Illinois Tool CEO got $9.6M pay package

PITTSBURGH -- Illinois Tool Works Inc.'s chief executive received compensation valued at $9.6 million in 2008, a 10 percent increase from the previous year, despite weaker annual earnings at the industrial products maker, according to an Associated Press calculation of figures disclosed in a regulatory filing.

David Speer, also the Glenview-based company's chairman, received a base salary of $1.1 million and a performance-related bonus of $1.6 million during the year, according to a proxy statement filed Wednesday with the Securities and Exchange Commission.

About 70 percent of Speer's compensation came in the form of stock and stock options valued at $6.7 million when they were granted in February 2008. The company based the amount on an implied value of $13.32 per share using a valuation technique. They have an exercise price of $48.51 per share. ITW stock closed Thursday at $32.40.

In 2007, Speer received a pay package worth about $8.7 million.

The Associated Press' compensation formula is designed to isolate the value the company's board placed on the executive's total compensation package during the last fiscal year. It includes salary, bonus, performance-related bonuses, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year.

The calculations don't include changes in the present value of pension benefits, and they sometimes differ from the totals companies list in the summary compensation table of proxy statements filed with the Securities and Exchange Commission, which reflect the size of the accounting charge taken for the executive's compensation in the previous fiscal year.

For 2008, ITW's profit dropped 19 percent to $1.52 billion, or $2.91 per share, from $1.87 billion, or $3.36 per share, the previous year. But annual sales improved to $15.87 billion from $14.87 billion.