Wage gap between CEOs, staff increases
Darden CEO pay jumps to 871 times more than its average employee
Darden Restaurants CEO Eugene Lee made 871 times as much in total compensation as the median worker at the Orlando-based company last year after directors gave him $7.5 million in future stock bonuses and grants aimed at keeping him long term.
Two years after requirements began to make public companies report how much their executives make compared with rank-andfile workers, seven out of 19 CEOs of Central Florida’s publicly traded companies make at least 100 times as much as their median employee.
The goal of the disclosure rule was to mitigate CEO pay increases, but that hasn’t happened. Instead soaring corporate profits and stock market performance have continued to increase execu
tive pay, compensation experts said.
At the same time, the uproar against CEO pay has quieted somewhat with low unemployment rates, the soaring stock market and recent wage gains for typical workers, one expert said.
Lee was the highest-paid chief executive at Central Florida’s publicly traded companies last year, making $15.8 million in salary, bonuses, stock and other benefits. The median worker at the company that owns Olive Garden and LongHorn Steakhouse and other national restaurant chains made $18,097 for the year.
Darden spokesman Rich Jeffers said the company’s board of directors decided that the retention bonus was needed to keep Lee, who at 58 is retirement eligible and has presided over record corporate earnings and stock gains. Even though Lee didn’t get the stock grants in 2018, SEC rules still require Darden to record it as compensation for the year it was given.
In all, top executives at companies that include Darden, Publix Tupperware, Gencor and others averaged a 17.5% increase in total compensation during their most recent fiscal year, led by a $9.4 million increase — or 147% — for the Darden CEO. Lee’s bonuses skewed the region’s average, but even without him, local CEO’s averaged a 4.7% increase in total compensation.
The average CEO of a publicly traded company in the region made $4.6 million in combined salary, bonuses, stock grants and options. The average annual income for workers in Metro Orlando increased 3.6% from 2017 to 2018 to $46,010 annually, according to the Bureau of Labor Statistics.
Again, the pay-ratio rule showed the disparity between top executives and the workers under them, particularly in Orlando’s service-based economy with plenty of theme park and restaurant companies. But it has had very little impact in board rooms where CEO pay is decided, said Paul McConnell, Orlandobased managing director of executive consulting firm Board Advisory.
“[The CEO pay disclosure law] was a lot of work and a lot of money expended for absolutely nothing,” he said. “It really hasn’t had much influence at all.”
William Brown at Melbourne-based Harris Corp. brought in $14 million, about $1.5 million more than the year before. That’s 144 times as much as the median employee makes there, regulatory documents show.
Marriott Vacation Club’s Stephen Weisz made $7.6 million in 2018 (212 times as much as the median worker) and fired SeaWorld CEO Joel Manby made $6.8 million, a $1.3 million cut from the previous year.
Manby made 711 times as much as the median SeaWorld worker, according to Orlando Sentinel calculations. In its filing, SeaWorld calculated the salary of former interim CEO John Reilly to compare executive and employee salaries. Reilly, who received $1.8 million in 2018, made 184 times the pay of the median worker there, who made $9,580.
Executive compensation figures are gleaned from proxy statements from companies filed with the U.S. Securities and Exchange Commission.
A bigger factor than the pay disclosure law has been pressure from investors to slow down CEO pay growth by using more sophisticated measures to peg compensation to financial and stock performance, McConnell said.
“Broad CEO compensation doesn’t really march to the same dynamic as the rest of the economy,” McConnell said. “CEO salary increases have been much flatter in recent years.”
When Clinton-era limits were passed to limit CEO base salary, compensation moved to stock options. Now compensation committees use multi-pronged methods based on financial performance targets, comparisons to peer companies as well a stock prices.
Darden recorded $596 million in net income for its 2018 fiscal year, the highest number ever for the company with the exception of the year it sold Red Lobster.
“If you look at Darden, they have outstanding performance the last couple of years,” said James Combs, a UCF business professor who studies executive compensation trends. “A case can be made this his compensation is appropriate, at least compared to other CEOs.”
A handful of other Central Florida executives were given large retention bonuses that were recorded as compensation this year but won’t be realized until later.
It was also a year of turnover for CEOs at some of the region’s biggest companies, with changes at SeaWorld, Tupperware and Ruth’s Hospitality under vastly different circumstances.
Longtime Ruth’s Hospitality Group leader Michael P. O’Donnell retired as CEO in August, and the company promoted chief operating officer Cheryl Henry to the top spot. Henry’s base salary increased to $650,000 from $410,000, but she was also granted $4.8 million in stock that she won’t be able to cash in on until 2021 to 2023. Her total compensation was $6.1 million in 2018.
O’Donnell, who moved to the executive chairman position, made $2.86 million last year in a partial year as
CEO.
“In connection with her promotion to president & CEO, Ms. Henry received a one-time, long-term equity grant designed to ensure that she is focused on driving long-term strategic value to Ruth’s Hospitality Group, Inc. (RHGI),” said a statement from company spokeswoman Mikella Gallagher. “The RHGI Board of Directors awarded this grant with the guidance of external expert resources and does not intend for her regular annual compensation to include awards of this magnitude.”
For 2018, Henry last year made about 193 times what the median Ruth’s Hospitality employee’s $32,504 salary.
Tupperware Brands also promoted its chief operating officer Tricia Stitzel to the CEO position when Rick Goings retired last year. Stitzel’s combined compensation of $3.6 million in 2018 was about half of what Goings made the year before. Stitzel’s compensation included $2.7 million in stock awards and future options. Stitzel’s compensation was 198 times more than the median employee there.
“Public company boards are eager to give executives large stock positions because it gives them a financial incentive to improve financial and Wall Street performance,” Combs said. That’s why its common for new CEOs to get large stock grants that mature over four or five years.
But even though CEO compensation is rising, Combs said it’s moderate considering the positive economy and growing stock prices.
“The public outcry over the last 20 years on CEO pay, it looks like it’s quieted down quite a bit,” Combs said. “When the stock market is up, it hides a lot of sins.”