Are South Florida’s top CEOs worth the money?
That’s always the big question at this time of year, as regulatory rules require publicly traded companies to detail how much they are paying their top executives. The numbers tend to be eye-popping, but even more so in this rocky economy.
For instance, the $14.8 million compensation recorded for NextEra CEO Lewis Hay last year amounted to $3,500 an hour. And that’s based on an 80-hour work week at the Florida Power & Light parent.
But as top executives reap major windfalls, what about investors?
The Miami Herald had the Miami office of compensation consultancy Global Governance Advisors compare pay packages of local CEOs to the returns investors earned from their companies’ stock. The formula was fairly simple: Stack up a CEO’s pay increase or decrease over the last year and the last three years against the return investors would have earned if they had bought and sold the company’s stock over the same time period.
To keep the list short, we limited comparisons to the six South Florida companies with enough revenue to qualify for the Fortune 500: Miami’s Carnival, Royal Caribbean, Ryder and World Fuel Services; Fort Lauderdale’s AutoNation and Boca Raton’s NextEra. Office Depot also qualified, but was dropped due to having a new CEO with no salary history to compare.
The results: World Fuel Services fares particularly well, with investors gaining 91 percent over three years while CEO Paul Stebbins saw only a 13 percent gain. Carnival, owned and run by Miami Heat owner Micky Arison, fares poorly. Carnival shareholders gained 16 percent over three years, but Arison’s reported compensation increased 55 percent to $7.6 million.
“World Fuel is getting really good value for their money,’’ said Luis Navas, vice chair for Global Governance and head of its Miami office. “Carnival, not so much.”
Carnival notes that in 2008, Arison declined his bonus. That set the CEO up for an inflated compensation gain in 2011, a year when the Doral-based company posted a $3.7 billion profit before interest, taxes and other expenses. The company also noted that because of the timing of stock awards, the compensation listed in Carnival’s regulatory filings doesn’t accurately capture changes in Arison’s compensation.
Using Carnival’s calculations, the company said Arison’s compensation dropped 21 percent in 2011, from $7 million to $5.8 million. That’s thanks to the sharp drop in Carnival stock following the shipwreck of one of its Italian ocean liners in early 2012, when the company’s board decided on Arison’s bonus.
Top S. Florida CEO pay
A look at the compensation of some of South Florida’s top CEOs, and how their companies fared in recent years.
CEO: Mike Jackson
2011 compensation: $6.4 million
One-year change: -5.0%
Three-year change: 149%
Shareholder return in one year: 34%
Shareholder return in three years: 209%
CEO: Micky Arison
2011 compensation: $7.6million
One-year change: 7.3%
Three-year change: 55%
Shareholder return in one year: -26%
Shareholder return in three years: 16%
CEO: Lewis Hay
2011 compensation: $14.8 million
One-year change: 9%
Three-year change: 23%
Shareholder return in one year: 24%
Shareholder return in three years: 12%
CEO: Richard Fain
Company: Royal Caribbean
2011 compensation: $5.8 million
One-year change: -31%
Three-year change: 1%
Shareholder return in one year: -46%
Shareholder return in three years: 50%
CEO: Gregory Swienton
2011 compensation: $6.2 million
One-year change: 17%
Three-year change: 27%
Shareholder return in one year: 6%
Shareholder return in three years: 23%
CEO: Paul Stebbins
Company: World Fuel Services
2011 compensation: $6.9 million
One-year change: 54%
Three-year change: 13%
Shareholder return in one year: 19%
Shareholder return in three years: 91%
Source: SEC filings, Yahoo Finance