Amazon execs have a $2 billion incentive

Seattle-based Amazon.com awarded stock options that could be worth a combined $2 billion in two decades to two top executives who joined the biggest Internet retailer last year.

President Joe Galli, formerly with toolmaker Black & Decker, and Chief Financial Officer Warren Jenson, hired from Delta Air Lines, also got cash bonuses of more than $7 million each for signing with Amazon.com.

In Amazon.com, they're joining a company that began selling books five years ago, had annual sales of $1.6 billion last year and has lost $882 million since 1994.

"It's pretty clear the company values these executives in what they bring in terms of expertise in running big companies - companies that have gone to the next level where Amazon wants to go," said analyst Dean Ramos at George K. Baum & Co.

The two executives are helping instill greater discipline and an increased focus on profit at Amazon.com, investors have said.

Scott Spector, a compensation expert for Fenwick & West in Palo Alto, Calif., said Amazon.com's option grants are some of the biggest he's seen.

The options can be exercised at different points over the next 20 years; most companies grant 10-year terms.

The length of the vesting period shows the company wants the executives to focus on shareholder value over the long haul, said analyst Kevin Hunt at Thomas Weisel Partners.

"A lot of option people are looking to vest quickly and get in and get out," he said.

Galli, 41, got options to purchase 3.92 million shares at $57.95 a share. The grant would have a value of $1.3 billion if the stock rises 10 percent a year through 2019, according to Amazon.com's proxy filing with the Securities and Exchange Commission.

The 43-year-old Jenson got options for 2 million shares at $63.50 a share, which could realize a value of $745 million in 20 years.

Amazon.com shares closed at $66.25 yesterday, up $2.50 for the day but far short of its record high of $113 set Dec. 9.

Galli, who was also named chief operating officer when he joined Amazon.com in June, received a $7.9 million signing bonus. Of that, he received $2.9 million last year. The rest will be paid in June of this year and next.

Galli had been in high demand. He accepted the job with the Internet retailer just two days after he had signed an agreement to take over as president and chief executive of Frito-Lay North America.

Galli will get an annual salary of $200,000.

Jenson, who left Delta in September, received $2.15 million of his $7.4 million signing bonus last year. The rest will be paid through 2003.

He also agreed to an annual base salary of $175,000.

Founder and Chief Executive Jeffrey Bezos earned $81,840 in base salary last year, but no bonus.

The filing also included a request to raise the number of allowable shares from 1.5 billion to 5 billion, a sign of possible deals to come.