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- How the compensation numbers in the survey were determined
By Loren Steffy
Houston Chronicle Staff Writer
This may be the last time we see some of the most familiar names on Houston’s annual parade of highest-paid executives.
About one-quarter of the 20 highest-paid executives on the Chronicle’s annual pay survey have retired, sold their companies or relinquished job titles in the past year. While last year may have represented their swan song in the executive suite, it didn’t crimp their compensation. In some cases, it actually boosted it.
ConocoPhillips is always well-represented on the pay list, of course, but in his final full year, the company decided to give former chairman and chief executive James Mulva a grand send-off — almost $28 million in total compensation, pushing him to No. 2 on the list. It was a 55 percent raise from the previous year, and Mulva then split the company in two and retired in May.
Shareholders, especially those of the Phillips 66 refining business, may question whether Mulva’s decision to break up the company he put together was worth it.
Cooper Industries shareholders are probably happier with Kirk Hachigian. The company’s chairman, president and CEO topped the 2010 pay list but dropped to No. 5 last year. His pay fell
16 percent to $21.1 million, but Hachigian announced plans in May to sell the company to Eaton Corp. at a 29 percent premium.
One of the biggest executive raises last year went to former El Paso Corp. chairman and CEO Douglas Foshee, who rocketed to 11th on the list from 30th in 2010. His $14.5 million pay package represented a 73 percent raise. Foshee sold El Paso to crosstown rival Kinder Morgan in May.
Getting by on $1 a year
Kinder Morgan Inc. Chairman and CEO Richard Kinder, by contrast, took his company public last year, but you won’t find him on the list. Officially, he earns $1 a year, but don’t start taking up a collection for him. As Kinder Morgan Inc.’s biggest shareholder, with 34 percent of the company, his stake is worth about $13.8 billion — which means he can live comfortably off the dividends.
Of course, no executive pay list would be complete without Nabors Industries’ Eugene Isenberg, our perennial poster boy for runaway pay. Nabors’ board showered $19.5 million on Isenberg last year, even as he gave up the CEO’s title in October. His pay would have been off the charts had shareholders not revolted over a proposed $100 million farewell gift the company was preparing for him.
Isenberg retired as chairman in June, so this may be his last time on the list, but Nabors isn’t going anywhere. Isenberg’s successor, Anthony Petrello, is already in the top 10, getting $16 million last year, up from $9 million.
New rules allowing shareholders to submit non-binding votes on executive pay are making many boards more cautious, but they are still reluctant to make executives share investors’ pain.
Consider BMC Software, where Robert Beauchamp continues to hover high on the list. Last year’s $12.7??million package was the same as in 2010, but his shareholders weren’t so lucky. They watched the company’s stock plunge 30 percent. It’s no wonder the company found itself in a proxy fight with one of its biggest shareholders, which it settled last month.
Pay up, shares down
Oil field services giant Schlumberger decided to give Andrew Gould a raise in his final year as chairman, bumping him to $17.9 million from
$15.6 million a year earlier. Investors weren’t as fortunate. The company’s stock tumbled 17 percent.
Nabors, of course, also falls into this category. The raises for Isenberg and Petrello came against a 26 percent decline in the company’s shares, making Nabors the worst-performing stock among Houston’s highest-paid executives.
Some boards were a little more frugal. Apache’s Steve Farris dropped out of the top 10 this year, collecting $15.6 million. Farris’ pay fell almost
20 percent from 2010, which seems only right because Apache shares slid 24 percent. That may be part of the reason that more than 95 percent of shareholders voted in favor of Farris’ pay package at this year’s annual meeting.
With so many of Farris’ peers on the pay list heading for the sunset, this year may represent a turning point. If we don’t get more realistic pay packages, at least we’ll get some new names for the pay parade.
