years from the date of the grant. In the event of a change in control, such as the Dow Chemical purchase, that restriction is lifted.  Union Carbide said it awards stock options to give executives a stake in increasing the value of the company, and that Joyce was awarded the options based on his contributions to "creating shareholder value.''

The merger with Dow Chemical, which is now in regulatory review, was valued at $11.6 billion in stock and debt when it was announced Aug. 4. Dow Chemical will pay Union Carbide shareholders 0.537 Dow shares for each Union Carbide share, a 37 premium to Union Carbide shares on Aug. 3. Joyce will become vice chairman of Dow's board.

Salary Details
Joyce's base salary increased 5.2 percent to $966,667 last year from $918,750 in 1998. His bonus increased 45 percent to $941,000 from $650,000. Joyce received $196,081 in other compensation such as contributions to the company savings program, compared to $142,700 in 1998.

Joyce was awarded bonuses based on the Danbury, Connecticut-based chemical maker's performance relative to other companies, Union Carbide said. Union Carbide shares increased 57 percent last year, compared with a 16 percent increase for the Standard & Poor's Chemicals Index.

Union Carbide estimated the value of the options it grants top executives based on the potential profits if company shares rise a certain percentage during the term of the options. Some other companies use a formula that estimates the value of options the day the board awards them. Because the SEC lets companies use either method in proxy statements, it's difficult to compare executive pay from one company to another, even if they're in the same industry. Union Carbide shares rose 5/16 to 47 15/16 on the New York Stock Exchange. Midland, Michigan-based Dow Chemical rose 1 3/4 to 99 3/4.

By Joe Richter