While the majority of CEOs in The Daily Record’s sample saw their compensation grow in 2011, even most of the executives who took a pay cut added employees.
Of the 15 executives who earned more in 2011 than 2010, all but four also increased the size of their staffs. Of the eight executives who saw their pay shrink in 2011, seven still increased their workforce.
Baltimore-based athletic apparel company Under Armour Inc. added about 1,500 employees, a 38 percent increase from 2010. However, CEO Kevin Plank’s 2011 salary of $1.1 million was 14 percent less than the $1.3 million he earned in 2010. Plank earned less because annual incentive awards for executives were paid out at 55 percent of their maximum when the company failed to meet its target for operating income percentage last year.
While Coventry Health Care Inc. CEO Allen Wise’s pay dipped 5 percent, his company grew by 3 percent, or 400 jobs. Top earner David Zaslav’s Discovery Communications Inc. also grew by 400 jobs, but his salary went up 23 percent to $52.4 million.
But even in a state where the year’s average unemployment rate of 7 percent was below the national 8.9 percent average, the news wasn’t all good.
Both Lockheed Martin Corp. and Marriott International Inc. cut 9,000 jobs, which amounts to about a 7 percent change in their work forces. At the same time, each executive earned more than in 2010. Robert Stevens of Lockheed saw his compensation grow by 7 percent and John W. Marriott Jr. earned 3 percent more. Marriott, who led the company for four decades, stepped down at the end of March, shortly after his 80th birthday.
But comparing changes in salaries to changes in staff size still doesn’t answer a question raised by the Dodd-Frank Wall Street Reform and Consumer Protection Act, which included a pay-gap provision. The law directs the Securities and Exchange Commission to create rules that would require companies to report on the difference between executive pay and median employee pay.
“That’s one of those issues that if they don’t get it done by the end of November and we see a change in administration … those rules may not see the light of day,” said Patrick McGurn, special counsel for the Institutional Shareholder Services, a Rockville-based firm that provides research and advice to shareholders participating in corporate decisions.
The SEC has missed a number of deadlines in creating the rules and has not yet even scheduled a public meeting on the topic, he said.