The chief executives of Charlotte’s largest companies saw their median pay dip slightly last year, falling about 1 percent – but many of the CEOs still saw big raises and perks packages worth hundreds of thousands of dollars.
And though the median pay package for a CEO at Charlotte’s major publicly traded companies didn’t rise last year, most workers would be happy to trade places with the top boss. The chief executives’ median pay totaled almost $5.7 million last year, down from just under $5.8 million, the Observer found in its annual look at CEO compensation.
Here’s a look at the highest-paid CEOs in the Charlotte area in 2016, according to an analysis of company filings:
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▪ In a repeat from 2015, the top-earning CEO was Bank of America’s Brian Moynihan, who brought in $15.4 million. The biggest chunk of his compensation was a $13.7 million stock award, most of which pays out only if he meets certain performance targets. The pay package came in a year in which the bank, the city’s largest by revenue, posted a $15.89 billion profit – the most since 2006.
▪ The second-highest earning CEO was Jerome Peribere of Bubble Wrap maker Sealed Air, with $14.8 million – again, mostly in the form of a $13.5 million restricted stock grant. Of that stock grant, about $4 million worth was granted as an inducement to sign a contract extension through the end of 2017. In October, Sealed Air announced it was spinning off about one-third of the company, and in May it officially moved into its new Charlotte campus.
▪ Third-highest was Gerardo Lopez of hotelier Extended Stay America, who received $13.9 million, the biggest chunk of which came in a $12 million stock grant. Lopez, who left theater company AMC Entertainment to run Extended Stay in August 2015, received his 2016 restricted stock award under an agreement made when he became CEO. The award was much bigger than the $4.4 million he received for 2015, and he isn’t eligible for another grant until 2019.
▪ Duke Energy CEO Lynn Good earned $13.5 million, making her the fourth-highest paid CEO and the highest-paid female. Most of her pay came from $9.1 million in stock awards. Duke earned $2.1 billion in 2016, down from the $2.8 billion of the previous year, but the utility reached the high end of its target for earnings per share.
$11.5 million Last year’s median CEO compensation at the nation’s biggest companies
$5.7 million Last year’s median CEO compensation at the Charlotte area’s biggest companies
$98 million Amount paid to the nation’s highest-compensated CEO in 2016: Thomas Rutledge, head of Charter Communications, the company that bought Time Warner Cable last year
For its analysis, the Observer tracked 25 of the largest publicly traded companies in the greater Charlotte area. The mix of companies changed from the previous year: Piedmont Natural Gas was acquired by Duke Energy and manufacturer Carlisle Cos. moved its headquarters from the city, while window maker JELD-WEN Holdings went public and specialty chemical company Albemarle relocated to Charlotte from Louisiana.
Nationwide, CEOs at the nation’s biggest companies saw an average raise of 8.5 percent last year, an analysis by the Associated Press and Equilar found. That jump, the biggest in three years, pushed median CEO compensation to $11.5 million.
The highest-paid chief executive in the U.S. was Thomas Rutledge, head of Charter Communications, the company that bought Time Warner Cable last year. He made $98 million, $88 million of which is in the form of stock and option awards. Leslie Moonves of CBS was No. 2, with $68.6 million, while No. 3 was Walt Disney CEO Robert Iger, with $41 million.
Last year’s jump in CEO pay was “considerable” compared with the 4.5 percent rise in 2015, said Dan Marcec, director of content and communications at Equilar.
One key reason for the surge is a trend of CEOs receiving a larger share of compensation in the form of stock, Marcec said, as corporations seek to more closely tie pay to performance.
Packages draw criticism
While supporters argue the size of CEO pay packages is necessary for attracting top executive talent, such payouts continue to draw criticism, including from those concerned about U.S. income inequality.
According to the AFL-CIO, the nation’s largest federation of labor unions, the average CEO of an S&P 500 company last year made 347 times more than the average rank-and-file worker. Meanwhile, wages for the average production and nonsupervisory worker have remained stagnant for 50 years, the AFL-CIO said.
“For us, executive compensation is one of the most visible examples of income inequality in this country,” said Heather Slavkin Corzo, director of AFL-CIO’s Office of Investment. “The CEO class is aggregating more power and more wealth, and as that happens workers lose power and wealth.”
The more money handed to CEOs, Corzo said, the less a company has to compensate other workers, as well as to make other important investments like research and development. Also, large CEO pay packages can harm employee morale and productivity, affecting a company’s performance and bottom line, she said.
Starting next year, the public is expected to begin finding out how much more CEOs are paid compared with other employees at their companies.
Under a Securities and Exchange Commission rule required by the Dodd-Frank financial overhaul law, publicly traded corporations will have to disclose the pay ratio of their CEO to the median annual total compensation of all employees. Unions and some investors have championed the rule, which some corporations have staunchly opposed.
But the future of the rule, which the SEC adopted in 2015, has become uncertain under President Donald Trump’s administration, which continues pushing to repeal or scale back Obama-era regulations. In February, with Trump in the White House, the SEC said it was reconsidering implementation of the rule.
Jets and other perks
One part of the CEO job that hasn’t changed much from last year: the perks. The median value of perks for Charlotte CEOs, which can include anything from use of the company jet to the cost of supplemental life insurance, stood at $156,424 last year.
The perks packages top executives received varied widely:
▪ Scott Smith, CEO of auto dealership Sonic Automotive, received $64,613 worth of demonstrator cars from the company, as well as $82,078 worth of personal use of the company’s aircraft. Meanwhile, Bruton Smith, his father and Sonic’s chairman, received demonstrator cars worth $136,011 as part of compensation totaling $4.8 million, including salary, bonus and stock awards.
▪ Mark Beck, the chief executive at JELD-WEN, was paid $874,767 in relocation expenses for his move to Charlotte. Included in that: The door- and window-maker picked up the tab for the commission on the sale of his house ($304,000) and the loss ($500,000) he took on the sale of his house in Maryland.
▪ Luther Kissam IV, CEO of Albemarle, received $264,364 worth of relocation expenses when the company moved its headquarters to Charlotte from Louisiana. The company also paid $10,040 for his country club dues.
▪ J. Frank Harrison III, of Coca-Cola Bottling Co. Consolidated, received income tax gross-ups worth $257,477 as part of his perks package at the soft drink bottler. Such payments cover the cost of income taxes for other perks executives receive, such as personal use of the company’s aircraft, making them a frequent target of criticism from corporate governance advocates.
▪ Robert Niblock, CEO of home improvement retailer Lowe’s, received a $12,000 reimbursement for the cost of tax and financial planning and $48,223 worth of personal use of the corporate plane, as well as $3,208 for the cost of a company-required physical.
How we did this story
To calculate total CEO pay, the Observer counts salary, grants of stock and options, cash bonuses and the value of perks, as listed in the summary compensation tables in the companies’ annual proxy filings.
The actual amount a CEO earns can vary from the reported value, because some payouts don’t fully vest for years and are tied to performance measures, such as revenue targets, the stock price or profits.
The 25 chief executives’ median pay totaled almost $5.7 million last year, down from just under $5.8 million. The median value is the midpoint, with half the CEOs earning more and half of them earning less. Two of the Charlotte CEOs were new in 2016 and didn’t have a full years’ compensation data in 2015 with which to compare.
Rick Rothacker and Ely Portillo