Thank you, Santa. In a tough economic year, when even some CEOs have had to scrimp and save, others are finding big bonuses beneath the tree.
Aaron Boyd, head of research for Equilar, an executive compensation data firm, says it's still too early to say how generous a year 2010 will turn out to be for chief executives of America's biggest companies. Most S&P 500 companies don't report their bonus numbers until March or April. A minority, however -- companies with fiscal years ending early -- file their proxies sooner, allowing analysts like Boyd to get a peek at coming attractions. His look at some 60 companies that have already filed shows that the five CEOs below were the biggest bonus winners.
What's noteworthy about their bonuses, says Boyd -- apart from sheer size -- is that all were pre-determined by formulas that take into account how the CEOs' companies performed.
"Companies are moving away from payouts based purely on the discretion of the board," he says. The trend is toward bonuses tied more closely to performance.
Congress last year was inundated with legislative proposals to achieve that result, and these (plus new SEC reporting requirements) have caused companies to reassess their pay practices. Regardless of whether the bonus is discretionary or performance-based, Equilar ranks only those paid in cash. To include ones paid in stock or options is to make comparisons more difficult.
"Obviously these bonuses are above the median of what most CEOs get," says Boyd. "The biggest ones tend to go to the most high-profile executives -- the names you know." These usually are the same executives who get the highest total compensation. "Larry Ellison usually places near the top for total compensation. As for Rupert Murdoch, he's synonymous with News Corp. When your pay is at his level, your bonus will be pretty high as well."
Here are some of the year's big winners:
1. William R. Johnson, Chairman and President, H.J. Heinz. Bonus: $8,589,063, up 17.6 percent. Johnson has been at Heinz since 1982. Past positions include vice president of marketing for Ketchup. He has helped Heinz grow its business overseas, particularly in Asia. China gave him the highest honor it gives foreign business leaders -- the Marco Polo Award -- for his contributions to the development of China's food industry. Heinz's sales for 2010 are $10.49 billion, up 3.42 percent; net income is $882.34 million, up 4.41 percent.
Larry Ellison Among Five Biggest CEO Year-End Bonuses
2. Lawrence J. Ellison, Chief Executive Officer, Oracle. Bonus: $6,453,254, up 79.9 percent. Ellison has been CEO of Oracle since he founded the company in 1977. He has been a pioneer in providing business applications on the Internet and, before founding Oracle, he helped build the first IBM-compatible mainframe. Intensely competitive, Ellison plays tennis, flies planes and races yachts. In 2010 he sailed with the BMW Oracle yacht racing team to help win the America's Cup. Oracle's sales for 2010 are $26.82 billion, up 15.34 percent; net income is $6.14 billion, up 9.69 percent
3. John T. Chambers, Chairman and CEO, Cisco Systems. Bonus: $4,600,000, up 126.5 percent. Since becoming CEO in 1995, Chambers has pushed Cisco's annual revenue from $2.0 billion to over $40 billion. An expert in workplace learning, he served as a member of President George W. Bush's Education Committee in 2000. Cisco's sales for 2010 are $40.04 billion, up 10.86 percent; net income is $7.77 billion, up 26.62 percent.
4. Mark G. Parker, President and CEO, Nike. Bonus: $4,441,875, up 393.5 percent. Parker, who first went to work at Nike in 1979, became CEO in 2006. He has expanded the company's portfolio of brands to include Cole Haan, Converse and Hurley International. He's a believer in corporate responsibility. During his time as CEO, Nike has become a supporter of such foundations as "Girl Effect" and "Yellow Band." The company's 2010 sales are $19.01 billion, up 0.85 percent; net income is $1.91 billion, up 28.25 percent.
5. Rupert Murdoch, Chairman and CEO, News Corp. Bonus: $4,368,800, down 19.6 percent. Starting in 1953 with a single, family-owned newspaper in his native Australia, Murdoch has built a media empire that now includes the tabloid New York Post, DIRECTV, Fox Entertainment Group and TV Guide. Among his latest ventures is The Daily, an iPad-only newspaper. He's been chairman of News Corp since 1991. And at age 79 he still boxes -- so watch what you say. Sales for 2010 are $32.78 billion, up 7.74 percent; net income is $2.54 billion, up from a loss of $3.31 billion the year before.