Photo: Ellis Hamburger, Business Insider
10 chief executives for top 100 public companies in the region saw their total compensation in 2011 more than double from the previous year. Here is a breakout of their companies’ explanations on the substantial increases:Motorola Inc.’s separation into two publicly traded companies at the beginning of 2011 resulted in huge compensation boosts for the CEOs of both companies. Motorola spun off its mobile devices and cable TV set-top box divisions into a company called Motorola Mobility Holdings. The remaining businesses, which make communications equipment and software for public safety and industrial customers, became Motorola Solutions.
Motorola Mobility CEO Sanjay Jha is the highest-paid chief executive on the Tribune’s list, and Motorola Solutions’ Greg Brown came in second. The two men ran Motorola as co-CEOs before the separation.
Jha’s 2011 compensation more than tripled, to $47.2 million from $13 million reported for 2010. The $13 million included $704,000 in bonuses that Jha voluntarily gave up in 2010, making the gap in compensation even greater when those bonuses are subtracted. Libertyville-based Motorola Mobility attributed the jump in Jha’s pay to higher-than-normal stock awards he received for the separation. He received $9.4 million in stock awards in 2011, up from $3 million in 2010, and his option awards climbed to $34.2 million from $7 million. Meanwhile, Jha’s salary rose to $1.2 million in 2011 from $900,000 in the previous two years, when he had agreed to a reduction in base pay.
Jha’s “actual equity award was at the low end of the possible range specified by the (company’s) formula,” Motorola Mobility said in a statement.
Motorola Mobility is being acquired by Google for $12.5 billion. The deal cleared its final regulatory hurdle Saturday when China’s government gave its approval.
Brown’s compensation in 2011 was $29.3 million, more than double the $13.7 million he collected in 2010. Like Jha, he had accepted a lower base pay of $900,000 in 2009 and 2010. Last year his salary was restored to $1.2 million. Brown also received $19.8 million in one-time equity awards related to the successful split. This compensation comprised $12.5 million in stock options and restricted stock for a “separation event equity grant,” plus $7.3 million in stock options and restricted stock for a “leadership grant.” In its proxy, Schaumburg-based Motorola Solutions acknowledged that Brown’s compensation “significantly increased from 2010” and attributed the jump to the one-time awards.
The third-highest-paid CEO in 2011 was Selim Bassoul of Elgin-based food service equipment manufacturer Middleby. Bassoul’s compensation totaled $27.7 million in 2011, nearly triple the $9.6 million he collected in 2010. The increase was largely due to stock awards, because Bassoul’s base salary stayed constant at $1 million. Also remaining the same was $8 million in incentive pay for achieving certain financial targets.
Bassoul earned $18 million in stock awards, which will vest in 2014 if the company reaches financial performance targets, after not receiving any compensation in this category in 2010. According to Middleby’s proxy statement, no named executive officers received stock awards that year.
In 2011, Middleby’s board put in a place a new equity-based incentive plan that encourages senior executives to own common stock in the company. These awards are handed out in accordance with Middleby’s “pay-for-performance philosophy,” the company said in its proxy.
David Klaskin, chairman and chief investment officer at Chicago-based Oak Ridge Investments, which has been a Middleby shareholder for more than six years and owns 331,000 shares, praised Bassoul for controlling costs and pursuing new business during the economic downturn.
“The management’s really created good value,” Klaskin said. “I would never say this is absolutely a perfect salary and bonus compensation (structure). I think it’s on the high side, but I think they’ve earned it.”
Debra Cafaro, chief executive of Ventas Inc., received a 26 per cent increase in salary, to $915,000. She also received a one-time $8 million stock award to support her retention and in recognition of her performance. The special grant boosted her total compensation to $18.5 million, which ranked her 8th on the list.
David Neithercut, chief executive of Chicago-based real estate investment trust Equity Residential, came in No. 20 on the list. His total compensation rose to $11.3 million in 2011 from $4.3 million in 2010, despite not receiving an increase in salary. The boost stems from a five-year retention bonus valued at $6.5 million, which Neithercut had not received in previous years. It is reflected under the “restricted shares” and “option awards” in Equity Residential’s filing with the Securities and Exchange Commission and will be paid out in a combination of options and restricted stock on Feb. 1, 2016, provided Neithercut “does not voluntarily leave the company or is terminated by the company for cause, prior to that date, or earlier upon his death, disability, or a change in control of the company,” according to Equity Residential’s proxy statement.
“This retention award is in the best interests of the company’s shareholders, as it is designed to encourage Mr. Neithercut to remain as the company’s chief executive officer and president until at least February 2016,” the statement said.
Equity Residential’s chairman, Sam Zell, also is chairman of Chicago Tribune parent Tribune Co.
Christopher Klein, chief executive of Deerfield-based Fortune Brands Home & Security, ranked 24th on the list. His total compensation more than doubled, to $10.4 million from nearly $3.7 million in 2010. Company spokesman Gary Ross attributed the spike to Fortune Brands Home & Security going public in October 2011 after it spun off from Fortune Brands Inc.
“At that time, Chris Klein’s responsibilities increased significantly as he took on a new role, moving from division president to public company CEO, and his compensation was increased accordingly,” Ross said. “As of (Thursday’s) close, (the company’s) stock price is up more than 30 per cent year to date and up more than 80 per cent since the spinoff.”
Klein’s stock awards increased to $4.2 million in 2011 from $1.3 million in 2010; his options awards were $4 million in 2011, up from $480,000 in 2010.
Chief Executive Robert Keller of Acco Brands Corp., a Lincolnshire-based supplier of office and consumer products, saw his total compensation more than quadruple last year, to just under $7 million from $1.5 million in 2010. Keller, who ranks 38th on the list of 100 CEOs, also received a special retention award of $5.4 million in stock awards that was “designed to retain Mr. Keller’s services through at least the end of 2014,” according to Acco Brands’ proxy statement. Keller received about $467,838 in stock awards in 2010.
The company said in its proxy that Keller was recruited by another employer and that his pay, as a result of the special award, was not in alignment with the company’s performance.
The 44th-highest-paid CEO, Jeffrey Yordon at Schaumburg-based Sagent Pharmaceuticals, saw his total compensation increase to $6.1 million in 2011 from $2.1 million in 2010. The bulk of his compensation increase stemmed from option awards, which increased to $5.5 million in 2011 from $1.4 million in 2010 because the company went public last year.
“We went from (Yordon) being CEO of a venture-backed, privately owned company, to going public,” said Jonathon Singer, chief financial officer at Sagent. “They’re all performance-based options, so the company needs to perform for him to vest in those options. It’s the board’s belief that his ownership was understated relative to his contribution to the company, and it was, as the board benchmarked his compensation against CEOs of similar-size public companies in our industry, and his absolute compensation relative to others is pretty small.”
Rajat Rai, chief executive at Lake Forest-based pharmaceutical company Akorn, who ranked 58th, saw his total compensation increase to $4.5 million in 2011 from $2.1 million in 2010. Rai received $1 million in cash compensation, including a $250,000 bonus. He received stock options worth $3 million but did not receive any restricted stock. His 2010 compensation was adjusted to account for options granted in 2009 but not approved until 2010.
The total compensation in 2011 for the 84th-highest-paid CEO, Eric Belcher at Chicago-based print procurement and management company InnerWorkings, rose 112.57 per cent from 2010, to $2.3 million. The spike in Belcher’s compensation was evenly distributed. He received $1.4 million in cash compensation, including a $150,000 salary increase, and $850,000 in stock and option awards, up from $270,000 in 2010.
“(Belcher’s total compensation is) commensurate with the company,” InnerWorkings spokeswoman Patricia Doyle said, comparing Belcher’s compensation bump to the company’s overall metrics in 2011. “We’ve seen growth.”
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