Public Companies: $156,000 At The Top

 

Executives of smaller publicly held companied enjoy fatter paychecks and broader perks than their counterparts in smaller private firms. That's the conclusion that can be drawn from an INC. spot survey of executive compensation in the 40 public companies listed below. Average total remuneration of CEOs in these firms was $156,417 last year, compared with $73,400 earned by chief executives in private companies (see page 35).

Selected at random from INC.'s prospectus files of recent public offerings, the roster represents a cross section of smaller businesses in manufacturing, service, and mining industries. For comparisons, the 40 companies are divided into four groups ranked according to fiscal 1980 sales ranging from $1 million to $25 million. Company profitability varies. Six of the firms experienced net losses last year, while four are highly profitable enterprises boasting net income that exceeded 15% of sales. Half of the companies, however, reflect average profitability ranging from 5% to 10%.

Not surprisingly, chief executive pay and corporate profits are directly related. The top officers of the most profitable businesses averaged $365,538 in total remuneration last year. By comparison, CEOs in companies with red ink on their P&L statements earned far less, chalking up average total pay of $113,407.

Indicative of the higher executive pay levels in public companies is the group's average of $106,574 in the salary-and-bonuses column. More than one out of four of the officers listed earned cash income that topped $100,000.

Beyond larger paychecks, degree of ownership is the most significant difference that emerges when the payrolls of public companies are compared with those of privately held businesses. Stock options, for example, are not an important factor in pay packages of private companies, where executive ownership generally exists. However, as this list of public firms indicates, top management's equity interest is far more limited.

Among chief executive officers, ownership -- chiefly in the form of common stock -- ranges from 2% to 70%. The average, however, is less than 20%. Only two CEOs own controlling interest in their companies, while almost half of the top officers own 10% or less. Consequently, stock option plans are part of the pay packages in three out of four companies listed.

As is true among closely held businesses, executive pay in public firms is proportionate to company size. For example, the average total compensation for chief executives of companies in the smallest sales category -- $1 million to $4.9 million -- was $52,128 last year. CEOs in the $5 million to $9.9 million group earned average total pay of $107,759. In comparison, those in the $10 million to $14.9 million range earned $178,804, while those in the largest sales category -- $15 million to $24.9 million -- average $270,646 in total remuneration.

Greater sales volume also means fatter paychecks for No. 2 executives. Total compensation for the second officers listed ranged from $10,500 to $238,904. The lowest paid officer in this case is found in the smallest sales group, while the highest paid No. 2 executive is in one of the biggest companies on the list. In the smallest companies, the second in command averaged total pay of $49,506 last year, while those in the largest revenue category chalked up $135,198 in total compensation.

As the tables also show, the larger the company the broader the total pay package. Stock options and company cars are the staples among the noncash forms of compensation in those companies with less than $10 million in sales.In firms with sales of more than $10 million, such additional perks as club membership, stock bonuses, and medical reimbursement plans appear on the list.

Executive benefits and perks for the group as a whole are less sophisticated and more conservative than those found in giant corporations. Three out of five of the companies listed furnish automobiles for their top executives. But only one, for example, has instituted a plan which underwrites executives' financial and legal fees (up to $10,000 a year). As testimony to the ever tighter tax clamp on perks, only one plane, yacht and lodge could be found among the 40 firms -- all three amenities owned by the same company.

Note: This table may be divided, and additional information on a particular entry may appear on more than one screen.

FY '80 Company Salaries, Securities,

Sales Location (no. of Executive, title (age) bonuses benefits

employees)

$1 MILLION TO $4.9 MILLION SALES

$1.2 Biotech Research Labs

Rockville, MD (30) Robert C. Y. Ting, vp - -

(51)

VP (51)

Biomedical research

1.7 Oxygen Enrichment

Schenectady (39) Richard H. Blackmer, - -

CHAN/PRES (50)

Mfr. respiratory Jonathan W. Hedman, - -

products

VP/TREAS (36)

1.8 Biochem International

Milwaukee (35) Gerhard Von der Ruhr, 47,167 3,448

 1 | 2 | 3 | 4 | 5 | 6 | 7  NEXT