CEO compensation continued to rise in 2011
The biggest pay packages seem to keep getting bigger, according to a preliminary analysis of executive compensation at major US public companies.
So far this year, the highest paid top executive is Apple Inc. chief executive Timothy Cook, who succeeded company cofounder Steve Jobs in August and earned $378 million in total compensation last year, one of the biggest pay packages in memory.
Cook, who runs the world’s most valuable company, received more than quadruple the amount of the top paid chief executive in 2010, when Viacom Inc. head Philippe P. Dauman topped the list at $84.5 million.
The package is a dramatic illustration of how CEO pay continues to edge upward - both in Massachusetts and across the country - as the stock market soars and the economy regains its footing.
“It’s not only back to business as usual, but back to business as usual and then some,’’ said Vineeta Anand, chief research analyst of the AFL-CIO union’s investment office.
Overall, pay for the top 100 highest paid CEOs at major companies rose 20 percent to more than $2 billion, from 2010 to 2011, largely because of outsize packages to Cook and a few other top executives, according to Equilar Inc., a California compensation research firm that compiled the data for The New York Times. The data are based on filings by about 300 companies with at least $5 billion in sales that publicly reported their annual compensation numbers by March 31.
Apple reported that almost all of Cook’s pay was in restricted stock, which will vest in two installments over 10 years, rather than in cash. The value of the stock, $376 million, was based on its price in August, when Cook became chief executive. The stock has since risen sharply, making his shares worth more than $634 million as of last week.
“This is one of the best examples of pay for performance and retention I have seen in 35 years,’’ said Frank Glassner, a partner with Meridian Compensation Partners LLC in San Francisco.
Compensation consultants said most CEOs appear to have only received modest raises last year in relation to increases in profits and stock prices. The median pay for a chief executive on the top 100 list was $14.4 million, up 2 percent from 2010. Two other surveys also found that median pay for continuing CEOs rose by just 1 to 2 percent last year, based on early filings.
“It was a good year for companies in 2011, but pay didn’t increase at the same rate,’’ said David Wise, senior principal with Hay Group, a management consultancy in New York.
Wise said companies were reluctant to slash CEO pay as much as profits suffered after the financial crisis and they are proving equally hesitant to ratchet up pay now as profits are improving.
Among Massachusetts companies that have filed so far, Nuance Communications Inc.’s chief executive, Paul A. Ricci, is one of the highest paid. He earned $20.7 million last year, up 5 percent from 2010. The Burlington company makes speech recognition software, used by companies ranging from Apple to Toyota.
State Street Corp. chief executive Joseph “Jay’’ L. Hooley’s total compensation jumped 25 percent last year, to $16.2 million. Profits at the Boston financial services giant grew 23 percent to $1.9 billion in 2011.
EMC Corp. chief executive Joseph M. Tucci earned $13.2 million in total compensation, up 6 percent from 2010. Tucci, who took over the Hopkinton tech company in 2001, plans to retire next year. EMC’s profits and revenue both rose faster than Tucci’s pay last year, though the total return for its stock fell 6 percent.
Parametric Technology Corp. chief executive James E. Heppelmann more than doubled his 2010 pay, earning $12.3 million last year. The Needham company, which makes computer-aided design software, said Heppelmann’s pay included one-time awards after he was promoted to CEO in 2010.
Akamai Technologies Inc. chief Paul Sagan’s pay nearly doubled last year to $11.9 million. The Cambridge Internet company said it issued a one-time stock grant to top executives for retention purposes.
Life sciences chiefs also enjoyed healthy raises. PerkinElmer Inc. chief executive Robert F. Friel earned $12.8 million, up 61 percent from 2010. The Waltham life sciences company gave Friel a $5.7 million cash bonus, accounting for most of the increase in pay, based on its incentive plan.
In his first full year as CEO of Biogen Idec Inc., George A. Scangos earned $11.3 million, up 20 percent from 2010. He became head of the Weston biotechnology company in 2010.
And Covidien PLC’s outgoing chief executive, Richard J. Meelia, earned $19.8 million last year, up 54 percent from 2010. José E. Almeida, who succeeded Meelia in July, earned $9.4 million last year.
Companies mentioned in this story explained compensation packages in filings with the Securities and Exchange Commission, but did not offer additional comment when contacted by the Globe.
Many of the compensation packages rely heavily on stock and options, rather than cash, so the actual amount of money executives reap depends on how the stock performs and when they sell their stakes.
Many of the stock awards also have vesting restrictions, requiring executives to hit certain performance targets or remain with the company for years, in order to receive the shares. However, critics say companies often waive the requirements when executives underperform or are forced to resign, making the restrictions meaningless.