Lennar CEO Stuart Miller earned almost $13 million last year. Thats more than $4,000 per work hour, easily making the 55-year-old the highest-paid chief executive among South Floridas largest companies.
Was Miller overpaid? His compensation from the national home builder his father co-founded amounted to 265 times what the Bureau of Labor Statistics said is the average annual pay for someone in the construction business. But by one measure of particular interest to shareholders, Millers pay may be seen as about right.
While the chief of the nations largest homebuilder earned a higher salary than any of the other CEOs of the regions largest companies, Lennar managed to reward its shareholders in an out-sized way, too.
The Miami-based company saw returns double last year, with stock price surging from around $18 to $38 a share amid a broader rebound in the building industry.
As his company has done better, it has been fairly reflected in the CEOs pay, Luis Navas, a consultant with Global Governance Advisors, said of Lennar. They have almost perfect pay-for-performance alignment.
For this years review of CEO compensation, Business Monday is examining not only a CEOs salary, but also how that compares to how each company rewarded shareholders during the same year. Its a key metric, according to GGA, a compensation advisory firm with headquarters in Toronto and Miami. GGA partnered with the Herald for this story. The firm analyzed the compensation filings for the 25 largest firms in South Florida, as measured by the value of their publicly traded stock.
Along with ranking each CEO by compensation earned, GGA compared the chief executives pay with the equivalent of a shareholders pay: that is, gains in stock price and dividend payouts during the same time period. By GGAs standards, both payouts should be in line as one goes up, so should the other.
On this scale, Citrix does not fare well. The CEO of the tech giant, Mark Templeton, earned more last year than almost every South Florida chief executive on the list, finishing fourth with a pay package of $12.2 million. But when it comes to shareholder returns, the company finished 14th on GGAs local rankings.
The return for Citrix shareholders amounted to just 8 percent not much of a gain, relatively, during the bull market of 2011. The NASDAQ 100 stock index, which includes Citrix, shot up 15 percent in the same time period.
Navas said shareholder return shouldnt be the only measure used when determining a CEOs pay, but it gets extra attention from investors. Gaps between the overall market and individual companys performance have gotten more attention as a rebounding economy lifts stocks in most industries (last weeks gyrations notwithstanding). Compensation experts say the best pay systems dont reward CEOs simply for presiding at a time of recovery or punish him or her for being at the helm during a recession.
In 2009, if you were operating a company exactly as you should, the stock price was still going to go down, said Josh Wilson, a compensation consultant at Mercer. During a rebound, there is a common view that a CEO doesnt have to do anything, and the stock price will go up.
The GGA review of South Floridas Top 25 companies found a mix of CEOs who could be considered under-paid compared to shareholders and some who could be considered over-paid. Of course, with a median yearly compensation of $6.5 million roughly $2,100 per hour for a 60-hour week all would be considered well-paid. In fact, the median pay for a CEO in South Florida is about 12 times more than for a CEO across the country, when adjusted for the size of the company.