CAT Caterpillar Inc

By Tess Stynes and Bob Tita 

Caterpillar Inc. said Chief Executive Doug Oberhelman's compensation for 2015 rose 4.5% to $17.9 million, but his performance-based pay plunged as the construction equipment maker's sales and profit fell in the face of weak markets.

Mr. Oberhelman's non-equity incentive pay for 2015 dropped to $822,804 last year from $4.9 million in 2014, according to the company's annual proxy statement. Other top executives received sharply lower incentive pay as well "based primarily on severe market downturns in mining, energy and oil and gas" and the company's declining performance in recent years, the proxy said.

The Peoria, Ill.-based company's annual sales have contracted for three straight years and the company is forecasting lower sales for 2016 as well. The company on Friday lowered its outlook for 2016 amid ongoing sales weakness in key markets. Caterpillar now expects revenue of $40 billion to $42 billion this year after chopping $2 billion from the top end of its earlier revenue range. Caterpillar expects per-share profit this year of $3.00, or $3.70 excluding restructuring costs, down from its previous outlook of $3.50, or $4.00 without restructuring expenses.

Mr. Oberhelman's base salary last year was flat with 2014 at $1.6 million. His overall compensation increased because of larger awards of stock and options. He received stock and options worth $13 million when they were issued, compared with $8.4 million in 2014 when he received only options.

Mr. Oberhelman has served as CEO since July 2010. Executive pay at Caterpillar has come under scrutiny. Last year, proxy advisers Glass Lewis & Co. and Institutional Shareholder Services Inc., along with the union-affiliated CtW Investment Group, had urged shareholders to vote against Caterpillar's compensation policies.

In an unusually stinging rebuke, around a third of the votes cast by Caterpillar shareholders at the annual meeting in June rejected the heavy-equipment maker's executive-compensation policies. The company defended its pay policies, saying that it tied compensation closely to performance and that executives deserved raises because they reduced costs and gained market share.

Write to Tess Stynes at tess.stynes@wsj.com and Bob Tita at robert.tita@wsj.com

(END) Dow Jones Newswires

April 25, 2016 11:24 ET (15:24 GMT)

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