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|Articles - October 2012|
|Monday, September 24, 2012|
Page 2 of 3
Median pay for all 20 Oregon CEOs has remained less than a third of the S&P 500 CEO pay.
That median pay rose from $2.1 million in 2007 to $3.0 million in 2011. Equilar produces an annual S&P 500 CEO Pay Study, which shows that prior to the recession in 2007, median S&P 500 CEO pay was approximately $8.7 million. It fell the next two years; then, as stock markets recovered, it roared back to $9.6 million in 2011. Nike, Precision Castparts and FLIR are currently the only Oregon companies included in the S&P 500 index.
Nike CEO Mark Parker’s total pay was more than a third of the $103 million paid to our CEO group.
Parker earned more than $35 million for the year ended in May 2012. Two-thirds of Parker’s pay was stock awards, which could rise or fall in value by the time he can exercise them. He received no bonus and his salary was only $1.6 million.
Looking at Nike’s performance, net income only declined once, in 2009, and was at an all-time high of $2.2 billion for 2012. Nike’s stock price is also flying high, elevating the grant-date value of Parker’s equity.
CEO pay and company performance seesawed wildly during the past five years‚ mostly in synch‚ but sometimes not.
Nationally, S&P 500 CEOs saw their median compensation decline in 2009, then rise the next two years, roughly in line with company net income, which shifted higher and lower than pay.
Likewise, average CEO pay for the top 19 companies in Oregon (excluding Nike) fell in 2009, then rose the next two years, increasing an average of 11% per year. Company net income followed the same — more extreme — pattern but only rose an average of 2% per year.
Individual companies, though, often strayed from company earnings. Parker’s percentage change in pay rose three times as high as net income in 2010, fell in 2011 when earnings continued to grow, then shot up 219% in 2012, while net income grew just 4%.
As a share of pay‚ salary has been in retreat for decades.
Don Lindner, executive compensation practice leader for WorldatWork, a nonprofit association focused on compensation education, says that base pay used to comprise about 50% to 60% of CEO compensation until the 1980s.
Then came IRS Section 162(m) in 1992, stipulating that corporations could deduct no more than $1 million of executives’ non-performance pay. To avoid tax liability, annual bonuses rose dramatically, says Lindner, and mega-grants of stock and options were invented, raising the prominence of equity awards. Regulators effectively had placed a limit on salary, but the unintended consequence was to rapidly increase total compensation, albeit in a leveraged form.
Among Oregon’s top 20 CEOs, average salary grew 5% per year since 2007, but as a share of total compensation it declined from 22% in 2007 to 14% in 2011. Salary accounted for just 10% of the S&P 500 CEOs’ 2011 pay. This decline of salary’s share is exacerbated by rising equity awards — much riskier and less liquid than cash.
“To replace base pay, which is a sure thing, with at-risk pay like options, you have to give them a whole bunch more [stock and options], because they’re worth less,” says Lindner.
|Tuesday, February 25, 2014|
BY LINDA BAKER
An intellectual property attorney by day, 48-year-old Stoll Berne attorney Tim DeJong is a singer and guitarist by night.
|Tuesday, February 25, 2014|
BY BRANDON SAWYER
Sales of small businesses surged in 2013 according to the biggest Internet marketplace of such transactions, BizBuySell, increasing to 7,056 reported sales, a 24% increase over 2012, when they dropped 7%. Portland Metro sales tracked by the site grew 9% to 73, capping three years of solid growth. On top of that, Portland’s median sale price jumped 67% to $250K, versus just 13% to $180K nationally. Portland was one of just six metros tracked where the median sale price matched the median asking price, with sellers getting, on average, 92% of what they asked.
|Tuesday, January 21, 2014|
BY EMMA HALL
Kevin Cavenaugh, owner of Guerrilla Development, graduated from architecture school but isn’t a licensed architect.
|Friday, December 20, 2013|
BY TOM COX | OB BLOGGER
What if being in chaos was optional? What if crisis, or chaos, or “firefighting,” or feeling behind schedule, behind the press of constantly emerging problems, could be stopped? It can. It’s simple. It’s not easy. Here are your three steps to stop fighting fires — and getting control, confidence, and clarity.
|Tuesday, January 07, 2014|
BY MICHAEL BECK | OB BLOGGER
Many organizations recognize the importance of improved engagement, but the result of their efforts to improve engagement are generally poor because they are misguided.
|Thursday, January 02, 2014|
BY ERIC FRUITS | OB BLOGGER
Cover Oregon’s fizzled launch has been a high profile disaster. But the state's history of multi-million dollar software disasters can teach us some valuable lessons.
|Thursday, January 30, 2014|
BY LINDA BAKER | OB EDITOR
A conversation with Travel Oregon CEO Todd Davidson.
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