Wal-Mart's Mike Duke Tops in Pay, Dillards Rule in Stock Options

by Gwen Moritz  on Monday, Jul. 22, 2013 12:00 am  

Mike Duke was paid $20.7 million last year as CEO of Wal-Mart Stores Inc., and he cashed out another $7.1 million worth of stock options. (Photo by Ryan Miller)

John Carney, senior editor for CNBC.com, noted earlier this month that shareholders of only 57 of the 2,173 companies that had cast say-on-pay ballots so far this year had rejected the compensation policies, and at 72 percent of companies the approval rating topped 90 percent.

“In fact,” Carney wrote, say on pay “may even be encouraging rising pay for top executives who can now point to direct shareholder approval of their pay packages.”

Highest-Paid Including Stock Options
When value realized by exercising stock options is added to total compensation, the following Arkansas executives were the highest paid in the most recently completed fiscal years:

CompensationOption IncomeTotal
1 William T. Dillard II CEO, Dillard’s Inc. $4,890,494 $31,120,000 $36,010,494
2 Alex Dillard President, Dillard’s Inc. $4,849,733 $31,120,000 $35,969,733
3 Michael T. Duke President & CEO, Wal-Mart Stores Inc. $20,693,545 $7,124,229 $27,817,774
4 James I. Freeman SVP & CFO, Dillard’s Inc. $5,173,519 $18,012,000 $23,185,519
5 Drue Matheny EVP, Dillard’s Inc. $2,332,338 $19,661,426 $21,993,764
6 Mike Dillard EVP, Dillard’s Inc. $2,352,808 $18,802,000 $21,154,808
7 David M. Wood Former President & CEO, Murphy Oil Corp. $18,211,157   $18,211,157
8 Rosalind G. Brewer EVP, Wal-Mart Stores Inc. $14,457,122   $14,457,122
9 C. Douglas McMillon EVP, Wal-Mart Stores Inc. $9,563,093 $3,485,383 $13,048,476
10 William S. Simon EVP, Wal-Mart Stores Inc. $11,221,797 $660,994 $11,882,791
11 Charles M. Holley Jr. EVP & CFO, Wal-Mart Stores Inc. $6,638,670 $1,628,989 $8,267,659
12 Jeffery R. Gardner President & CEO, Windstream Corp. $7,995,350   $7,995,350
13 James V. Lochner COO, Tyson Foods Inc. $7,801,420 $138,249 $7,939,669
14 Kevin G. Fitzgerald EVP & CFO, Murphy Oil Corp. $6,553,986 $1,322,295 $7,876,281
15 Donnie Smith President & CEO, Tyson Foods Inc. $7,844,679 $9,278 $7,853,957
16 Steven A. Cossé CEO, Murphy Oil Corp. $4,611,906 $3,020,596 $7,632,502
17 Roger W. Jenkins EVP, Murphy Oil Corp. $6,266,192 $637,438 $6,903,630
18 Jeffrey H. Fox Executive Chairman, Convergys Corp. $5,184,109 $1,089,769 $6,273,878
19 John H. Tyson Chairman, Tyson Foods Inc. $4,217,434 $2,005,740 $6,223,174
20 George G. Gleason II Chairman & CEO, Bank of the Ozarks Inc. $3,483,389 $2,070,298 $5,553,687

Dodd-Frank also requires publicly traded companies to reveal how their CEO’s pay compares with that of their median employee, but the SEC has yet to issue regulations on just how those ratios are to be reported.

In April, the Bloomberg financial wire service reported that CEOs of companies included in the Standard & Poor’s 500 Index are paid, on average, 204 times that of rank-and-file workers in their industries. That, according to Bloomberg’s research, is an increase of 20 percent in four years.

When Bloomberg ranked CEO pay as a multiple of an industry-specific average worker pay, Wal-Mart’s Duke ranked 18th. His compensation of $18.1 million in the fiscal year that ended Jan. 31, 2012, was calculated at 611 times the $29,688 average pay and benefits package for retail workers.

By the same measure, Donnie Smith, CEO of Tyson Foods Inc. of Springdale, ranked No. 211. His compensation of $7.8 million in 2012 was 196 times the $39,934 average for food manufacturing workers, according to Bloomberg. Tyson objected to the methodology, saying the industry average excluded thousands of management jobs and didn’t recognize benefits that Tyson provides that other companies don’t.

On Arkansas Business’ list, Smith ranks seventh, and he added less than $10,000 to his income by exercising stock options.

How Stock Options Work

A stock option is the right to buy a share of stock during some future period and at a price set by the company. The exercise price — also called the “strike” price — does not change with the market price.

When the market price of a company’s stock rises, executives may choose to exercise their options to buy stock at the lower exercise price. The shares are, in most cases, quickly resold at the higher market price.

The difference between the exercise price and the market price is the value realized by exercising stock options. In this week’s list of Arkansas’ highest-paid public company executives, the value realized by exercising stock options is reported in a separate column but is not included in the executive’s total compensation figure.



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