Fee Simple? Utility Board Directors Get Less Than Peers
How do fees for utility board directors match up to those at other companies? Not too shabbily, as the following data show, but...
Options, that is, as they pass the nationwide median in long-term pay incentives (em more than their counterparts at transportation or industrial firms (em but still less than execs at automotive and consumer companies.
Among CEOs (chief executive officers) at consumer products companies, industrial concerns, and transportation firms, top executives at energy companies can now boast of long-term pay incentives accounting for some 44 percent of their overall annual pay packages. That gives energy CEOs almost $950,000 in annual long-term pay incentives (44 percent of annual pay) compared with $503,000 (28 percent) for industrial CEOs, only $225,000 (26 percent) for transportation CEOs, but a whopping $2.07 million (53 percent) for top execs at consumer products companies. The median figure nationwide comes in a about $838,000 (41 percent), as measured across eight industries (automotive, chemicals, consumers products, energy, food and beverages, industrial products, retail, and transportation).
On the other hand, a higher proportion of long-term incentives (which usually means stock options) can be seen as placing cash compensation more at risk.
Those are some of the findings from a recent study, Executive Compensation Practices in Manufacturing, Retailing & Distribution Companies, by KPMG Peat Marwick, the international accounting and consulting firm. The KPMG study found that consumer products, industrial products and energy companies are placing greater emphasis on annual and long-term incentives rather than base salary, a trend that increasingly places the pay of CEOs and other top officers at risk.
The study is based on information disclosed in 1996 proxies and annual reports put out by KPMG. The study examines base salary, annual incentive, and long-term incentive practices from 182 top publicly-held companies by KPMG in eight industries: automotive, chemicals, consumer products, energy, food & beverage, industrial products, retail, and transportation.
In terms of base salary, the study revealed that CEO pay increases for 1995 typically ranged from seven percent to nine percent above the prior year for the entire survey population. Energy companies were fell below the average, with an increase of 6.1 percent. CEOs at consumer products companies (7.4 percent) fell within the normal range, as did industrial product CEOs (7.6 percent).
The study also found that stock options, the core long-term incentive tool in most companies, were awarded to CEOs in 78 percent of all companies surveyed, with a median grant value of $3.3 million (# of shares x fair market value at grant). The median grant value for the highest-paid CEOs within energy companies was approximately $3.5 million ($4.2 million for the highest-paid at consumer product companies; $3.1 million at industrial firms).
Overall, total cash compensation (base salary plus annual incentives) increased 9.5 percent in 1995 as compared to the prior year, with CEOs at energy companies (14.5-percent median increase) falling in between their counterparts at consumer products firms (15.5 percent) and industrial products companies (13.3 percent).
Does all of this mean that energy is becoming more of a consumer product, and less of an element of infrastructure? t
Source: KPMG Peat Marwick. For a copy contact KPMG's Publication Center at (201)-307-7781.
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