United Technologies Corp., the Hartford-based multinational conglomerate that recently announced it would ship about 1,000 Connecticut jobs to Georgia and Asia, generated $45.3 billion in operating profits over the last decade, according to reports the company made to federal securities regulators.
The documents also show that UTC’s Pratt & Whitney division, whose jet-engine repair operations in Cheshire and East Hartford are to close within two years, accounted for nearly a third of those profits — a total of $13.6 billion between 1999 and 2008.
Moreover, the reports reveal that over the same period the total compensation collected by the five highest-paid executives at UTC jumped to $66.9 million from $10.5 million, a six-fold increase.
In perhaps the best example of that trend, the corporation’s chairman and chief executive officer was its highest-paid official in 1999, when he was paid a total of $4.2 million. The firm’s highest-paid official in 2008 was its president and chief executive officer, who was paid a total of $18 million, or more than four times as much.
Similarly, while the president of UTC’s Carrier division was paid a total of $1.1 million in 1999, the executive in the same post received a total of $8.3 million in 2008. The company’s senior vice president and chief financial officer was paid a total of slightly more than $1 million in 1999, but the executive in the same post was paid a total of $4.4 million last year.
UTC recorded its profits and awarded its compensation packages as the company repeatedly moved to cut labor and other costs.
The company’s payroll at Pratt in Connecticut, for example, plunged from around 15,000 hourly workers in 1987 to around 4,100 two years ago, according to union statistics.
Pratt reportedly eliminated more than 600 Connecticut jobs between December 2008 and July 2009. The company handed out pink slips to 280 salaried workers in East Hartford, Middletown, and Cheshire in December.
Those layoffs occurred only a few months before UTC announced a $750 million “restructuring” program aimed at cutting a total of 11,600 jobs from its subsidiaries around the world.
Nevertheless, a UTC spokesman, John Moran, said that UTC’s total employment in Connecticut had grown by 3.5 percent — or about 935 additional jobs — since 2003.
State Treasurer Denise L. Nappier recently said UTC executives should voluntarily cut their multimillion-dollar pay packages to save the jobs at Pratt’s Cheshire and East Hartford operations and as well as at their multiple suppliers and contractors in Connecticut.
The sole fiduciary officer of the state pension fund that holds $23.5 million worth of UTC stocks and bonds, Nappier said the company’s top five executives were paid a total of $70 million last year. That is more than three times the amount UTC says it needs on top of money and concessions offered by the state and the Machinists union to make those operations profitable, she said.
The treasurer had cited her concern about executive compensation at UTC last month in a letter to its chief executive officer.
In a reply to that letter, Akhil Johri, UTC’s vice president for financial planning and investor relations, did not specifically mention the executives’ pay.
But Johri reminded Nappier “of the value UTC has created for its shareholders.”
“Since December 1992, UTC stock has increased by nearly 13 times (through August 2009) while the S&P 500 and the Dow Jones industrial average have increased by two times and three times, respectively, over the same period,” he wrote.
“Despite a very challenging economic environment, UTC increased its dividend by 20 percent last October, leading to a total increase of 276 percent since 2000. This performance is due to UTC’s market-leading businesses, combined with a relentless focus on costs, productivity, and product performance.”
Johri also cautioned Nappier that UTC’s second-quarter 2009 results included a 17 percent decline in revenues and a 20 percent decline in earnings per share. He added that to remain competitive the company “has had to make many difficult decisions, including reducing headcount, requiring furloughs, and deferring merit increases.”
UTC recorded net profits of $4.7 billion in 2008, $4.2 billion in 2007, $3.73 billion in 2006, $3.06 billion in 2005, $2.78 billion in 2004, $2.36 billion in 2003, and $2.23 billion in 2002.
UTC’s reports to the U.S. Securities & Exchange Commission show that the corporation’s operating profit fell behind a previous year’s number only once in the last decade. That occurred in 2003, when UTC reported a $3.64 billion operating profit, down slightly from the $3.65 billion recorded in 2002.
