More than 90 executives at Tri-State public companies made more than $1 million in 2012

Smaller bonuses, larger stock awards fuel pay

CINCINNATI - Ninety-one local executives crossed the million-dollar threshold in 2012, as Cincinnati-based public companies bestowed smaller bonuses but bigger stock awards to its highest-ranking managers.

It’s a strong sign of wage growth among Cincinnati’s top breadwinners. Last year, just 72 local executives passed the million-dollar plateau.

While Cincinnati mirrored national trends toward better disclosure of pay practices and smaller cash bonuses, a WCPO Digital analysis of compensation data found the overall trend of executive pay in the Tri-State is the same as it has been for years: Upward.

Median pay increased 13.6 percent to $1.3 million for the 144 executives who had at least last two years of pay disclosed in regulatory filings. The numbers came from annual proxy statements to shareholders of 33 publicly-traded companies.

WCPO Digital is offering several ways for readers to explore and examine executive-pay trends at Cincinnati’s publicly traded companies:

Compensation details for all executives can be found here: http://www.wcpo.com/money/business_news/CEO-Pay-Tri-State-Executives.

 

See what CEOs made (Story continues)


 

Smaller Bonuses, Higher Median Pay

National compensation studies this year are finding evidence of moderation in the pay plans of public-company executives.

The human resources consulting firm, Towers Watson, said median CEO pay across the country increased 1.2 percent in 2012, down from the 6.7 percent increase tracked by the firm in 2011. Cash-bonus awards declined 16 percent in 2012, according to Towers Watson.

Across the Tri-State there was evidence of smaller bonus awards, with 27 companies shelling out just under $25 million in total bonuses, down 11 percent from last year. Median pay declined 4.3 percent to $2.1 million.

Three years of “Say on Pay” voting by shareholders have caused companies to give better explanations of executive pay and eliminate past abuses, said Stephen Kline, consulting director for Towers Watson. Say on Pay is a Congressionally-mandated reform that allows stockholders to cast an “up or down” advisory vote on compensation plans. Most companies win shareholder votes by high margins, but those that failed have faced lawsuits and negative publicity.

“Companies in many cases proactively have removed pay irritants,” Kline said, “things that proxy advisors, shareholders, investors have kind of decided they don’t think are necessary.”

So, it’s out with perks like club dues, private jets and “gross up” payments to cover executive tax liability. And it’s in with restricted share grants, which vest over time and deliver maximum benefits only when certain performance goals are met.

“The big trend on the long-term incentive side is the diminishing role of stock options, which were the king in the ‘90s, and the increasing role of performance plans,” Kline said. “If you look back to 2010, those kinds of plans accounted for 19 percent of the total. Now, they’re up to 27 percent. Options have gone from 41 percent to 35.”

The trend was evident in Cincinnati’s largest public companies last year.

 

Combine the pay plans of Kroger’s David Dillon, outgoing Procter & Gamble CEO Bob McDonald and Macy’s Chief Terry Lundgren, and you’ll find that bonus awards declined 43 percent to $6 million in 2012. Options declined 19 percent to $8.8 million for the trio, while restricted stock grants increased 8 percent to $14.4 million.

Of course, none of this means local executives are scraping by. 

Those 91 leaders, with compensation plans worth more than $1 million, include 19 people whose pay packages were worth at least $5 million in 2012.

Those in the million-dollar club worked at 22 different companies.
• Omnicare Inc. had the most with seven.
• Macy’s Inc., American Financial and Cincinnati Financial Corp. each had six.
• P&G, Kroger, Cincinnati Bell Inc., Hill-Rom Holdings Inc., Fifth Third Bancorp., Ashland Inc. and General Cable Corp. each had five.

Companies are only required to list their five highest-paid executives in the proxy. Some of Cincinnati's largest public companies may have executives who made more than $1 million but aren't named in the filing.

 

About This Project

WCPO Digital pulled compensation data from the annual proxy statements that companies file with the Securities and Exchange Commission. That data was combined that with average worker salary data from the Bureau of Labor Statistics report:  May 2012 National Industry Specific Occupational Employment and Wage Estimates. Numbers on shareholder return came from Bloomberg and measure the total percentage gains to shareholders from stock price increases and dividends for each company’s fiscal year.

WCPO Digital Multimedia Producer Brian Niesz compiled and created the interactive graphic and photo gallery.

WCPO Digital Intern Emmi MacIntyre provided research.

WCPO Digital Managing Editor Chris Graves edited this report.

 

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