Top executives at 41 large corporations in Arizona earned a median $3.26 million in 2016, according to an Arizona Republic analysis of compensation submitted in corporate filings. That’s up from $2.63 million in 2015, the prior record high. Wochit
The formula for CEO riches is simple — work hard to improve your company’s bottom line, make sure you hold onto your job and root very hard for a rising stock market.
At many larger Arizona corporations, all three conditions were met last year, helping to explain why average pay for the state’s CEOs surpassed $3 million for the first time ever.
Top executives at 41 large corporations in Arizona earned a median $3.26 million in 2016, according to an Arizona Republic analysis of compensation submitted in corporate filings. That’s up from $2.63 million in 2015, the prior record high.
David Roberts, the former CEO and former executive chairman of Carlisle Cos., a global diversified manufacturer that recently moved its headquarters to Phoenix, led all chairmen and CEOs with compensation of $31.7 million last year.
He outpaced James Hughes, the former CEO at First Solar, who earned $22.9 million, and Donald Brandt, head of Pinnacle West Capital, at $19.5 million. Hughes resigned last year amid heavy losses for the maker of solar modules. First Solar’s shares lost half their value in 2016.
Executives often realize their highest compensation when they resign or are ousted from companies, thanks to severance payments and the cashing of stock options or restricted stock awards.
CEOs cited in this article either declined comment through their companies or couldn’t be reached.
Also, 107 executive vice presidents, chief operating officers, chief financial officers and other non-CEOs earned at least $750,000 last year, up from 104 who did the same in 2015. Public corporations report compensation for their CEOs and a handful of other top officers once a year.
The big number last year wasn’t the pay for any CEO. Rather, Barbara Rechterman, the chief marketing officer at GoDaddy Inc. in Scottsdale, earned $52.6 million. It’s the first time a woman had the highest pay among top Arizona executives for at least the past decade. It’s also unusual for a non-CEO to lead the list.
Other high-earning non-CEOs last year included John Altmeyer, a division president at Carlisle ($13.1 million), and Georges Antoun, chief commercial officer at First Solar ($11.9 million).
Median CEO pay nationally rose in 2016
Executive pay reflects a range of income sources, from salaries and bonuses to retirement contributions. Perks such as company-provided vehicles, 401(k) contributions and country-club memberships also are included, though these are fairly modest at most Arizona corporations. Rather, it’s options and restricted stock awards that generate some of the biggest numbers.
Our analysis includes actual compensation realized from stock awards that vested and stock options that were exercised during the past year. In Rechterman’s case, for example, nearly all her compensation was earned on options and awards granted over many years.
For all individuals cited in this report, we also list numbers as reported in the Summary Compensation Table, a standardized chart that includes annual salaries, bonuses and such but ignores the value of options and stock awards when they’re finally cashed in.
REPUBLIC 100: Arizona’s largest employers
We add the value of realized gains from options and restricted stock awards but subtract the unrealized value of options and awards granted in 2016, to avoid double-counting. The unrealized values are included in the Summary Compensation Table.
Nationally, pay for CEOs of the nation’s largest corporations — those included in the Standard & Poor’s 500 index — reached a median $11.5 million, according to a study by Equilar and the Associated Press. That was up 8.5 percent over 2015.
Corporate directors — often current or former CEOs themselves — are the ones who set CEO pay. Critics often complain that the numbers are excessive and exacerbate the rich-poor divide. Yet shareholders periodically have a chance to endorse or reject executive-compensation packages in nonbinding votes, and most of these “say-on-pay” proposals routinely pass.
For example, among Arizona-based corporations, the pay packages at Republic Services, Avnet and On Semiconductor all passed with more than 95-percent favorable votes earlier this year. However, at Sprouts Farmers Market, the 62.7 million shares cast against the company’s executive pay package outpaced the 47.9 million in favor — an unflattering result.
CEOs in Arizona and elsewhere typically earn a lot more than average Americans. Last year’s median $3.26 million in Arizona CEO pay compares with Arizona per-capita personal income of $40,243, ranking 42nd among the states, according to the Bureau of Economic Analysis.
When the stock market rallies strongly, as it did in 2016, options and stock awards become much more valuable. Two-thirds of Arizona’s public corporations had double-digit stock-market returns last year. Three in four of these companies were profitable.
CEOs of the nation’s largest companies — those in the S&P 500 index — earned 347 times average wages for nonsupervisor production workers last year, according to an estimate by the AFL-CIO.
Starting with results to be released this year, corporations will need to compare CEO pay against that for their median workers. This new measure will add another layer of context for executive compensation and possibly provide fuel for critics, like the AFL-CIO, who say pay scales have gotten out of hand.
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