It's looking like top corporate executives raked in the cash in 2010:
In 2010, median non-farm worker compensation increased by a mere 2.0 percent. With the exception of 2009, when compensation rose just 1.4 percent, that's the slowest rate of increase in decades.
CEO bonuses at 50 major corporations jumped a median of 30.5%, the bigest gain in at least three years, according to a study of the first batch of corporate pay disclosures by consulting firm Hay Group for The Wall Street Journal.To a large degree, the gains reflect the value of generous CEO stock options, which surged in concert with last year's bull market. It might seem only fair to incentivize executives to boost their companies' share prices—until you consider how few of these gains have trickled down to the average American worker.
In 2010, median non-farm worker compensation increased by a mere 2.0 percent. With the exception of 2009, when compensation rose just 1.4 percent, that's the slowest rate of increase in decades.
By JOANN S. LUBLIN
For many U.S. chief executives, bonuses bounced back last year at a speedy clip.Reuters
Starbucks CEO Howard Schultz received his biggest bonus ever.
Top executives collect a lot of different types of pay, including salaries, long-term equity awards and bonuses tied to corporate performance. Bonuses in general are rebounding as some hard-hit industries like autos recover and corporate profits climb.
Bloomberg News
Clorox paid its CEO, Donald R. Knauss, a 53% bigger bonus.
Jacobs Engineering Group Inc. and Beazer Homes USA Inc. have already gotten a thumbs down from investors. Five others won support from less than 70% of the votes, according to Institutional Shareholder Services, which advises big investors like mutual funds and pension funds.
Hay Group reviewed proxy statements filed since Oct. 1 by companies with at least $4 billion in annual revenue. The 50 CEOs in the sample collected a total of $126.1 million in 2010 bonuses, up from about $83 million a year earlier.
Big winners included the chiefs of Starbucks Corp., Jabil Circuit Inc. and Clorox Co.
Bloomberg News
CEO Hugh Grant's Bonus fell as his company Monsanto missed key financial goals
The measure of shareholder return includes gains in the stock price along with reinvested dividends.
Corporate directors said the sharp upturn was a sign of improved profits. Net income at the 50 companies increased a median of 19.4%.
Bloomberg News
Jeff Fettig, chief executive officer of Whirlpool Corp., received a lower bonus amid rising costs and stiff competition.
Jeffrey Immelt, the chief executive of General Electric Co., picked up a $4 million cash bonus for 2010 after skipping payments the previous two years, when profit dropped.
Top bosses at Oshkosh Corp., Navistar International Corp. and Johnson Controls Inc. got higher bonuses as their companies recovered along with the auto industry.
Oshkosh's Robert G. Bohn collected a $2.4 million bonus in the year ended Sept. 30, up from $527,813 the prior year at the maker of specialty vehicles and other products. The company said the bonus was mainly based on gains in operating income.
Daniel Ustian, Navistar's chief, got a $1.95 million one-time bonus for developing a business model "that kept the company profitable in the midst of the worst truck market in 50 years,'' said Roy Wiley, a spokesman for the commercial truck maker. The special award was in addition to a regular $1.95 million bonus.
At Starbucks, Chief Executive Howard Schultz pocketed a $3.5 million bonus for the year ended Oct. 3. The bonus, his biggest ever, far surpassed the $1 million the coffee giant bestowed the year before.
The higher reward reflected the company's performance last fiscal year, said Alan Hilowitz, a spokesman. Starbucks recently turned around sales after the toughest stretch in its 40 years. The company's profit more than doubled to record levels. Starbucks's directors set tough bonus goals "tied to a very challenging fiscal 2010 annual operating plan," Mr. Hilowitz said.
Starbucks investors also got richer, with gains in the stock plus reinvested dividends up 24.9% last year, according to Hay Group. Proxy adviser ISS recommends investors vote "yes" on the company's pay practices at the March 23 annual meeting.
Jabil Circuit gave CEO Timothy L. Main a $2.9 million bonus for its year ended Aug. 31, more than five times his $524,103 award the prior year. The board's pay panel chose possible bonus targets that it "believed were challenging yet attainable in an uncertain economic environment,'' said Adam Berry, director of investor relations for the maker of circuit boards and electronic components.
The award was based on higher core operating income and return on invested capital. Jabil Circuit posted profit of $169 million last year, swinging from a loss of $1.2 million the year before.
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Shareholder returns were -4.3% in the year ended Aug. 31, compared with 10.9% for the S&P 500 Index, according to Hay Group. Poor returns forced Mr. Main to forfeit most of his performance-based restricted shares.
Clorox was generous with its bonus even though it has hit a tough stretch lately. CEO Donald R. Knauss collected a $1.97 million bonus for the year ended June 30, representing a 53% gain. Profit advanced 12.29% during fiscal 2010.
Dan Staublin, a Clorox spokesman, said, "It's important to look at our total CEO compensation package, which fully aligns with shareholder interest.'' Last month, billionaire investor Carl Icahn disclosed a 9.08% stake, saying Clorox is undervalued.
Not every big business boss is rolling in bonus dough, the Hay analysis showed. Whirlpool Corp. CEO Jeff M. Fettig saw his cash bonus tumble 49% to about $1.8 million from $3.5 million in 2009, even as 2010 earnings jumped 89% from a year earlier to $619 million.
The home-appliance maker is caught in a vicious spin cycle of rising expenses and intensified pressure from Korean rivals. The competition, especially in the U.S., makes it harder for Whirlpool to pass along higher raw material prices to consumers.
Monsanto Co.'s Hugh Grant didn't collect a penny for the year ended Aug. 31, because the agricultural-products giant missed key financial goals. His fiscal 2009 bonus totaled $1.1 million. Even so, 34% of voting shares opposed Monsanto's executive pay packages at its Jan. 25 annual meeting.
Mr. Grant's total direct compensation climbed 17.4% in fiscal 2010, while shareholder return fell 36%, according to Hay. Monsanto directors are now discussing the large minority vote with investors so they can understand why shareholders "voted the way they did," said Kelli Powers, a spokeswoman.
Write to Joann S. Lublin at joann.lublin@wsj.com
http://online.wsj.com/article/SB10001424052748703818204576206903329068840.html
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