Typical CEO made $9.6M last year

NEW YORK — Profits at big U.S. companies broke records last year, and so did pay for CEOs.

The head of a typical public company made $9.6 million in 2011, according to an analysis by The Associated Press using data from Equilar, an executive pay research firm.

That was up more than 6 percent from the previous year, and is the second year in a row of increases. The figure also is the highest since The Associated Press began tracking executive compensation in 2006.

Companies trimmed cash bonuses but handed out more in stock awards. For shareholder activists who have long decried CEO pay as exorbitant, that was a victory of sorts.

That’s because the stock awards are being tied more often to company performance. In those instances, CEOs can’t cash in the shares right away: They have to meet goals first, like boosting profit to a certain level.

The idea is to motivate CEOs to make sure a company does well and to tie their fortunes to the company’s for the long term. To be sure, the companies’ motives are pragmatic. The corporate world is under a brighter, more uncomfortable spotlight than it was a few years ago, before the financial crisis struck in the fall of 2008.

Last year, a law gave shareholders the right to vote on whether they approve of the CEO’s pay. The vote is nonbinding, but companies are keen to avoid an embarrassing “no.”

“I think the boards were more easily shamed than we thought they were,” says Stephen Davis, a shareholder expert at Yale University, referring to boards of directors, which set executive pay.

In the past year, he says, “Shareholders found their voice.”

The typical CEO got stock awards worth $3.6 million in 2011, up 11 percent from the year before. Cash bonuses fell about 7 percent, to $2 million.

The value of stock options, as determined by the company, climbed 6 percent to a median $1.7 million. Options usually give the CEO the right to buy shares in the future at the price they’re trading at when the options are granted, so they’re worth something only if the shares go up.

Profit at companies in the Standard & Poor’s 500 stock index rose 16 percent last year, remarkable in an economy that grew more slowly than expected.

CEOs managed to sell more, and squeeze more profit from each sale, despite problems ranging from a downgrade of the U.S. credit rating to an economic slowdown in China and Europe’s neverending debt crisis.

Still, there wasn’t much immediate benefit for the shareholders. The S&P 500 ended the year unchanged from where it started. Including dividends, the index returned a slender 2 percent.

Shareholder activists, while glad that companies are moving a bigger portion of CEO pay into stock awards, caution that the rearranging isn’t a cure-all.

For one thing, companies don’t have to tie stock awards to performance. Instead, they can make the awards automatically payable on a certain date — meaning all the CEO has to do is stick around.

Other companies do tie stock awards to performance but set easy goals. Sometimes, “they set the bar so low, it would be difficult for an executive not to trip over it,” says Patrick McGurn, special counsel at Institutional Shareholder Services, which advises pension funds and other big investors on how to vote.

And for many shareholders, their main concern — that pay is just too much, no matter what the form — has yet to be addressed.

“It’s just that total (compensation) is going up, and that’s where the problem lies,” says Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware.

To determine 2011 pay packages, the AP used Equilar data to look at the 322 companies in the S&P 500 that had filed statements with federal regulators through April 30. To make comparisons fair, the sample includes only CEOs in place for at least two years.

Among the AP’s other findings:

 • Of the five highest-paid CEOs, three were also in the top five the year before. All three are in the TV business: Leslie Moonves of CBS ($68 million); David Zaslav of Discovery Communications, parent of Animal Planet, TLC and other channels ($52 million); and Philippe Dauman of Viacom, which owns MTV and other channels ($43 million).

 • About two in three CEOs got raises. For 16 CEOs in the sample, pay more than doubled from a year earlier, including Bank of America’s Brian Moynihan (from $1.3 million to $7.5 million), Marathon Oil’s Clarence Cazalot Jr. (from $8.8 million to $29.9 million) and Motorola Mobility’s Sanjay Jha (from $13 million to $47.2 million).

 • Perks and other personal benefits, such as hired drivers or personal use of company airplanes, rose only slightly, and some companies cut back, saying they wanted to align their pay structure with “best practices.”

Military contractor General Dynamics stopped paying for country club memberships for top executives, though it gave them payments equivalent to three years of club fees to ease “transition issues” caused by the change.

The top 10 highest-paid CEOS:

1. David Simon, Simon Property Group, $137.2 million, up 458 percent.

2. Leslie Moonves, CBS, $68.4 million, up 20 percent.

3. David M. Zaslav, Discovery Communications, $52.4 million, up 23 percent.

4. Sanjay K. Jha, Motorola Mobility, $47.2 million, up 262 percent.

5. Philippe P. Dauman, Viacom, $43.1 million, down 49 percent.

6. David M. Cote, Honeywell International, $35.7 million, up 135 percent.

7. Robert A. Iger, Walt Disney, $31.4 million, up 12 percent.

8. Clarence P. Cazalot Jr., Marathon Oil, $29.9 million, up 239 percent.

9. John P. Daane, Altera, $29.6, million, up 278 percent.

10. Alan Mulally, Ford Motor, $29.5 million, up 11 percent.

Other entries of interest:

16. Rex W. Tillerson, Exxon Mobil, $25.2 million, up 17 percent.

19. James Dimon, JPMorgan Chase, $23.1 million, up 11 percent.

30. Gregg W. Steinhafel, Target, $19.5 million, down 18 percent.

42. W. James McNerney Jr., Boeing, $18.4 million, up 34 percent.

44. Michael T. Duke, Walmart Stores, $18.1 million, down 3 percent.