NH executives aren’t hurting
CEOs of New Hampshire companies make less than the national average, but many of them are still pulling in millions.
The state’s highest-paid CEO, based on a comparison of New Hampshire-based companies that are publicly traded, is GT Solar’s Tom Gutierrez, who collected $5.31 million in total compensation last fiscal year. Only $221,000 was base salary; the rest came from bonuses, stock options and other incentives.
Timberland’s Jeffrey Swartz takes second place with a $4.09 million compensation package made up of $825,000 in base salary, $1.5 million in stocks and options, and $1.4 million in incentive pay.
Rounding out the bottom is David Robbins, of Hudson-based Micronetics, a company that, among other things, makes a transceiver used to bring satellite-based broadband service to airplanes. His total compensation was $279,941.
Spring is the time of year when most public companies disclose the prior year pay of their top executives, as is required annually by the U.S. Securities and Exchange Commission.
The exceptions are companies that operate on a fiscal year that’s different from the calendar year. GT Solar, for example, discloses its executive compensation in the summer, following its June 30 close of the fiscal year.
Nationally, CEO pay shot up in 2010 as the economy improved. Median CEO compensation jumped 27 percent to $9 million, according to a USA Today report that analyzed data from GovernanceMetrics. The spike followed three years of declines in CEO pay, and it occurred despite a still-fragile economy and stagnant wages for employees.
“There hasn’t been much, shall we say, humility after the recession,” said Charlie Cray, director of the Center for Corporate Policy in Washington, D.C.
Generally, New Hampshire CEOs also saw an increase in pay. PC Connection’s Patricia Gallup got a 12 percent raise to $1.75 million in total compensation; Pennichuck’s Duane Montopoli also earned 12 percent more for total compensation of $451,100; and White Mountain Insurance Group’s Raymond Barrette collected 7 percent more for a total of $1.72 million.
It’s possible that companies are starting to reward executives for better financial performance, said Daniel Innis, dean of the Whittemore School of Business and Economics at the University of New Hampshire, but he cautioned against considering the increase in New Hampshire CEO pay a trend.
In recent years, CEO pay has been the subject of much public debate. After the bank bailouts began in 2008 under the Federal Troubled Asset Relief Program, serious questions were raised about the bonuses and incentive pay being awarded to executives who led their companies into near-financial collapse. Goldman Sachs CEO Lloyd Blankfein became the poster child for Wall Street excess after it was revealed that he made $68.5 million in 2007 – $67.9 of which came in the form of bonuses and other incentive pay.
Congress, as part of the 2009 stimulus bill, limited bonuses for executives at banks and other financial institutions that accepted TARP money.
And last year, Congress passed the Wall Street Reform and Consumer Protection Act, which requires public companies to give their shareholders a vote on CEO pay.
Merrimack’s GT Solar, which makes equipment other companies use to make solar panels, is in the process of reviewing and revising its compensation plan, said Jeff Nestel-Patt, director of marketing and communications. Citing that process, the company declined to comment further.
PC Connection, a computer equipment reseller that’s also based in Merrimack, is seeking shareholder approval to increase its maximum executive bonus from $1 million to $2 million annually, according to documents filed with the Securities and Exchange Commission.
Salary is generally a small portion of executive compensation, and that’s by design. By offering bonuses and stock options, companies can tie a CEO’s pay directly to the company’s performance.
In New Hampshire, the most recent CEO salary data suggests a strong link between pay and performance. CEOs of profitable companies earned more during the last fiscal year than they did the year prior. CEOs of the two companies that lost money saw a decline in pay.
ICAD, a Nashua medical software company, paid CEO Ken Ferry $505,850 in the 2009 fiscal year, the most recent year for which executive pay has been reported, down about 57 percent from $1.18 million in the 2008 fiscal year. ICAD lost $2 million in the 2009 fiscal year.
Ezenia, another Nashua software company, paid CEO Khoa Nguyen $770,304 in the 2009 fiscal year, when the struggling company lost $3.4 million. That was a decline of about 11 percent from the $868,511 Nguyen collected in the 2008 fiscal year.
GT Solar and Timberland – the companies with the highest CEO salaries – also had some of the highest profits: $87 million each in 2010.
Despite controversy in recent years over CEO salaries, Innis, the UNH dean, said the job also comes with giant responsibilities.
“To the average person, it’s a lot of money, but with it comes enormous responsibility and long hours,” he said. “A leader sets a tone for the company and helps it meet its vision; they create a culture. They really do play an important role.”
The question that remains, Innis said, is whether employees are getting raises when the CEO does.
Ashley Smith can be reached at 594-6446 or firstname.lastname@example.org.