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Halliburton paid execs retention bonuses for 2002
April 9, 2003

By Erwin Seba

HOUSTON, April 9 (Reuters) - Halliburton Co. paid top executives an undisclosed amount of retention bonuses to stay with the company in 2002 as its stock slumped due to mounting asbestos liabilities, a regulatory filing made on Wednesday said.

The bonuses were paid to unidentified "senior and key" executives of the world's No. 2 oilfield services company who were with Halliburton between Feb. 1, 2002, and Jan. 1, 2003, according to proxy statement filed with the U.S. Securities and Exchange Commission on Wednesday.

"Due to a depressed stock price from concerns over the company's asbestos litigation, this was a step to retain personnel in leadership roles," said Halliburton spokeswoman Wendy Hall.

Hall declined to reveal the identities of the executives or the amounts paid to them, but said fewer than 50 employees received retention bonuses.

The bonuses were given even as the Houston-based company declined to raise the base salary of Chairman and Chief Executive Dave Lesar and other top executives because of the bad business environment and uncertainty over energy prices.

But the company did give out the retention bonuses plus, equity grants and dividend-style payments on the outstanding stock options of its top executives as part of its plan to keep key executives.

Since the retention bonuses were given this year, the amounts do not have to be revealed until the executive compensation for 2003 is disclosed in the 2004 proxy, Hall said.

Until December, when Halliburton announced a $4 billion settlement of more than 300,000 asbestos injury claims against it, the company saw its stock price and credit ratings tumble as asbestos lawsuits and jury awards mounted.

The injury claims are from workers who said they developed a form of cancer linked to asbestos exposure. Halliburton subsidiary Dresser Industries operated Harbison-Walker Refractories, which made an industrial furnace cement containing asbestos.

Halliburton purchased Dresser when U.S. Vice President Dick Cheney was chief executive of the company. Cheney left Halliburton in 2000 to join President George W. Bush's Republican presidential ticket.


Since the global asbestos settlement, Halliburton has seen its fortunes shift for the better. On March 24, its engineering subsidiary KBR was awarded a Defense Department contract to rebuild Iraq's oil infrastructure.

However, some Democratic members of Congress are seeking an investigation into how Halliburton got the contract without going through a competitive bidding process.

In the proxy, Halliburton said Lesar's base salary was unchanged in 2002 at $1.1 million. He received a bonus of $1.7 million in 2002, compared with $2.2 million in 2001.

Lesar also received 308,810 restricted shares worth $4.482 million in 2002 compared with 154,407 shares in 2001 worth $3.381 million. The shares are vested over 10 years.

In the proxy, Halliburton is recommending shareholders vote against a proposal by shareholder Amalgamated Bank LongView Collective Investment Fund to limit future executive severance packages to two times base salary unless shareholders approve a higher amount.

Currently, the company would have to pay Lesar five times his base salary and the value of restricted shares outstanding if he is fired, according to the proxy. If Lesar and the four other top Halliburton executives left, it would cost the company over $10 million, according to Amalgamated Bank's proposal.

Adoption of the proposal would undermine the company's ability to attract and retain senior executives, Hall said.

(Reporting by Erwin Seba; editing by Eric Walsh;
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