by John Henry on Monday, Jul. 28, 2008 12:00 am
There's nothing quite like selling a company for $27.5 billion. Just ask the top executives of Alltel Corp.
Last year's sale of the nation's fifth-largest wireless communications company to private equity firms TPG Capital LLC and GS Capital Partners boosted five Alltel execs to the top of this year's list of executive compensation.
The deal was so big - and the execs' take so hefty - that it was impossible to calculate a meaningful median or average compensation figure for the leaders of the state's public companies.
Scott Ford, chief executive officer of Alltel, reaped the biggest benefit. In 2006 he received $16.4 million in total compensation. In 2007 that jumped to $146.4 million.
Ford's salary last year was just $1.2 million, but he realized a gain of $18.7 million from stock options before the sale and another $9.6 million in stock awards, along with $7.5 million in bonus pay. That $37 million alone would have made him No. 1 among the state's public company execs. But with the sale, Ford garnered another $109.3 million in other compensation to push him far ahead of anyone else.
The other four Alltel executives who comprise the top of the list are Jeffrey Fox, Kevin Beebe, Richard Massey and Sharilyn Gasaway.
Fox, a group president, got a $49.1 million jump with the sale to boost his total compensation to $71 million. In 2006, he took home $10.5 million.
Beebe, also a group president, received $51.5 million from the sale, increasing his total take to $61 million. He earned $9.8 million the year before.
Massey, executive vice president, general counsel and secretary, who earned $3.1 million in 2006, got $43.3 million from the sale, propelling him to $50.9 million last year.
Gasaway, another EVP, netted $36.7 million last year after a $30 million benefit from the sale. Her take in 2006 was $2.9 million.
With their stock sold in taking the company private, the latest flip of Alltel to Verizon Communications Inc. in a $28.1 billion deal this year won't have the same impact on the exec's pay. Indeed, some will be looking for other work - if they want it.
Ford, who has headed Alltel since 2002, will keep busy as CEO of the company until the Verizon deal is completed, which is expected by the end of the year. He still serves on the boards of Tyson Foods Inc. and the Cellular Telecommunications & Internet Association.
Given his obvious talent at growing a telecommunications company, don't expect him to disappear. In a speech to the Rotary Club of Little Rock last week, he said, "I plan to stay here and be a part of this community." (See Inside Business article on Page 10.)He also said that other executives and staffers were committed to continuing their careers in Little Rock, even outside of Alltel.
Ford told club members that several new business plans were possibilities and that he would examine them more closely once the Verizon deal is done.
The 2006 compensation figures for the Alltel execs - and several others - were corrected on this year's list because of federal Security & Exchange Commission reporting changes that now allow for an apples-to-apples comparison.
Wal-Mart CEO Earns Big
The slowed economy has proven to be a boon for discounters such as Wal-Mart Stores Inc., the world's largest corporation. Its stock is up 36 percent this year from its 52-week low.
Lee Scott, CEO and president of Wal-Mart, who has led the list in the past and normally would be expected to again, fell to sixth place because of the Alltel deal.
Still, his $33.6 million pay package in 2007 was just short of $4 million more than he took home the year before. Scott's base salary is $1.4 million, but he also got $20.9 million in stock option awards, $8.4 million in bonus pay and another $2 million in stock options realized.
Executives of Arkansas' five Fortune 500 companies, as expected, monopolize the top 25 on the list. Those companies are Wal-Mart (No. 1), Tyson Foods Inc. (88), Murphy Oil Corp. (134), Alltel (300) and Dillard's Inc. (338).
Rounding out Arkansas-based public companies that made the Fortune 1000 list are J.B. Hunt Transport Services Inc., which at No. 501 just barely missed making the elite list; Windstream Corp., the Alltel spinoff (532); Arkansas Best Corp. (934); and Baldor Electric Co. (935).
Murphy Oil has greatly benefited from the high price of oil, and coming in at No. 7 is CEO Claiborne Deming with total compensation of $17.7 million, double what he made the year before. However, $8.8 million came from stock options realized. And this year, Murphy's stock has risen some 45 percent above its 52-week low. Deming's base salary was $1.1 million.
John Menzer, former vice chairman of Wal-Mart, and Michael Duke, vice chairman-international for the retail giant, were in eighth and ninth place. Menzer's package amounted to $17.1 million and Duke's $14.1 million.
Rounding out the Top 10 is Tyson Foods CEO Richard Bond with total compensation of $11.1 million. Most of that was $6 million in stock options awards.
Tyson - and all other chicken, beef and pork producers - has been suffering in the current economy. High grain and fuel prices have cut heavily into profits, but Tyson's stock still has managed to rise some 27 percent over its 52-week low.
Arkansas Business lists the compensation of 109 executives this year, ranging from Ford's $146.4 million down to Jim Precht, a senior vice president withAdvance Environmental Recycling Technologies Inc. at Springdale, who took home $147,800.
5 Women on List
Of the 109 public company execs on the list, only five are women. In addition to Alltel's Gasaway, they are Drue Corbusier (27th on the list), EVP at Dillard's, who earned $1.99 million;Sherri Billings (59th), CFO of First Federal Bancshares of Arkansas, $640,261; Judy McReynolds (60th), SVP, CFO and treasurer of Arkansas Best, $640,021; and Susan Bradley (65th), SVP at Windstream Corp., $624,955.
Nationally, the CEO of a Standard & Poor's 500 company received, on average, $14.2 million in total compensation last year. That's according to The Corporate Library, a corporate governance research firm. The median compensation package received was $8.8 million.
That's up over the previous year, even though many of the big public companies are posting losses during the economic decline. That increase in executive pay upsets critics, who consider the pay raises unjustified, particularly in light of market losses. Such pay level abuse, as it's called, undermines shareholder value and market confidence, critics say.
"External factors, not leadership errors, are creating the trouble for companies, so companies are reluctant to punish CEOs for things that are largely out of their control," said John A. Challenger, CEO of Challenger Gray & Christmas Inc. "We may see CEO turnover decline as the economy worsens, due to the fact that many companies may try to keep the highest tier of leadership intact through the downturn. Any drastic changes at the highest levels of an organization are unlikely to reverse a company's fortunes in this economy and the tumult may actually make the situation worse."
National CEO Pay Grows
Still, some of the shareholder angst over CEO pay is understandable. Last month, The Associated Press reported that average CEO compensation grew by 3.5 percent last year despite slowing economic growth, falling profits and mass layoffs.
Generally, a CEO's pay declines during tough economic times. Dillard's provides an example. The department store chain has been struggling, and bonuses or performance pay that the top execs had received in the past were eliminated in 2007.
CEO William Dillard II made $2.7 million last year, compared with $5.1 million in 2006, when he received a bonus of $2.5 million. Dillard's President Alex Dillard's pay was cut by more than half to $2.2 million from $4.9 million in 2006. Corbusier and Mike Dillard, another EVP, both earned less last year than in 2006.
The AP report said half of the 10 best-paid CEOs - who collectively hauled in half a billion dollars last year - presided over companies whose profits shrank "dramatically."
The struggling economy has hit the nation's big financial investment firms particularly hard. Yet John Thain, the CEO of Merrill Lynch, was No. 1 in CEO pay last year (unless one includes Ford's windfall). He received $83 million in compensation for the year, despite presiding over a company that has recorded more than $30 billion in write-downs since the third quarter of last year. Earlier this month, it posted a $4.9 billion loss for its second quarter.
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