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The clues to executive compensation.


Don't get lost in the numbers. First of all, none of them likely match your own, because the guys in the compensation index (that's right all of them are men) have several more zeros on their paychecks than most. Where else could one find a range from $6,759,387 - Wal-Mart's CEO, David Glass - to 60,000 - Cannon Express's CEO and founder, Dean Cannon - in total compensation.

In this year's analysis of public paychecks, we've grown to 123 executives from last year's 96. All told, those executives pulled down $46.9 million in salary, stock options, profit sharing and other forms of compensation.

We've been ranking salaries since 1986, and each year the list gets longer as companies expand or are added to the ranks of public companies.

Our information is from corporate proxy reports issued for 1989 annual meetings and reflecting compensation during 1988.

David Glass returns to the No. 1 position this year, after dropping down aways on 1987's list. He made most of his compensation by exercising stock options: $6,129,387 worth, according to the Wal-Mart proxy. Last year, Glass' two colleagues - Donald Soderquist and Jack Shewmaker - headed the list.

The stock option route is a common carrot for Wal-Mart executives. With a fast-growing company, incentive and compensation comes in making those shareholders happy.

Most executives in the survey, however, depend upon salary and bonuses. This year, that contributed 71 percent of compensation, up from last year's 62.5 percent. Options accounted for $10.7 million of the total (23.2 percent). The profit-sharing component contributed just over a half-million to the total - increasing to 1.1 percent of total compensation, up from 0.8 percent in 1987. Gale Galloway, CEO of Entex, which merged with Arkla, Inc., received a $667,000 payment for relinquishing his entitlement to certain perks at Arkla. That boosted him to No. 2 on this year's list, up from No. 24 in 1988.

Although each individual executive's total compensation fluctuates on the basis of his company's performance, we estimate that the group of 68 executives with pay stubs for both 1987 and 1988 saw an increase of 8.1 percent. Soderquist, Johnson and a couple of Systematics executives did not exercise options this year and their ranking reflects this.

Reading a proxy can be like reading a Tom Clancy novel: You've got to look closely for the clues to total compensation. Salaries of all "senior executives" are required to be listed. Yet some highly paid executives sometimes elude listing their salary because they aren't considered senior.

In the case of James R. Hudson, son of the founder of Hudson Foods, although he's not listed as an officer, the Hudson proxy does disclose he earned $150,750 as manager of fleet operations.

The Fisher Transporatation proxy for April 24, 1989, lists only two executives pulling down more than $60,000. A closer look reveals, however, that four officers negotiated employment agreements with the company in March just prior to the annual meeting.

Trey Trumbo, VP of finance, did rather well: $299,330 with a one-time bonus of $35,000 if he stayed in the company's employ for a month. The same proxy also gives a second reason for Trumbo to hang around. He is a trustee of founder Joseph Fisher's shares in the company, which has had some rough riding of late.
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Copyright 1989 Gale, Cengage Learning. All rights reserved.

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Title Annotation:comparison of corporate executives' salaries, etc.
Author:Holmes, Joe
Publication:Arkansas Business
Date:Oct 9, 1989
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