Executive Compensation Climbs

2010 wasn’t a great year for Arkansas’ publicly traded companies: Seven of 18 reported net losses in their most recently completed fiscal years.

But last year was a good time to be running one of those companies, with total compensation rising for 65 of 88 of the executives named in annual corporate proxy statements and exercising stock options more likely to be part of the mix.

As is fitting, the CEO of the largest company in Arkansas – and the world – was the highest-paid executive in the state. Michael T. Duke received a total compensation package from Wal-Mart Stores Inc. of $18.7 million, down 3.5 percent from 2009 entirely because his performance pay and stock and options awards were cut by almost $1 million.

Only one other Arkansas executive had a total pay package that reached eight figures last year: David M. Wood, CEO of Murphy Oil Corp. of El Dorado, with $14.1 million.

Almost half of the 88 executives considered statewide were paid at least $1 million last year. That includes 36 from Northwest Arkansas.

Arkansas Business uses a simple formula for arriving at total compensation: all compensation reported in the annual proxy, plus the actual value realized from the exercise of stock options during the year.

Thirty-eight percent of the executives on this year’s list exercised options in 2010, compared with 27 percent in 2009.

This year’s list is significantly shorter than last year’s, thanks primarily to the disappearance of two publicly traded companies: the tiny penny stock WellQuest Medical & Wellness Corp. of Bentonville and Baldor Electric Co. of Fort Smith. WellQuest began trading publicly in April 2009 and ceased reporting to the Securities & Exchange Commission a year later.

Baldor was acquired by Swiss giant ABB Ltd. in January and did not subsequently file a proxy statement.

In keeping with the SEC’s efforts to make executive pay reporting more uniform and transparent, corporate proxy statements include detailed breakdowns of the top managers referred to as “named executive officers.”

Most companies include five NEOs, but some (including America’s Car-Mart Inc. of Bentonville and Harrison-based First Federal Bancshares of Arkansas) only report three. Mid-year personnel changes can result in more than five being included in the reporting, as is the case with Arkansas Best Corp. of Fort Smith.

 

Out With the Old

Turnover among NEOs has accelerated in the past couple of years, with a number of longtime fixtures on the list disappearing. In fact, six of last year’s top 25 are gone, including Richard L. Bond, the former CEO of Tyson Foods Inc.

Several more are already gone from their companies, although they appeared in the proxy and are on this year’s list. That number includes Kirk Thompson, who retired as CEO of J.B. Hunt Transport Services Inc. of Lowell at the end of 2010; and Thomas M. Schoewe, the former CFO of Wal-Mart who retired in January.

Brian C. Cornell, who was No. 2 on last year’s list with total 2009 compensation of $14.3 million, is missing this year. He is still a Wal-Mart executive vice president, running the Sam’s Club division, but he was only an NEO in last year’s proxy thanks to the $10.57 million worth of stock that Wal-Mart used to lure him away from Michael’s Stores Inc. in April 2009.

 

In With the New

Eleven names on this year’s list are new since last year.

The highest-paid newcomer is No. 8, Charles M. Holley Jr., who replaced Schoewe as Wal-Mart’s chief financial officer. The other newbies include:

• Donnie King and Noel W. White, senior group vice presidents for Tyson Foods;
• Three at Arkansas Best – Senior vice president J. Lavon Morton, CFO Michael E. Newcity and vice president and treasurer Donald W. Pearson;
• Michael R. Weindel Jr., a vice president at USA Truck Inc. of Van Buren; and
• Lance K. Stewart, CFO for P.A.M. Transportation Services Inc. of Tontitown.