Executive compensation on rollercoaster

Analysis

While chief executives at public companies throughout the nation saw a decline in their pay packages in 2009, changes for Northern Colorado’s CEOs varied as much as their strength through the recession.

An analysis by executive compensation research firm Equilar found that the median total compensation for S&P 500 CEOs was $1.86 million, down 5.4 percent from 2008. Only one Northern Colorado CEO, Woodward Governor Co.’s Tom Gendron, surpassed that mark. His total compensation package of $2.2 million, including salary, bonuses and options, saw a year-over-year decline of 22.7 percent but was still the highest among four reporting public companies headquartered in the region.

Woodward reported revenues of $1.43 billion and income of $94.35 million for its 2009 fiscal year, which ended on Sept. 30. Compared to 2008, revenue was up 13.6 percent, with the acquisition of HR Textron finalized in April 2009, while net income declined 22.5 percent.

The company started its 2009 fiscal year with a stock price of $33.49, not bad considering the general market plunge that followed the Sept. 15, 2008, bankruptcy of Lehman Brothers. The stock finished the year at $24.26, a decline of almost 28 percent, after dropping as low as $8 in March 2009.

The rollercoaster year was largely reflected in Gendron’s bonus pay. His base salary was actually up 7.8 percent to $698,007 for 2009. However, the company pointed out in a proxy statement footnote that the base salary figures went into effect in October 2008 and that no named executive officers would receive a salary increase for fiscal year 2010.

Gendron, along with the other executives for which compensation is reported, received no cash compensation under the company’s management incentive plan, the performance-based element of Woodward’s bonus program. He did receive, however, $575,000 under the long-term incentive plan.

Gendron’s decline in bonus pay (58.7 percent) was higher than many of Woodward’s peer companies. In an analysis of 232 firms with revenues more than $1 billion, Equilar found that median total bonus payouts dropped 12.6 percent to $812,799 in 2009.

For small cap companies, Equilar found that the median bonus payout was up slightly but that 6.6 percent more CEOs received no bonus at all.

Other CEOs see different results

In the case of Heska, the board has tied bonus pay and salary to performance – largely defined as profitability. The board, at the request of the executive officers, has in the past opted to freeze base salaries as a means of achieving or nearing profitability. For 2009, Heska saw a 7 percent decline in revenue but moved from a loss in 2008 to a profit of $2.2 million.

Grieve’s base salary was up only $4,000 to $420,000, but the value of his total compensation package was up 37 percent, going from no bonus in 2008 to $180,182 for 2009.

Advanced Energy Industries Inc.’s CEO Hans Betz took no bonus payment in 2009, but he didn’t take one in 2008, either. About 45 percent of CEOs received no bonus compensation at all – an increase of 3.1 percent from 2008, according to Equilar.

Betz was the only Northern Colorado public company CEO to take a base salary cut in 2009. The 11.8 percent cut, instituted along with employee furloughs, brought Betz’ salary down to $495,414. His overall compensation for 2009 declined 10.2 percent. For 2009, Advanced Energy reported revenue of $186.4 million – down from $328.9 million in 2008 – and a net loss of $102.7 million.

Truly bucking the bonus trend for 2009 was Frederick-based UQM Technologies Inc. The self-described fiscally conservative company has historically weighted its executive compensation with stock and option awards. However, although CEO William Rankin received no stock award for 2009, his total compensation was still up 7.8 percent. His base salary crept up only 4 percent to $335,732 – remaining the lowest of the Northern Colorado public companies – but his bonus pay was up more than 400 percent to $251,580.

UQM had a stellar year, by most standards. Its financials for the fiscal year ending on March 31 remained relatively stagnant, reporting revenues of $8.7 million and a net loss of $4.1 million. However, the company landed a major Department of Energy grant that had it hosting a visit by Vice President Joe Biden earlier this year.

During its most recent fiscal year, the company’s stock increased from $1.64 to $4.21 – reaching as high as $7.45.

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