By  on March 31, 2010

Macy’s Inc. chief executive officer Terry Lundgren last year received the maximum allowable nonequity incentive plan compensation, $7 million, helping to erase reductions in his stock and option awards and boost his overall pay 8.6 percent to $16.1 million.

Lundgren’s salary was unchanged at $1.5 million, but his incentive plan earnings jumped to the maximum amount from $900,000 in fiscal 2008. Meanwhile, the total of his stock and option awards fell by two-thirds, to $3.8 million from $11.9 million in 2008. Because of vesting schedules and fluctuating stock prices, awards weren’t necessarily realized, but they are reported to the Securities and Exchange Commission when companies file their annual proxy statements, as Macy’s did on Wednesday.

Lundgren, chairman, president and ceo of Macy’s, earned $14.8 million in 2008.

The $7 million incentive plan bonus, the maximum allowed under the plan adopted by Macy’s in 1992, included performance criteria in three areas. Lundgren was deemed to have qualified for 493.2 percent of his salary, or about $7.4 million, based on Macy’s earnings before interest and taxes results; for 36 percent of his salary, or $540,000, based on sales performance, and for 60 percent of his salary, or $900,000, based on cash flow. Without the cutoff figure, he would have earned an additional $1.8 million

Lundgren’s pay also included a $3.2 million credit for the changes in pension value and nonqualified deferred compensation earnings, versus zero in the prior year, and $499,000 in other compensation, up 0.4 percent from 2008, to account for perks such as a car and driver and travel by company aircraft. The proxy noted that, as Macy’s is a participant in the Corporate Angel program, cancer patients traveling to and from treatment often accompany Lundgren on his flights, reducing the potential risk of infection to the ailing.

Also on Wednesday, Macy’s said it had spent $526 million, including expenses, to repurchase senior notes and debentures with a face value of $500 million.

The additional cost to buy back the debt is expected to be offset by reduced interest expense this year. Macy’s bought the debt on the open market beginning Jan. 30. The firm said next year’s interest expense would be cut by about $15 million.

Additionally, Macy’s said it reached a deal to cobrand its Macy’s and Bloomingdale’s credit cards with American Express. Citi will issue the cards. Existing Macy’s and Bloomingdale’s Visa cards will be replaced by the end of this year and will carry the same terms as they did before the rebranding.

Macy’s shares Wednesday closed at $21.77, down 35 cents, or 1.6 percent.

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