Executive Pay List Reflects Revised Rules

by Gwen Moritz  on Monday, Aug. 23, 2010 12:00 am  

Michael T. Duke, CEO of Wal-Mart Stores Inc., was the highest-paid public company executive in Arkansas in the most recent fiscal year.

"Either the consequence of this was not fully understood, or it was understood and ignored," Hodgson said.

Even in much better years than 2009, Hodgson said, stock price is a poor indicator of management prowess.

"Between 60 and 80 percent of any stock change is due to the market rather than due to how well any company is run," he said. "There is a link, but it's not a direct enough link to tie compensation to it."

Instead, The Corporate Library recommends tying compensation, including stock awards and bonuses, to "performance standards" other than market price. Appropriate performance standards would "depend on what the directors are trying to get the management to do," he said.

"It might be some strategic measures; it could be about product development; it could be about market share. It really depends on the state of the company to determine whether the management is doing a good job or not."

The management of a young company might be rewarded for increasing revenue, while a mature company might need managers who are motivated to develop new products or diversify into new markets.

The List
Arkansas Business' list of executive compensation draws from the most recent proxy statements released by public companies headquartered in Arkansas and out-of-state companies that have "named executive officers" in Arkansas. NEOs are the CEO and CFO of the company plus the three other most highly compensated executives, although some smaller companies have fewer than five NEOs and some companies disclosed more than five because of new hires and departures during the fiscal year.

For 2009, the only out-of-state company with an NEO in Arkansas was IberiaBank Corp. of Lafayette, La., and its only Arkansas-based NEO, Senior EVP Michael J. Brown, moved back to Louisiana this month.

The list comprises 99 names, including several who retired, resigned or were terminated during the 2009 fiscal year. All of them are NEOs except two members of the Dillard family, Denise Mahaffy (No. 62 on the list) and William Dillard III (No. 69), whose compensation as vice presidents of Dillard's Inc. were disclosed in the proxy because of their relationship to other officers and directors.

The compensation information for NEOs of America's Car-Mart Inc. of Bentonville dates back to the fiscal year that ended on April 30, 2009. Car-Mart plans to release its 2010 proxy before the end of August, according to CFO Jeffrey Williams (No. 58).



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