While many chief executives got raises last year, one local CEO saw his total pay cut by more than $1 million.
The pay cut Stuart Rose, the chairman and chief executive of Harrison Twp.-based REX American Resources Corp., absorbed last year was among the more dramatic cuts for CEOs of publicly traded companies in southwest Ohio.
Rose received $154,500 in 2012, compared with $1,157,705 in total compensation in 2011, according to a document REX filed with the U.S. Securities and Exchange Commission.
Last year was difficult for those with interests in ethanol-producing plants, such as REX. A scarcity of corn due to a drought led to 20 of the nation’s ethanol plants ending production, at least temporarily, trade group Renewable Fuels Association said earlier this year. A REX spokesman at the time said none of its ethanol interests had closed.
“His (Rose’s) compensation is tied to the company’s profitability,” Joe Jaffoni, a spokesman for REX, said more recently. “Given the difficult alternative energy environment last fiscal year, the company incurred a loss, hence the decline in his annual comp.”
The company’s executive pay “plan aligns executive compensation with the interests of shareholders and the creation of value,” Jaffoni added.
REX on May 22 reported much stronger first-quarter results. Earnings jumped to $3.3 million, compared with $800,000 during first quarter 2012.
Rose did not return a call seeking comment.
Three other southwest Ohio CEOs saw smaller cuts.
James Wainscott, chairman, president and CEO of West Chester Twp.-based AK Steel Corp., saw a slight fall in total compensation in 2012, $8,687,258, compared to $8,722,267 in 2011.
Standard Register Co. President CEO Joseph Morgan saw $1,758,932 in total pay in 2012, down from $2,129,148 in 2011, a reduction for the company failing to hit a revenue target, according to the company’s proxy filing. Morgan’s base salary of $600,000 has been frozen since 2009, Standard Register has said.
The president and CEO of Wilmington-based Air Transport Services Group Inc., Joseph Hete, received total pay of $1,658,903 in 2012, according to that company’s proxy statement. That’s down from $2,124,981 in 2011 and even a bit lower than the $1,696,810 Hete saw in 2010, the filing said.
But another area CEO, Teradata’s Mike Koehler, saw a substantial pay increase.
Koehler, the Atlanta-based CEO of Miami Twp. data powerhouse Teradata, received total pay of nearly $10.3 million in 2012, up from the $6.8 million and $7.3 million he received in 2011 and 2010 respectively, according to the company’s proxy statement.
Melissa Gruys, a Wright State management professor, said corporate boards are increasingly linking CEO pay directly to company performance, especially during difficult economic times.
Boards also want to protect their companies’ reputations, she said.
“You have to look at the reputation of the company, and what a huge impact that (CEO pay) will have on the reputation of the company,” Gruys said.
Charles Elson, director of the University of Delaware’s Weinberg Center for Corporate Governance, said many corporate boards are wary of being seen as being too generous.
“I think they’re taking pains” to be seen as more reasonable, Elson said. “I think that’s what the say-on-pay vote is all about.”
Part of the Dodd-Frank legislation passed in 2010, “say-on-pay” requires publicly traded corporations to give shareholders a vote on executive pay provisions at least every few years. The votes are not binding.
Elson would like to do away with corporate “peer group” comparisons that he contends some boards use to justify excessively high CEO pay. When CEOs in a “peer group” company earn a certain amount, boards may feel the need to be competitive with peer group companies. But Elson contends that CEOs rarely jump ship to such firms.
While CEOs deserve to be fairly compensated, “it isn’t a license to hit the jackpot,” Elson said.
AK Steel Corp., James Wainscott: $8,687,258 in 2012; $8,722,267 in 2011.
Air Transport Services Group Inc., Joseph Hete: $1,658,903 in 2012; $2,124,981 in 2011.
Procter & Gamble, Robert McDonald: $15,198,597 in 2012; $16,188,037 in 2011.
Navistar, Lewis Campbell (interim): $5,767,580 in 2012.
Sources: Company proxy statements, SEC filings.