$30M-A-YEAR BARRIER
Pay packages rise again, but wealth has yet to spread to shareholders 11 CEOS BUST THROUGH
Investors didn’t see a big pay day last year since the stock market was flat. But some CEOs sure did. Eleven current CEOs in the S&P 500, including Philippe Dauman of media giant Viacom, Marc Benioff of online sales software maker Salesforce.com and Robert Iger of media powerhouse Disney, are members of the lucrative $30-million-a-year club, based on an analysis of data from S&P Global Market Intelligence by USA TODAY of the 418 CEO pay packages reported so far.
Total pay package sums were tallied using the methodology required by the Securities and Exchange Commission.
Breaking the $30 million-ayear barrier was even more rare this year because the stagnant stock market, stalled earnings growth and anemic gains in pension values due to accounting changes put a lid on CEO pay gains. Contrast that with 2014, when 22 of current S&P 500 CEOs made $30 million or more.
“These kinds of paychecks are really out of line,” says Eleanor Bloxham, CEO of The Value Alliance, an advisory service for corporate boards and executives. These pay packages “are not just out of line with what shareholders are making ... (they are) causing negative effects on the economy.”
The biggest pay package was awarded to Dauman to the tune of $54.2 million, a total that rose 22% from the same year-ago period that ends in September. During the fiscal year, shareholders didn’t fare nearly as well with the stock dropping 44% and net income falling 19% to $2 billion. Viacom’s regulatory filing shows $17 million of Dauman’s total pay was from a contract renewal. Excluding that renewal, Dauman’s pay fell 16%, the filing shows. Viacom didn’t respond to a request for comment.
Large CEO pay packages catch attention, but they might be easier for shareholders to take if they are gaining, too. Take Disney’s Iger, who was paid $44.9 million last year. That package puts the CEO among the best paid, but Disney shareholders saw the stock jump 16% during fiscal 2015, which ended Oct. 3. Iger’s pay was down 4% from 2014. A Disney spokesman said 92% of Iger’s compensation is linked with financial performance. Disney’s net income rose 12% last fiscal year to $8.4 billion.
Deciding how to measure CEO
These pay packages “are not just out of line with what shareholders are making ... (they are) causing negative effects on the economy.” Eleanor Bloxham, CEO of The Value Alliance
pay continues to be a topic of great discussion. David Cote, CEO of Honeywell, was paid $34.5 million last fiscal year, up 18% from fiscal 2014. The SEC required the company to include pay Cote received connected with a growth plan that actually is paid over two years, says Rob Ferris, a spokesman at Honeywell.
“This differs with how our compensation committee views this element of compensation because the total payment is earned over two years and should be annualized since performance cycles do not overlap,” Ferris said. Adjusted to an annual basis, Cote’s total pay fell in 2015. Honeywell’s stock rose 3.7% in 2015.
Some companies make a point to say they’re addressing CEO pay. Benioff saw his pay in fiscal 2015, which ended Jan. 31, 2016, drop 16%. But it still came in at a $33.4 million, making him the fifth-best paid CEO in the analysis. The company said, in its regulatory filing, it made “significant changes” to Benioff ’s pay “taking into account feedback we received from stockholders.”
The biggest change replaces option-based incentives to an “atrisk” compensation where 91% of CEO pay is tied to performance pay or pay tied to the stock’s performance.
Shares of Salesforce rose nearly 21% in fiscal 2016, while the company’s net loss widened to $263 million.