Chattanooga: Chattem pays Guerry less, but others more

Chattanooga: Chattem pays Guerry less, but others more

April 18th, 2009 by Brian Lazenby in Business

The chief executive at Chattem watched his compensation slip in 2008, but other top company officials saw increases, according to filings with the Securities and Exchange Commission.

Records show Zan Guerry, Chattanooga-based Chattem's chairman and chief executive, took an almost 11 percent cut in compensation to $2.48 million.

Compensation for Bob Bosworth, president and chief operating officer, increased about 18 percent from to $1.3 million in 2008.

Robert Long, vice president and chief financial officer, saw a 26 percent increase in his compensation to $409,763 last year.

Thad Whitfield, vice president, general counsel and secretary, said cash compensation, such as salary and cash bonuses, decreased for all Chattem executives in 2008.

He said Chattem typically pays a base salary less than the median range for other companies, yet long-term benefits, such as stock options, are generally more than what is paid by other companies.

Mr. Whitfield said compensation increases for executives mostly were because of stock options.

"The company had a really good year last year, up 26 percent on earnings per share," Mr. Whitfield said. "Compared to other companies, we probably did better than most."

Executive compensation at Chattem is determined by a three-person Compensation Committee, which looked at several criteria, including company performance, when figuring compensation.

"Our net sales and adjusted earnings per share increased 7 (percent) and 26 (percent) respectively, over fiscal 2007, demonstrating the effective performance of our executive team," the committee wrote in their report.

The panel said that in the context of the positive results and consistent growth, even during the economic recession, "we believe amounts paid to our executives ... appropriately reflect and reward their performance and contribution to increased shareholder value."

Amy Greene, an analyst with Avondale Partners in Nashville, said she doesn't expect Chattem's performance to change anytime soon.

"Sales seem to be accelerating now that the new products are on the shelves - particularly at Wal-Mart," Ms. Greene said. "I think we will see that continue as the ads for the new products really start to be seen in April, May."

Chattem manufactures an array of health care products, toiletries and dietary supplements. The company's key brands include Gold Bond, ACT, Icy Hot and Cortizone-10.

Officials recently launched several new products including Gold Bond lotions and Icy Hot with the "no-mess" applicator.

Chattem's stock closed Dec. 31, 2008, at $71.53 after having reached $81.45 in February.

On Friday, Chattem's stock closed at $57.36 a share, up more than 3 percent from Thursday's close.