Even amid a bear market, a sluggish economy and investor revolts, it still pays to be the boss.
Most chief executives at Southern California's 100 largest companies received double-digit pay increases in 2002 even as shareholder returns for most of the firms declined, according to The Times' annual survey of Southland executive compensation.
At computer and parts distributor Ingram Micro Inc., for example, sales fell, a $6-million profit turned into a $275-million loss and total shareholder return -- stock price gains plus any dividends -- was down more than 28% in 2002. Yet CEO Kent B. Foster received a 153% raise to $2.9 million, largely as the result of a $1.7-million performance bonus. It was the fourth-largest raise in cash pay among the executives in the survey.
Foster's bonus was based on successfully implementing a cost-cutting plan that shuttered several distribution and return centers and cut 900 workers, a spokeswoman for the Santa Ana-based company said.
Those decisions eventually may make Ingram Micro a leaner -- and more profitable -- company. But it's usually not a good idea to put rewards ahead of bottom-line results, said Matt Ward, chief executive of Westward Pay Strategies, a San Francisco compensation consulting firm.
"When performance is down," Ward said, "your pay should not be up."
Among other findings in the survey of Southland CEO pay, performed by Mercer Human Resource Consulting, total direct compensation -- salary and bonus plus restricted stock awards and realized gains from stock options -- for Southland CEOs grew much faster last year than the average worker's paycheck.
The median CEO pay package, meaning half were larger and half smaller, was $1.7 million, up 11.4% from the year before. The median family income in Southern California last year was $50,005, up 1.1% from 2001.
Although only about one-third of the companies in the survey rewarded shareholders last year with a positive total return, nearly two-thirds of the CEOs saw their cash compensation increase and more than half received higher total direct compensation. Still, the median total return for the companies in the survey was minus 12.2%, beating the benchmark Standard & Poor's 500 index's 2002 total return of minus 22.1%.
Tying executive pay to yardsticks such as profit and total return made high-profile progress at some companies in the survey.
