Dell's Highest-Paid Executives: Going Private Payouts And Salary/Bonus Packages For 2016

Private Payouts

As a private company, Dell doesn't have to disclose financial information publicly. But its holding company, Denali Holding, does have to make certain things public, especially concerning the bid to acquire EMC in an acquisition worth about $60 billion. Last week, a Denali U.S. Securities and Exchange Commission filing related to the acquisition made public for the first time Dell's financial results for its 2016 fiscal year, which ended Jan. 29, and its executive compensation.

In addition to disclosing a $1.1 billion loss for the year, the filing explains that executives received bonuses despite the fact that Dell "failed to meet corporate performance objectives" for the year. The filing details executive compensation for the company's most highly compensated "named" executives, "each of whom is expected to serve as an executive officer of Denali following the merger": Chairman and CEO Michael Dell, Senior Vice President and CFO Thomas Sweet, Chief Integration Officer Rory Read, Vice Chairman and President of Operations and Client Solutions Jeffrey Clarke and President and Chief Commercial Officer of Enterprise Solutions Marius Haas. Here, from the filing, are some key facts about Dell's executive compensation.

Going Private Resulted In Big Paydays For Top Execs

Before going private in late 2013, Dell granted restricted stock to Dell, Sweet, Clarke and Haas as part of a long-term incentive plan in connection with the going-private transaction. That restricted stock converted into the right to receive cash payments on a predetermined vesting schedule, and in fiscal 2016, which ended Jan. 29, Dell got a cash payment of $8.9 million, Sweet got a payment of $169,364, Clarke got a cash payment of $684,626 and Haas got a cash payment of $439,467.

Fiscal 2016 Pay Package: Michael Dell

If not for the $8.9 million cash payout tied to the going-private transaction, the company founder, chairman and CEO wouldn't have been the highest-paid Dell executive in Round Rock, Texas, in fiscal 2016. Dell's pay package totaled about $2.4 million for the year. That includes a salary of $950,000, a $1.4 million bonus and just under $18,000 in benefits and perks, including a 401(k) plan, health insurance, life insurance and other items.

Fiscal 2016 Pay Package: Rory Read

Rory Read, who was hired about a year ago as chief operating officer and is now heading up the integration of Dell and EMC along with EMC COO Howard Elias, received the biggest pay package of any Dell executive in fiscal 2016. His total compensation for 2016 was $10.5 million, including a $750,000 signing bonus, as well as option awards that carried a value of $7.1 million when they were granted to him. His base salary is $496,154. Read's contract also stipulates that if he does not receive a payment of at least $2 million under the company's special incentive bonus plan in fiscal 2016, 2017 and 2018, he may resign and get half that amount. Not counting the $750,000 signing bonus, Read's bonus for 2016 was about $2.2 million.

Fiscal 2016 Pay Package: Thomas Sweet

Sweet, senior vice president and CFO, has been with Dell for nearly 20 years, and he has a broad set of responsibilities including financial planning and analysis, the company's tax accounting, treasury and investor relations. He's also responsible for Dell corporate strategy and development. In fiscal 2016, Sweet got a pay package worth about $3.4 million, including a base salary of $650,000, a $2.7 million bonus that included a $170,000 cash award as part of a 2013 retention agreement, and about $35,000 in benefits and perks.

Fiscal 2016 Pay Package: Marius Haas

Haas who has been with Dell since 2012, received a 2016 pay package totaling nearly $3.4 million, including a base salary of $772,890, a $2.6 million bonus, and $1,206 in perks and benefits.

As Dell's president and chief commercial officer for enterprise solutions, Haas spearheads global go-to-market efforts for the company's commercial portfolio.

Haas' career has included stints at Hewlett-Packard, Compaq and Intel, as well as storied private equity powerhouse Kohlberg, Kravis & Roberts.

Fiscal 2016 Pay Package: Jeffrey Clarke

An electrical engineer by training, Clarke, who has been with Dell since 1987, received a 2016 pay package totaling $3.8 million, including an $826,160 base salary, a bonus just shy of $3 million, and $25,146 in benefits and perks.

As vice chairman of operations and president of client solutions, Clarke is responsible for Dell's global manufacturing, procurement and supply chain activities, as well as the engineering, design and development of desktops, notebooks and workstations for consumers, SMBs and enterprise. Clarke also leads customer support, as well as global IT planning and governance.

Michael Dell Doesn't Get Severance Benefits

Michael Dell does not receive any severance benefits if he leaves the company, but all the other top executives do. Read's severance package is particularly generous. If Read is terminated without cause within three years of being hired, he's eligible to receive severance payments of $5 million, plus his entire annual base salary.

As for the rest of the Dell top executive team, if they are terminated or resign for good reason, they get severance payments equal to 300 percent of their base salary: two-thirds of that up front, and the remainder a year later.

Dell Perks And Benefits Are Limited

Michael Dell and top execs get annual physicals for themselves and their spouses or domestic partners, and reimbursed travel and lodging expenses up to $5,000 per person. The company also provides the execs with tech support, security (Michael Dell reimburses the company for security expenses related to his family's personal security protection) and financial counseling and tax preparation up to $12,500. The executives get the same benefits as other employees, including medical, dental and life insurance and 401(k) plans.

Bonuses Can Be Recouped If Dell Has To Restate Its Numbers

If Denali or Dell has to restate financial results, the board of directors can review bonuses, as well as cash and equity awards, and "to the extent practicable under applicable law, Denali will seek to recover or cancel any such awards that were awarded as a result of achieving performance targets that would not have been met under the restated financial results."