Good Year to be the Boss

Click on chart image to view full chart
Things aren’t always what they seem, especially when you examine the pay packages received by the chief executives of some of the nation’s largest retail companies. Collectively, these CEOs took home bigger paychecks last year than they did in 2008 — but total compensation figures don’t tell the whole story.

Median pay increased 43 percent to $6.7 million at the 51 public companies analyzed for STORES by Equilar; average total compensation rose 13 percent to $7.8 million. In nearly every instance, however, base salaries were either flat or increased only nominally. For most, the primary lift came in the form of stock incentives, though many also took home hefty cash bonuses, which they had forfeited in 2008.

Aaron Boyd, research manager for Equilar, notes that retail CEOs generally faired better than their peers at companies in the S&P 500, where average compensation declined 8 percent. Still, he cautions against broad assumptions, pointing out that the sample size – 51 publicly traded retail companies that filed proxy statements by mid-May – is much smaller.

The CEOs included in the Equilar data all led companies that qualified as a STORES Top 100 Retailer in 2009. The list is meant to provide an industry snapshot rather than a panoramic view — particularly since a sizable portion of retail companies are privately-held.

“Bonuses definitely made a comeback among retail CEOs,” Boyd says. “In 2008, there were some chief executives that didn’t earn a bonus because they missed a target — others forfeited their cash bonus acknowledging corporate struggles. By the second half of 2009, most CEOs felt as though their companies were getting back on track so it was okay to accept a bonus.”

All but four of the CEOs on this list took home a cash bonus last year; 39 received a bonus that was greater than their base salary. Retail CEOs also profited from equity awards, a trend that crosses all industries, Boyd says. “Most companies got their annual stock compensation early last year when the stock market was at a 12-year low,” he says. “In most cases, companies handed out more stock and options than grants from previous years because the stock price had fallen so much. As the market rebounded and share prices increased, the stock options given to CEOs last year became worth a lot more than they were on the day they were granted.”

“The formula is very simple,” says Les Berglass, founder of Berglass+Associates, which specializes in placing top talent in the retail and CPG industries. “If you want your business to grow you need to invest in talent – and the best talent is usually the most expensive. If the business does well and the shareholders are happy, then it was clearly a good investment.”