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THE JOURNAL REPORT: THE WSJ 350: A SURVEY OF CEO COMPENSATION
Who Made the Biggest Bucks
April 10, 2006; Page R1
A healthy increase in corporate profits amid a somewhat stronger stock market swelled company captains' trove from stock-option exercises during 2005.
Their expanded riches show up in the annual compensation survey that Mercer Human Resource Consulting conducts for The Wall Street Journal.
THE JOURNAL REPORT
[See the full report] • See complete data from the CEO survey (pdf), the methodology, plus, the complete Executive Compensation report.
The New York firm keeps tabs on CEO rewards from exercising options plus other long-term incentive payouts, salary, bonuses and the value of restricted-stock grants. This total direct compensation climbed 15.8% to $6,049,504.
The median value of shares held by the No. 1 bosses at the end of their employers' latest fiscal years was $11.19 million, down slightly from $11.34 million the year before. The median total shareholder return, or TSR, equaled 6.8%, compared with 17.4% in 2004.
According to the Mercer study, 192 company chiefs cashed in options during 2005 for a median gain of $3,493,440. That compares with the 197 doing so the previous year for a median gain of $3,229,072.
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• Get salary information for managers in a range of industries and a list of senior executives' median compensation, from CareerJournal.com.
Here's a lineup of the big-business leaders who racked up the highest scores in the 2005 pay sweepstakes. All but one landed on past scoreboards. Two of these highest-paid CEOs will encounter investor resolutions limiting executive pay this year, reports Institutional Shareholder Services in Washington.
• Richard D. Fairbank, Capital One Financial Corp., with total direct compensation of $249.27 million. The sum entirely resulted from option exercises. Most of the value realized came from grants scheduled to expire last year. He held shares worth $200.2 million in the McLean, Va., credit-card giant at year-end. Shareholder return equaled 2.7%.
• Bruce Karatz, KB Home, $155.9 million, mainly because he enjoyed a $118.37 million payday from exercising options, pocketed restricted shares initially worth $3.86 million and received a long-term incentive payout of $3.53 million. He owned stock worth $132.6 million as of Nov. 30, the fiscal-year end for the Los Angeles builder. Shareholder return was 61%.
• Henry R. Silverman, Cendant Corp., $133.26 million, largely due to $117.64 million from exercising options that were about to expire. The head of this sprawling travel and real-estate company held shares worth $159.35 million when the year ended. Shareholder return was minus 21%. His employer is splitting up because of its poor stock performance.
• Richard S. Fuld Jr., Lehman Brothers Holdings Inc., $104.4 million, mainly an outgrowth of $74.96 million from his option exercises. The leader of the New York investment bank owned a sizable stake worth about $563.68 million on Nov. 30, the end of fiscal 2005. Shareholder return totaled 51.6%
• William E. Greehey, Valero Energy Corp., $95.16 million, primarily resulting from about $55.27 million in option gains, restricted shares with an initial value of $5.7 million and $29.28 million from a long-term incentive payout. His shares were worth $241.85 million at the end of a year when TSR was a stunning 128.5%.
• Ray R. Irani, Occidental Petroleum Corp., with total direct compensation of $83.96 million, the consequence of his $37.56 million in option gains, a restricted-stock award with an initial value of $30.9 million, plus a $10.56 million payout from a long-term incentive plan. The leader of the Los Angeles energy concern had a share stake worth $32.7 million at year-end. Shareholder return equaled 38.8%.
• Lawrence J. Ellison, Oracle Corp., $74.37 million, largely due to $66.89 million from exercising options. When the fiscal year ended last May 31, the founder of the business-software maker had a huge stake valued at about $15.5 billion. Investors saw a return of 12.3%.