How a stock deal sent a CEO’s pay package soaring

A look at the top paid executives in the region last year. Will the pandemic cut their 2020 paychecks?

John Plant said he’d do it for a year — he’d be Arconic’s fourth CEO in two years to prepare the aerospace manufacturer for a spinoff.

His reward for that year: $51.7 million. In 2019, that placed him at the top, with room to spare, of the Fortunate 50. The annual list ranks the compensation of Pittsburgh-area public company executives, factoring in their salaries, bonuses, stock awards, perks and other company contributions.

Mr. Plant outdid the runner-up, Ansys Inc. CEO Ajei Gopal, by more $20 million. This is how he did it. Mr. Plant had taken the helm of the North Shorebased company two weeks after Arconic, which itself spun out of aluminum giant Alcoa in 2016, rejected a takeover by a private equity group. Its stock was trading in the high teens. Mr. Plant was previously chairman of the company’s board of directors. When he agreed to take the CEO job, Arconic gave him 1 million shares of the company’s stock, worth about $17.5 million at the time.

Another director, Elmer Doty, took over as president and chief operating officer around the same time in early February 2019. By the time Mr. Doty left the executive post seven months later, he’d earned $10 million.

For the rest of the executive team, compensation relied on the company meeting certain targets — for revenue, earnings, return on assets.

But for Mr. Plant and Mr. Doty, their compensation packages were tied to one thing: the rise in the price of Arconic’s stock.

If it got to $30 per share at some point during the following two years, Mr. Plant would get a $20 million bonus. Mr. Elmer would receive $10 million in cash.

In December, Arconic’s stock crossed the $30-pershare threshold.

Mr. Plant got the full monty. Mr. Elmer, who left the post early, settled for $2.7 million, a prorated amount.

It would have taken the median employee at Arconic nearly 1,000 years to match the year Mr. Plant had in 2019.

His $51,712,578 compensation last year was $51,712,577 higher than Toby Rice’s, who took over as CEO of EQT Corp. in July.

The $1 first-year salary was Mr. Rice’s promise when he launched a campaign to unseat the leadership of the Downtown-based natural gas driller last year.

Though he remains fortunate in many ways — Rice Energy Inc., a natural gas firm that his family started and sold to EQT for $6.7 billion in 2017, dominated the

Fortunate 50 list in 2015 — Mr. Rice was the rare EQT CEO to miss the Fortunate 50 list in years.

But EQT did have four executives on the list, each either unseated by Mr. Rice’s activist proxy campaign or people who left shortly afterwards.

The quickest money went to Gary Gould, a veteran oil and gas executive who was brought in as COO of EQT in late April, in part to try to diffuse the activist campaign led by Mr. Rice. He left in August, a month after the campaign succeeded.

Mr. Gould’s compensation for three and a half, albeit tumultuous, months: $10.6 million, much of it accumulated outside of his actual service to the company.

It began with a $500,000 signing bonus; a relocation budget of $122,153 (more than the median EQT employee makes in a year); $39,775 in country and dining club dues; and a $9,000 annual car allowance. But the big-ticket items were stock awards worth more than $6 million, granted on his starting date. On the way out, Mr. Gould grabbed $2.5 million as a payment for leaving.

Party over?

The COVID-19 pandemic hit right around proxy season, the time of year when public companies disclose the compensation packages for their top executives.

As the economy shut down and millions of employees were told to stay home — and many were told they’re no longer employees — hundreds of companies announced moves to cut executive compensation during the crisis.

In the Pittsburgh region, a handful of public companies decided to show some pain at the top, although it won’t be

clear until the next proxy season what impact their announced pay cuts will have had.

Dick’s Sporting Goods Inc. said on March 19 that its CEO and president would receive no salaries and the base salaries of other top executives would be reduced.

But, as with other companies, the bulk of their annual earnings come not from salaries but from incentive pay, which is usually some multiple of the salary awarded depending on how many of the company’s goals were met during the year. Dick’s specified that executives would be given their incentives based on 2018 salaries.

At ATI, top executives got a 20% salary cut for a period of a year.

Kennametal executives took a 20% salary cut for the second half of 2020.

PPG Industries instituted temporary salary cuts for its CEO (30%) and other senior executives (20%-25%) until Sept. 30.

Arconic Corp., now the spun-out rolled products piece of its former self, announced it would reduce the CEO’s salary by 30%. Senior-level managers would see a 20% cut in their salaries, while all other salaried employees would have a 10% cut.

The company that remained after the spinoff, Howmet Aerospace, did not follow suit. Its co-CEO is John Plant. But he’s only staying for a few years.