Arkansas’ Top Executives Earn More Than $197 Million in 2006

(For a look at the top executives in Arkansas, click here.)

The top 99 executives at Arkansas’ 21 public companies together earned more than $197 million in 2006.

More than a third of that total compensation came from the values of each executive’s stock and/or option awards, an amount previously excluded from the Business Journal’s public companies’ executive compensation list.

Following the rising trend of linking executive compensation to company performance, the Financial Accounting Standards Board in December 2004 issued new standards requiring public entities to report employee stock-based compensation according to the fair value of that company’s stock on the grant-date.

For the majority of companies on the list, the most recent annual reporting period was the first to fall under the revised standards, which explains the huge jump in the year-over-year comparison for each executive’s total annual compensation.

Take this year’s highest-paid executive for an example. Lee Scott Jr., president and CEO of Wal-Mart Stores Inc., earned $29.7 million in 2006, with $23.4 million of that total coming from the value of his stock and option awards at the end of Wal-Mart’s last fiscal year, regardless of whether those awards were granted in the last fiscal year.

Without taking this figure into account, Scott would have reported $6.3 million, just $100,000 more than 2005.

Scott’s 2006 total was more than the combined totals of the next two highest-paid executives. No. 2 on the list also works for Wal-Mart: Vice Chairman and Chief Administrative Officer John Menzer, who earned $14.5 million.

Next is Scott Ford, CEO of Alltel Corp, who earned $13.4 million. Even without $4.3 million in stock and option awards, Ford had a pretty good year thanks to a 136 percent bump in bonus and performance pay, up to $4.4 million, which was the biggest bonus earned by a single Arkansas executive in 2006.

It’s no wonder Ford earned the big bucks. In the company’s last fiscal year, he oversaw the complicated spin-off/merger of Alltel’s wireline division, which formed Little Rock-based Windstream Corp., one of two new companies on this year’s list.

The transaction, which closed in July, helped relieve Alltel of more than $5 billion in debt and transformed the company into a pure-play wireless carrier. With that, income from the company’s continuing operations rose 12 percent in 2006 to $823.7 million.

Those developments, coupled with the ongoing buyout speculation, helped drive Alltel’s stock back up above $65 a share, the same price for the stock prior to the spin-off.

Jeff Gardner, the CFO of Alltel who was transformed into CEO of Windstream, also had a windfall year. Gardner made roughly $5 million in each of his roles last year. His combined total of $9.7 million vaulted him into the top five, up from 13th last year.

Francis Frantz also crossed over from Alltel to Windstream. He earned $3 million in his new role as chairman of Windstream’s board of directors. However, his 2006 compensation for his former role as executive vice president was not disclosed in Alltel’s proxy statement, presumably because he was not one of the five highest-paid executives.

Three other new Windstream executives debuted on the list this year: CFO Brent Whittington, COO Keith Paglusch and General Counsel and Secretary John Fletcher. Home Bancshares was the other Arkansas company to go public last year – on June 23, to be exact, with a $51 million stock offering.

As a result, five more executives joined the list: Chairman and CEO John Allison, CFO and Treasurer Randy Mayor, President and COO Ron Strother and bank Presidents Tracy French and Randall Sims.

Pocahontas Bancorp of Jonesboro and all of its executives fell off the list after IberiaBank Corp. of Lafayette, La., bought the bank’s holding company for $76 million, a deal that closed in February.

On average, Arkansas public company executives were paid $2.1 million in 2006. Total compensation doesn’t include each executive’s change in pension value, which is outlined in some of the companies’ proxy statements.