The recession put a big hurt on sales at Hurco Cos. Inc. last year. It also took a toll on executive pay at the Indianapolis-based machine-tool maker.
Michael Doar, Hurco's chairman and CEO, took a 63.2-percent cut last fiscal year as a
result of the deep recession. Hurco also substantially trimmed compensation of the rest of its management team.
“Our compensation program was significantly affected by the global recession, which led to a steep decline in worldwide demand for machine tools,” Hurco wrote in its annual proxy statement, which the company released Tuesday. “Beginning in the second quarter of fiscal 2009, we reduced the base compensation of our executive officers and directors by 10 percent and suspended the company-match contribution to our 401(k) plan. In addition, there were no bonuses awarded in fiscal 2009.”
Hurco operates on a calendar that concludes Oct. 31. In its last fiscal year, the company’s revenue fell 59 percent, from nearly $224 million in fiscal 2008 to just $91 million in fiscal 2009. The steep declines in sales and service fees forced Hurco to slash expenses. Even so, the company’s annual profit dropped from $22.5 million to a net loss of $2.3 million.
During the fiscal year, Hurco’s stock price slipped from $23.76 per share to $15.90 per share. It had increased to $16.64 per share before the start of trading Wednesday morning.
Doar’s total fiscal 2009 compensation of $414,834 was $713,446 less than the $1.1 million he earned in the previous year. Most of the difference came down to Hurco’s decision to award him no bonus. In each of the previous two years, Doar had received bonuses of $670,000.
His two key lieutenants also saw their pay decline. Hurco Chief Financial Officer John G. Oblazney’s total compensation dropped 37.5 percent, from $316,037 in fiscal 2008 to $197,550 in fiscal 2009. Hurco Corporate Controller Sonja K. McClelland’s pay fell 46.2 percent, from $227,575 in fiscal 2008 to $122,420 in fiscal 2009.
Perhaps Hurco’s biggest ongoing management expense cut came from shrinking its leadership team. James D. Fabris resigned in early October after a 12-year stint on the management team. Hurco’s former president and chief operating officer earned fiscal 2009 compensation of $884,433, or 14.1-percent less than the $1 million he earned the previous year.
Much of Fabris’ pay came in the form of a $504,510 severance package that included a one-time payment of $52,260 and 18 months of his monthly base salary of $25,125.
Hurco will additionally pay Fabris a biweekly severance of $12,335 until he finds another job or until April 30, 2011, whichever comes first.
Board pay was another area in which Hurco managed to trim its expenses. The company awarded $227,050 in compensation to its seven independent directors, compared with $517,580 in compensation it awarded eight board members the previous year. Much of the difference was in options. In fiscal 2008, Hurco awarded board members Phillip James and Janaki Sivanesan options packages worth $153,540 each. Hurco gave no stock options to its directors in fiscal 2009.
IBJ uses the Associated Press formula to calculate executive pay. It gauges the value of compensation such as stock and options grants at the time they are awarded, not the time they are cashed in.