Chief executive pay still rising despite shareholder uproar

You call this a revolution? Probably the most-heard complaint about big business these days, one seemingly tailored for the 99 percent, is how much money corporate chief executives routinely pull down. Many ordinary people in the United States probably cheered when stockholders — that is, the people who actually own public companies — finally began to say, “Enough.” Yeah, well. Despite a lot of noise from shareholders and a few victories at big names like Citigroup and HewlettPackard, executive pay just keeps climbing.

Yes, some corporate boards seem to be listening to shareholders, particularly on contentious issues like the seven-figure cash bonuses that helped define hyperwealth during the boom. Since the bust, corporate America on the whole has moved to tie executive pay more closely to long-term performance by skewing executive paychecks more toward restricted stock, which can’t be sold for years.

But rewards at the top are still rich — and getting richer. Now that 2011 proxy statements have been filed, the extent of executive pay last year has finally become clear. Median pay of the nation’s 200 top-paid chief executives was $14.5 million, according to a study conducted for The New York Times by Equilar, a compensation data firm based in Redwood City, Calif. The median pay raise among those chief executives was 5 percent.

That 5 percent raise is smaller than last year’s. But it comes at a time of stubbornly high unemployment and declining wealth for many ordinary people in the United States.

Even corporate pay experts say that this is hardly the kind of change that will quell anger over the nation’s have-a-lots by the have-lesses, particularly in an election year.

“The bigger issues are there, still to be worked on, and those are the more difficult ones,” says Eleanor Bloxham, the chief executive of the Value Alliance, a firm in Westerville, Ohio, that consults on corporate pay. Corporations are changing pay practices, Bloxham says, but not enough: “There is too much hype and too little substance.”

The latest list of the most richly rewarded executives expands on a preliminary survey Equilar put together for The Times in April, before many companies had submitted final regulatory filings for 2011. While the ear- lier study showed the median pay package rising 2 percent from 2010 to 2011, the final figures put the increase at 5 percent.

The list has many familiar names, like Lawrence Ellison of Oracle ($77.6 million) and Leslie Moonves of CBS ($68.4 million). But a number of executives from smaller companies also landed near the top. Discovery Communications had about a tenth the revenue of Oracle last year, but gave its chief executive, David Zaslav, $52.4 million, the sixth-largest pay package in corporate America, according to Equilar.

Because the list includes only the chief executives of public companies, it does not capture the many billions that have been earned by top hedge fund managers and private-equity dealmakers in recent years. But even in the more narrow universe of public companies, the complete Equilar study shows that there was not one, but two executives who had nine-figure paydays last year — the first time that has ever happened, according to Aaron Boyd, Equilar’s head of research.

David Simon, the top executive at the Simon Property Group, was the secondhighest paid chief executive last year, with $137 million. He joined the exclusive nine-figure niche occupied by Timothy Cook, who succeeded Steve Jobs at Apple. Cook received a package valued at $378 million. The pay of both Simon and Cook were bolstered by one-time rewards that the companies said would not be repeated, and that are tied to future company performance.

In Simon’s case, this was a stock package that will be distributed over eight years that was worth $132 million when granted last year. Like Cook’s bonus, it has already gained substantially in value.

While Apple shareholders overwhelmingly approved Cook’s compensation, Simon Property investors lopsidedly rejected Simon’s pay package at the annual meeting in May, with 73.3 percent voting against it, according to Institutional Shareholder Services. But such votes aren’t binding. That means companies can do as they want, whatever shareholders say.

The fact that there were votes at both companies shows the new power that investors have seized. Despite opposition from corporate America, the Dodd-Frank legislation mandated that public companies give shareholders a vote on compensation strategy at least once every six years. Last year brought the first onslaught of such say-onpay votes, and this year 1,714 companies have already held them, says the consulting firm Semler Brossy. Among those, 45 companies’ pay strategies have been rejected by shareholders, up from 29 last year at this time.

The votes have had immediate impact, pushing many corporate boards to explain to investors how they reached pay decisions, and influencing some companies to rein in golden parachutes like the ones Hewlett-Packard gave its last two chiefs.

To address criticism that chief executive pay has become untethered from company performance, companies have been giving more bonuses in restricted stock that can be sold only if an executive manages to increase revenue or the stock price. An Equilar survey of all companies in the Standard & Poor’s 500 index shows that the median amount of stock awarded to chief executives rose 10.7 percent from 2010 to 2011, while cash awards fell 6.8 percent.