Compensation figures for other top officers of area companies

5/1/2011

One-third took a cut, but most of the men who were chief executives last year at the Toledo area's companies with public stock had bigger pay and benefit packages as the economy and industry struggled to emerge from the recession.

For the second straight year, Mike Thaman, 47, chief executive officer of home building products giant Owens Corning, led the area list, with $9.7 million in total compensation.

Under reporting rules begun by the U.S. Securities and Exchange Commission this spring, Mr. Thaman's compensation last year increased almost 28 percent from 2009's.

That came in a year in which OC, the area's third-largest corporation, made $933 million in profit on higher sales of nearly $5 billion and as the firm's stock climbed more than 21 percent to $31 a share.

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The figures for all the area CEOs and senior executives, taken from the companies' annual proxy statements filed with the SEC, include salary and bonuses, estimated value of stock awards and options, performance-based incentives, values of perquisites such as cars and corporate travel, and company contributions to executives' pensions and retirement plans.

In contrast, the CEO at the area's largest company, Albert Stroucken at Owens-Illinois Inc.,had an 11 percent decline in total compensation to $7.8 million. The Perrysburg glass bottle maker had higher profits of $258 million last year but lower sales of $6.6 billion, and its stock price slipped 7 percent.

Although many area CEOs experienced relatively small increases in their compensation packages, four took cuts: Mr. Stroucken, John Meier at Libbey Inc., H. Douglas Chaffin at MBT Financial Inc., and Daniel Schutt at United Bancshares Inc.

Taken together, the compensation packages for chief executives of metro Toledo's publicly held companies rose about 20 percent last year, primarily as a result of stock options and awards given to them by their corporate boards as the economy recovered from the depths of the recession, analysts say.

David Schmidt, a senior executive compensation consultant with Arthur J. Gallagher & Co. in New York, said big moves in executive compensation are to be expected in an improving economy.

"This happens all the time. Coming out of a recession, companies get very conservative and set relatively modest goals, and they blow it out of the water," he explained. "That's kind of what's going on here.

"I think the way pay is designed is changing. There's a lot more focus on pay-for-performance. Typically, half or three-quarters of an executive's total compensation will be based on achievement of a company's long-term goals."

Executive perquisites -- or "perks" -- have long been a staple of executive compensation, and sometimes are notable. In 2008, Dana Holding Corp. of Maumee paid $2.3 million to shuttle its two top executives between their homes in California and Toledo on private aircraft, stopping the practice after it was disclosed in early 2009. Last year, Dana reimbursed executive chairman John Devine $31,590 for his commercial flights to and from metro Toledo.

Compensation figures for other top officers of area companies.

Many Toledo-area companies have kept corporate perks -- club memberships, automobile and fuel allowances, life insurance, financial planning services, and, in the case of Cedar Fair LP's Richard Kinzel, even laundry services.

But others have scaled back or, like Dana, have gone to a single annual "perquisite allowance" of $35,000 to $100,000, depending on the executive's title, and have allowed them to buy what they want or need without having to report to shareholders on each item.

O-I, for example, no longer pays for home security systems for its top executives and limits Mr. Stroucken's personal use of corporate aircraft to no more than 50 hours a year.

The reporting of executive compensation has undergone some changes this year because of the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act last year. The law contained key requirements:

● Provide shareholders with an ability to voice their opinions on executive compensation, through so-called "say-on-pay" proxy questions.

● Ensure the board's executive compensation committee hires advisers and counsel independent of the company's management.

● Report the ratio of CEO pay to the median pay of a company's employees.

● Establish provisions to reduce executive compensation if a company must restate its financial results.

Still, the act hasn't seemed to put a damper on executive compensation, analysts said.

"For over 30 years, the SEC and Congress have tried to curtail the growth in executive pay unsuccessfully -- through the tax code, through SEC reporting requirements, through accounting policy -- and none of it has had any impact on reducing pay," said Jeff McCutcheon, managing director of Board Advisory LLC, a Florida firm that counsels corporate boards on executive compensation levels.

"With the return of better times, we're seeing executive pay coming back toward where it was three years ago."

That trend has caught the attention of those fighting a disparity between executive pay and that received by other employees. The AFL-CIO's Executive Paywatch Web site said that the $3.4 billion paid to CEOs of 299 publicly held companies in 2010 would be enough to support 102,325 jobs at the median wage -- $33,190 -- for all workers in the United States.

The $2.1 million increase in compensation last year for OC's Mr. Thaman was largely on paper, but his base salary increased by more than $20,000 last year. His nonequity incentive plan compensation went up 68 percent to $3.4 million. In the annual proxy, the compensation committee of OC's board of directors explains its reasoning for the stock and bonus awards for the company's top executives, including achieving certain benchmarks in share price and corporate performance.

Mr. Thaman's "compensation is based on the performance of the company. We delivered significant earnings growth in 2010," said spokesman Jason Saragian. "There is rigor and process in determining the appropriate compensation of all Owens Corning executives. In Mike's case, 90 percent of his pay was 'at-risk' pay, only 10 percent of it was salary."

Lowest compensated among the area CEOs was Mark Klein, who took over at Rurban Financial Corp., a Defiance banking company, in June. His package was nearly $318,700, but was lower than the $355,002 reported for now-retired Rurban CEO Kenneth Joyce.

His company had a loss of $14.6 million as its main revenue source, net interest income, dropped by 5 percent and its stock price fell 42 percent.

Contact Larry P. Vellequette at lvellequette@theblade.com or 419-724-6091