CEOs' pay dropped with South Florida companies' fortunes in 2007

BY MARCIA HEROUX POUNDS |South Florida Sun-Sentinel

June 8, 2008

The raises were slim and the bonuses few, but most CEOs of area public companies still took home total pay in 2007of more than half a million dollars — with many pocketing tens of millions.



Cash, stock, incentive pay and perks for chief executives of South
Florida-based companies, or those with a major presence of employees,
were compiled for the South Florida Sun-Sentinel by Equilar, a California firm that tracks executive compensation trends.



South Florida CEOs who run companies in the housing, banking and other
struggling industries saw their total compensation shrink the most last
year. Their salaries often remained the same, but they got no bonuses
because such pay is often tied to whether their companies meet
performance goals.



After stockholders' outcries about what they called excessive pay in
recent years, public companies' compensation committees scurried to tie
more of their CEOs' pay to corporate performance targets. They moved
away from stock-option and restricted-stock awards to giving CEOs stock
only if their companies met certain financial goals.

Charles "Mick" Lasher, president of Weston-based executive search firm
Lasher Associates, said public companies have to consider the
perceptions of stockholders and Wall Street analysts.



"Companies are much more careful in issuance of stock options," Lasher
said. "They're more willing to see pay come out in cash compensation
than awarding large blocks of stocks."



Still, Lasher said, "You can't hire execs without some equity component." Top CEOs should be invested in the business, he said. American Express
CEO Ken Chenault, the highest-paid CEO on the South Florida list with
total pay of $50 million, is a notable example. In January, Chenault
was given a special grant of 2.75 million shares of company stock. But
to get that grant, he must beat several company performance goals over
six years.



Chenault also received the highest bonus, $6 million, of CEOs with
regional ties. American Express has more than 6,000 employees in South
Florida.



Sometimes, the company's stock performance directly affects a CEO's payout.



Office Depot
Chief Executive Steve Odland was criticized recently for his $17.8
million compensation this year by stockholders trying to oust him from
the company's board. Of his total compensation, $16.3 million is in
stock options. Odland defended his pay, saying many of his stock
options are "under water," meaning they're worth less than the exercise
price.



Still, the options have a life of 10 years and could be worth much more if Odland succeeds in turning around the Delray Beach office-supplies retailer.



AutoNation
CEO Mike Jackson didn't receive any incentive pay in 2007, but in 2006
he collected $1.1 million. His 2007 cash compensation dropped 49
percent. Jackson and several other executives at Fort Lauderdale-based
AutoNation didn't receive the extra pay because performance goals were
not met in 2007, according to the company's proxy filing.



"I think it's an important principle that when a company does well, the
managers and executives should do well. When the company doesn't do
well, the managers and executives don't do well either," said Jackson,
when asked about his lost bonus.



Even if car sales lag because of a slow economy, that shouldn't make a difference in an executive's pay, he said.



"We have to all participate," said Jackson, who leads the nation's largest automobile retailer.



Lennar Corp.'s Stuart Miller could have earned more than $11 million in
compensation in 2007, but he voluntarily forfeited $9.95 million in
stock and option awards because the home builder failed to meet
financial goals in the troubled housing market. Miami-based Lennar
reported a $1.9 billion loss for 2007.



Miller's move was unusual, Hodgson said, in comparison to competitor KB
Homes' former CEO, Bruce Karatz, who had a multimillion-dollar
windfall, despite leaving amid a stock option scandal.



Miller received no bonus, but he didn't go home empty-handed. He had a
$1 million salary in 2007 and took home $130,397 in other perks and
compensation.



South Florida's housing downturn has affected other companies and their CEOs.



Steven Nielsen, CEO of West Palm Beach-based Dycom Industries, which
provides contracting services to telecommunications and construction
industries, received $2 million in total pay. But Nielsen didn't get
$600,000 in restricted stock — those awards were reversed when
performance criteria were not met.



However, CEOs are rewarded when their companies exceed performance goals.



Burger King CEO John Chidsey received $1.3 million in incentive pay,
which was 132 percent of his base salary. In its proxy, the company
said the award was based on the world's No. 2 burger chain exceeding
target performance levels in 2007 for North America, Latin America and
the Asia-Pacific region. Miami-based Burger King has posted 16 quarters
of growth in same-store sales, or sales in stores opened at least a
year.



Chidsey also has perks that include annual expenses of $50,000 and
private charter jet use for business travel and personal travel up to
$100,000 a year. He used $88,693 of that in 2007, according to SEC
filings.



Hodgson said while transparency about executive pay is improving, there
continues to be some companies that circumvent bad news that could
affect their CEOs' pay.



Washington Mutual, for example, which has bank
operations in South Florida, rewrote its executive bonus pay in
February to exclude effects from subprime mortgage losses. Many South
Florida residents lost their homes and workers their jobs recently
partly because of subprime mortgage-lending practices.



CEO Kerry Killinger said at the bank's annual meeting this year that
"with the benefit of shareholder input," two board members plan to
recommend an amendment to the 2008 bonus plan that would "adopt
specific credit-related targets for which we will be accountable."



"I strongly support this action," he said.



Marcia Heroux Pounds can be reached at mpounds@sun-sentinel.com or 561-243-6650.