Little changes in state CEOs’ pay rankings
ExecutivesStock market fluctuation has effect
DON MECOY
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17
Published: June 7, 2009
The rankings of the highest-paid chief executive officers of Oklahoma’s publicly traded companies are little-changed from last year.
Again topping the rankings was Chesapeake Energy Corp.’s Aubrey McClendon, with a total compensation of $112.5 million.Multimedia
Stock swoons affect pay
The stock market has affected the compensation of many of the CEOs, as plummeting stock values have slashed the value of stock and options granted to the executives.
Companies must report a "fair value” of stock and options granted to executives at the time the grant is made. The Oklahoman uses that figure as part of each executive’s total compensation.
However, the sharp decline in stock values since many of those grants were made has eaten away at the value of those granted shares and options.
For instance, SandRidge granted Ward 136,364 shares of company stock on July 11 when the stock was worth $61.46. That added $8.4 million to Ward’s 2008 compensation. But last week, SandRidge stock was trading for only about $10.50.
Even among companies that paid chief executive officers less, shareholder discontent over plummeting stock prices and multimillion-dollar executive compensation packages exists, said Chris Crawford, executive director of Longnecker & Associates, a Houston-based executive compensation consultant company.
McClendon’s compensation, largely driven by a $75 million bonus paid on Dec. 31, has prompted four shareholder lawsuits. The company has defended McClendon’s pay as recognition for his role "in shaping the vision for the company and growing it into the largest independent producer of U.S. natural gas.”
"Aubrey was personally responsible for the origination, negotiation and closing of four transactions that delivered to the company $10.3 billion in proceeds and $8.7 billion in economic gain, while permitting us to retain approximately 70 percent of the three biggest projects of the four,” corporate attorney Henry J. Hood said in a letter last month.
As part of his compensation agreement, McClendon must remain at Chesapeake for five years, and must use the bonus payment only for costs associated with a program that allows him to personally participate in wells drilled by the company.
The agreement also froze McClendon’s salary and bonus for five years, and requires him to repay a pro-rata share of the $75 million bonus if he leaves Chesapeake in the next five years.
Crawford said corporate directors, and particularly those boards’ compensation committees, set the pay and benefits for the major executives, seeking to retain those executives while providing incentives for good performance.
"Boards and compensation committees are looking to make market-competitive equity awards so they still have some handcuffs on employees,” Crawford said.
David Houston, principal with The Todd Organization, an Oklahoma City-based executive benefit consultation firm, said directors must balance compensating executives in such a way that they’re not tempted to seek greener pastures without upsetting shareholders.
"We’ve got to get shareholder confidence back so people will invest in these companies, and they don’t like to see management with big paydays,” he said. "The whole market issue has to do with confidence, and a lot of that has to do with how you are compensating.”
Houston said corporate boards seem to be holding the line on salary increases while providing executives incentives to boost stock prices by awarding restricted shares and stock options.
"The cash compensation is the same or less, if anything, there might be a token cost-of-living increase,” Houston said. "People are holding pretty pat.”
Crawford said highly compensated top executives show their worth in the current tough economic times.
And, like elite athletes, there are an extremely limited number of top-flight performers, he said.
"They’re worth their weight in gold in this environment,” Crawford said. "It’s in this environment that a real leadership team is proving their worth. They’re working harder, working longer hours and they’ve got less resources, less cash and equity available to them. They’re earning it.”
For the second straight year, Mark White, chief executive officer of Osage Bancshares, claimed the smallest compensation package among the leaders of state-based companies. White said his total compensation of $164,492 was adequate for running one of the nation’s smallest publicly traded banks.
The Pawhuska-based company, parent of Osage Federal Bank, operates three branches, employs 40 people and controls assets of about $158 million.
White doesn’t begrudge the much larger paychecks paid to leaders of much larger companies.
"A lot of the people on the list are from multi-billion dollar companies, some of them founders of multibillion-dollar companies.” White said.
Related Topics:
Business, Company Activities and Information, Jobs and Labor, Corporate Governance, Executive Management, Employee Compensation
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Kevin, I believe you are correct. I think I have also seen somewhere that Aubrey is the highest paid in the nation.
If you don't like it, it's a free market. You can go start your own company, work the 100 hour weeks with no vacation for a chance to become a business elite, then have people complain that your effort isn't worth the compensation the company pays you.
You people are hilarious-you do nothing but moan about how Obama is a "socialist" and is trying to take your hard earned money and give it to someone else. Then, you moan about some lucky few who have figured out a way to make a nice living.
Which way do you want it Oklahoma?
These organizations are supposed to be providing a benefit, at a minimum, commensurate with their tax exemption. It appears that they fail at that effort yet they compensate their executives at a higher rate than the majority of the executives of the publicly traded, tax paying companies in Oklahoma detailed in this article.
When are we going to hold these folk and their respective fiduciary boards accountable.