Highs and lows of CEO pay
- 17 July, 2014 23:32
This year's proxy season has come to a close, and after digging through regulatory filings, 10 highlights stand out in our analysis of 62 tech CEOs' compensation.
1. Tech CEOs don't like to fly coach. Some fringe benefits are on the outs, like tax gross ups and club memberships. But not private jets. A number of employers continue to foot the bill for CEOs' personal use of corporate aircraft. One frequent flier is Motorola Solutions' Greg Brown, who logged $273,734 in personal travel last year. Other CEOs accustomed to using company jets for personal travel include: HP's Meg Whitman (to the tune of $254,162), CSC's Michael Lawrie ($237,469), CA's Mike Gregoire ($177,557), IBM's Virgina Rometty ($151,933), Verizon's Lowell McAdam ($120,304), and EMC's Joe Tucci ($106,121).
2. No longer flying at the company's expense: Randall Stephenson. Is it unreasonable to expect well-compensated executives to pay for their own personal travel? Maybe not. In 2013, Stephenson began reimbursing AT&T for his personal use of company aircraft. By comparison, he racked up $276,391 for personal aircraft usage at AT&T's expense a year prior.
(Despite relinquishing the aircraft perk, Stephenson still managed to accumulate plenty of perks last year, including $27,194 in auto benefits; $27,025 for home security; $24,000 for financial counseling, tax preparation and estate planning; $20,960 in communications expenses; $15,528 for supplemental health insurance premiums; and $2,776 for club memberships.)
3. Securing the CEO is a pricey endeavor. Another perk that's nonnegotiable for some employers is personal and residential security for the CEO. Amazon pays to keep CEO Jeff Bezos safe, and the company's security tab hit $1.6 million last year. The company justifies the security expenses in part because of Bezos' low compensation (besides the $1.6 million security perk, Bezos' only pay in 2013 was his $81,840 salary).
Other tech companies also picked up the tab for their CEOs' security: Oracle paid $1.5 million to secure Ellison's residence; Salesforce.com paid $654,829 for costs related to Marc Benioff's personal and residential security; and Verizon paid $153,741 for McAdam's home security expenses.
Facebook spent $650,164 on chartered aircraft for CEO Mark Zuckerberg, as part of his overall security program.
4. Sprint CEO Dan Hesse received a $13.4 million cash bonus -- the largest cash award among the 62 CEO pay packages we studied. Giant cash payouts also went to Comcast CEO Brian Roberts, who collected a $9.2 million bonus; Motorola Solutions' CEO Greg Brown, who netted a $6.2 million bonus; and AT&T CEO Randall Stephenson, who got a $5 million bonus. How do these top cash-bonus collectors compare to the rest of the CEOs in our analysis? The median cash bonus among 62 tech CEOs was $1.1 million.
5. It pays to negotiate. Sprint's Hesse landed an enormous raise last year. His total compensation was valued at $49.1 million, which is more than quadruple the value of his $11.1 million pay package in 2012. Significantly, among the perks Hesse received was $226,794 paid by Sprint for legal fees related to the negotiation of his employment contract.
6. Spectacular pay raises keep widening the pay gap. Sprint's Hesse wasn't the only tech leader to receive a generous pay hike. Avaya CEO Kevin Kennedy got a 454% pay increase last year. His $7.4 million compensation was more than five times the value of his 2012 pay, which came in at $1.3 million.
Thomas Richards, the head of CDW, saw his pay nearly double last year, climbing from $3.2 million to $6.3 million. An 80% raise boosted John Chambers' compensation above $21 million last year, compared to $11.7 million in 2012. Riverbed CEO Jerry Kennelly's 2013 compensation spiked 61% to $12.8 million, up from $8 million a year earlier.
7. Extreme pay cuts weren't uncommon. Dick Costolo's compensation took the biggest nosedive, percentage-wise. The Twitter CEO was paid $130,250 in 2013, down from $11.5 million the previous year -- a 99% plunge. Aruba CEO Dominic Orr saw his pay cut 97% to $650,547; William Brown, CEO of telecommunications equipment company Harris, took a 55% pay cut to $6.4 million; and Brian Krzanich, who was named Intel CEO in mid-2013, saw his total compensation drop by 40% to $9.6 million the year he took the reins.
Despite an $11.7 million pay cut, Yahoo CEO Marissa Mayer still managed to rank among the highest paid tech CEOs in the U.S. with a pay package valued at $24.9 million in 2013 (down 32% from $36.6 million). Likewise, Paul Ricci, CEO of speech recognition company Nuance Communications, made 21% less in 2013 than he did the prior year, yet he still landed a pay package worth $29.2 million -- enough to be included in our ranking of top-paid tech CEOs.
8. No one comes close to Larry Ellison. Like Yahoo's Mayer and Nuance's Ricci, Larry Ellison appears on two of our lists: highest paid tech CEOs and most drastic CEO pay cuts. He's the highest paid tech CEO with a 2013 package valued at $78.4 million. He also took the biggest pay cut by dollar amount -- a whopping $17.7 million loss -- among all the CEOs analyzed. (He made $96.2 million in 2012).
9. Legal and regulatory assistance pads executive pay packages. Salesforce.com paid $280,000 in filing fees to the government on behalf of CEO Benioff, whose exercise of stock options in late 2012 required him to make a filing under the Hart-Scott-Rodino Antitrust Improvement Act (HSR Act). Qualcomm paid $45,000 in HSR Act filing fees on behalf of Paul Jacobs, who stepped down as CEO at the end of 2013.
As previously mentioned, Sprint paid $226,794 to cover Hesse's legal fees related to the negotiation of his new employment contract. Similarly, CSC picked up a $50,000 tab for legal expenses tied to CEO Lawrie's employment agreement.
Oracle hired a law firm to make sure its most senior executives properly report their personal political campaign contributions. CEO Ellison tapped that service for $2,999.
10. Some CEOs enjoy expert financial advice, courtesy of their employers. HP paid $18,000 for financial counseling for CEO Whitman, and EMC paid $14,756 for Tucci's tax and financial planning services. As mentioned, AT&T spent $24,000 for Stephenson's financial counseling, tax preparation and estate planning services. IBM's Rometty and Motorola Solutions' Brown also received personal financial planning services at their respective employers' expense, but the costs weren't itemized.