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Robert Trigaux

CEO pay: Why is one hedge fund manager paid 800 times what Jabil Circuit's chief earns?

1

April

TIMMAINJABIL Wake up and good morning. A new Wall Street Journal survey of CEO pay at 200 U.S. companies captures just one Tampa Bay chieftain -- CEO Tim Main of Jabil Circuit, a St. Petersburg-based contract electronics manufacturer -- who received $4,946,000 in total direct compensation in 2009. (Main photo, left, St. Petersburg Times.)

That's relatively modest these days, given the pay of other CEOs out there and the climate of national disapproval with executive pay in this country in general. Occidental Petroleum CEO Ray Irani, who often ranks atop these pay surveys, was paid $52 million in 2009. On the other hand, CEO William Crenshaw of Publix Super Markets in Lakeland -- a company with $25 billion or so in sales annually -- received all of $896,000. So there's quite a range in pay out there.

Of course the wild card in reporting on CEO pay of public corporations this year is that every single pay package listed is puny compared with what many managers of hedge funds earned by clever (or lucky) betting on parts of the struggling U.S. economy. More on that in a moment.

The Wall Street Journal CEO Compensation Study was conducted by Hay Group, a management-consulting firm. The study analyzes CEO pay from 200 U. S. companies with fiscal year 2009 revenue of at least $4 billion that filed their proxy statements between October 2009 and Sept. 30, 2010. The study will be updated as more companies file new proxies, which contain executive pay data.

Aside from Jabil CEO Main and Publix's Crenshaw, here are some pay packages of other executives noted in the survey who have ties to the Tampa Bay and central Florida area:

* Walt Disney CEO Robert Iger: $20.8 million.

* Wells Fargo CEO John Stumpf: $18.7 million.

* Verizon CEO Ivan Seidenberg: $16.1 million.

* Honeywell CEO David Cote: $12.4 million.

Capital One CEO Richard Fairbank: $11 million.

* Northern Trust CEO Frederick Waddell: $10.5 million.

* Progressive CEO Glenn Renwick: $8.7 million.

* SunTrust CEO James Wells: $5.7 million.

* AutoNation CEO Mike Jackson: $4.9 million.

The complete compensation list is here. The Journal says CEO compensation edged lower in 2009, the first time in two decades that pay declined for two consecutive years. Of course, 2009 was the peak of our recession, so that makes sense, right?

The median value of salaries, bonuses, long-term incentives, and grants of stock and stock options for these 200 CEOs declined 0.9 percent to $6.95 million. The analysis also showed that highly paid CEOs generally run companies that deliver better-than-average shareholder returns. The Journal also noted that pay curbs appear to be ending as several companies recently thawed frozen salaries or canceled pay cuts. Here's the complete Wall Street Journal story.

Now for a reality check...

DavidTepperappaloosamanagement While the public frets over these seemingly sky-high compensation packages, consider the hedge fund managers of 2009. David Tepper of the Appaloosa Management hedge fund pulled in an estimated $4 billion in personal earnings last year. (Tepper (photo, right) invested in Tampa's Walter Industries in years past. Here's that story.) His 2009 compensation is way more than the combined compensation packages of all 200 CEOs in the Wall Street Journal survey.

How did Tepper do it? Says the New York Times: "Tepper wagered that the government would not let the big banks fail, even as other investors fled financial shares amid fears that banks would collapse or be nationalized."

Here's the complete New York Times story on hedge fund pay. And here's a slide show of the biggest buck winners among hedge fund managers.

So, just out of curiosity... Is hedge funder David Tepper's pay ($4 billion) for performance really worth more than 800 times that of Jabil Circuit chief Tim Main ($5 million)?

-- Robert Trigaux, Times Business Columnist



[Last modified: Tuesday, June 1, 2010 12:27pm]

    

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