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Virtually all of that money was for logistical support, engineering and construction services provided by Halliburton's Kellogg, Brown and Root division, which was spun out earlier this year to trade as KBR Inc. (KBR, news, msgs). Those contracts helped drive Halliburton stock from $5 at the start of 2002 to more than $40 last year. The gains allowed Lesar to reap $13.6 million just by cashing in options last year, and $14.7 million the year before.
Lockheed Martin Chief Executives Vance Coffman and Robert Stevens together earned $64.8 million from 2002 to 2006. Stevens has also realized more than $19 million so far this year by cashing in options. He replaced Coffman as CEO in August 2004.
Lockheed Martin's Defense Department-related revenue increased from $17 billion in 2002 to $26.6 billion in 2006, a 57% increase. The stock has more than doubled to $100 from $47 at the start of 2002. Lockheed Martin was the top Defense Department contractor last year.
For the rest of the highest-paid defense contractors, see the chart below summing up the pay of those who earned the most. To calculate pay levels, I examined company documents and the Institute for Policy Studies CEO pay database. Pay includes salary, bonus, value realized on exercising and vesting stock options, nonequity incentive plan compensation, long-term incentive stock and "other" pay. Companies had to get more than 40% of their revenue from the Defense Department in one of the past three years to make the list.
| Company | CEO | 2002 | 2003 | 2004 | 2005 | 2006 | Total pay '02-'06 | Average annual pay '02-'06 | |
|---|---|---|---|---|---|---|---|---|---|
Nicholas Chabraja | $15.25 | $9.27 | $31.53 | $9.85 | $32.01 | $97.90 | $19.58 | ||
David Lesar | $7.30 | $4.17 | $11.43 | $26.60 | $30.33 | $79.83 | $15.97 | ||
Vance Coffman/Robert Stevens | $25.34 | $13.70 | $6.73 | $4.50 | $14.51 | $64.77 | $12.95 | ||
W. James McNerney Jr. | $4.15 | $3.81 | $3.99 | $28.43 | $15.62 | $55.99 | $11.20 | ||
Daniel Murphy | $10.53 | $16.77 | $1.87 | $1.71 | $15.85 | $46.73 | $9.35 | ||
Engineered Support Systems** | Gerald Potthoff | $1.61 | $3.54 | $39.73 | $0.72 | -- | $45.61 | $11.40 | |
Robert Bohn | $8.74 | $9.13 | $3.77 | $18.15 | $3.86 | $43.64 | $8.73 |
*McNerney took over in 2005. Before that, pay covers interim CEO James Bell and CEOs Phil Condit and Harry Stonecipher.
**Does not include pay for 2006 because company was taken over.
Sources: Institute for Policy Studies CEO pay database and analysis by Michael Brush of company filings.
The biggest pay raises
While CEOs at the biggest defense contractors naturally got the most pay, those at smaller companies saw some of the biggest increases.Robert Bohn, chief of Oshkosh Truck, which sells military vehicles, has seen his pay go up nearly eightfold. He earned an average of $1.1 million in 2000-2001, but that shot up to $8.7 million a year on average for 2002-2006. Bohn had his best year in 2005, when he made more than $18 million -- chiefly by cashing in options for a net gain of $14.7 million after his company's stock tripled from the start of 2002.
More from MSN Money
Oshkosh Truck has seen better profits in part because of a big increase in Defense Department contracts. Back in 2002, the company got 35% of its revenue from Defense Department contracts. That rose to 45% of its $2.26 billion in revenue in 2004 and 50% of its $2.96 billion revenue in 2005. Oshkosh Truck got $4.7 billion in Defense Department contract revenue during 2002-2006, or 38% of its revenue for that time. The contract flow has helped propel Oshkosh Truck stock to $55 a share recently, from $12 at the start of 2002.
Continued: 6 others who saw big gains
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