Top Stories Milwaukee

By Michael Horne

By the time he broke for lunch on his first day of the new work year, Johnson Controls Chairman of the Board, President and Chief Executive Officer Steven A. Roell had already banked more salary than the average Wisconsin worker would earn all year. Roell earned $17.5 million in compensation in 2010, making him the state’s highest paid CEO, a new report shows.

The gap between executive pay and rank and file wages has never been greater or easier to document than it is today. In fact, the ratio of executive pay to worker salaries must be reported in the proxy statements of publicly traded corporations according to reform legislation passed by Congress in 2010 in the wake of the financial crisis.

We are able to learn about Roell’s $17,563,931 in total 2010 compensation (529 times the median worker income of $33,190) thanks to Executive Pay Watch, a CEO compensation search engine released this week by the AFL-CIO. The national labor group compiled the information from proxy statements of companies nationally and allows users to check the data by state.

The report lists CEO compensation at 44 Wisconsin firms and found an average compensation of $3.9 million for them, which is 121 times higher than the median Wisconsin salary of $32,360, while the statewide unemployment rate is 8.5 percent.

Johnson Controls, with 2010 sales of $34 billion, is Wisconsin’s largest publicly traded company, so it’s no surprise Roell leads the pack in compensation. However, if the list of the 100 best-compensated CEOs in America were an airline seating chart, Roell, at 82nd, would be deep in economy class, somewhere near the tail and far behind such first-class earners as Gregory B. Maffei of Liberty Media Corp., whose 2009 compensation package was worth $87.5 million.

But in the Badger State, you might say, the Johnson Controls CEO Roells the Roost.

By contrast, Gale E. Klappa, the Chairman of the Board, President and CEO of Wisconsin Energies received $10.3 million and had to work nearly a full day to earn what the average worker did in a year.

It turns out, however, that 2010 was an off year for Klappa, whose income has been flat since 2008. In any event, his pay is right in line with others in his business, says spokesman Brian Manthey. “In spite of record financial performance, total executive compensation was less than the previous year,” he noted in an email to NewsBuzz.

“Compensation for all employees at Wisconsin Energy, including executives, is targeted at the market median, that is, in the middle of the pay range for individuals in similar positions in similar companies nationwide,” Manthey adds. “In 2010, officer salaries remained frozen at 2008 levels. Only a portion of base pay for executives is included in customer rates and incentive compensation is not included in rates at all – but paid entirely by stockholders.”

Executive Pay Watch has a feature that enables users to check compensation records by industry, so it seemed reasonable to put Mr. Klappa’s midrange salary to the test.

As it turns out, he was the 10th highest paid executive in the “Electric Gas and Sanitary Services” category, where the average CEO compensation among the 119 listed was $4.6 million, or less than half what Klappa made.

The AFL-CIO launched the website to highlight its concern that executive pay is far outpacing worker compensation. The top 299 earners on its list carried a payroll that could have employed over 100,000 rank and file workers, the group adds.

The site also highlights a new provision in security laws that inserted to draw attention to the compensation disparities. Notes the AFL-CIO: “While CEO pay is still out of control on Wall Street and in the rest of Corporate America, shareholders now have new tools to fight back. CEOs must now give their shareholders a ‘say on pay,’ thanks to the Dodd-Frank Wall Street Reform and Consumer Protection Act that President Obama signed in July 2010.

“Starting in 2011, shareholders of publicly traded companies are required to be given a say-on-pay vote on executive compensation. Although these votes are not binding, they will encourage boards of directors to reform their companies’ executive compensation. No CEO wants to suffer the embarrassment of shareholders voting against their pay.”

The “Say-on-Pay” data is exhaustively researched in a series of “Executive Pay Scorecards” issued by the Corporate Library, a private firm that researches corporate issues and sells the information to shareholders, mutual funds and other interested parties. Its data are far more nuanced and complete that that of the AFL-CIO and includes several metrics to see if the officer’s compensation was in line with averages. It highlights concerns, rather graphically, with red flags.

In the case of Milwaukee company Joy Global, we learn that CEO Michael W. Sutherlin’s $5.6 million in compensation comes from a basket of sources that would take one of the firm’s giant mining shovels to contain: “Base Salary, Discretionary Bonus, Annual Cash Incentive, Benefits & Perquisites, Post-Retirement Benefits, Stock Option Awards, Stock Awards, Vesting of Stocks and Severance.”

Sutherlin’s severance, which is waiting in the wings and does not appear as part of his 2010 compensation, is listed as a whopping $41.7 million.

This latter item earns Joy Global one of its six (out of a potential 10) red flags, since it exceeds the recommended limit of twice annual salary for potential severance pay. Even so, Joy Global ranked as “Average Concern” by the Corporate Library. (Attempts to contact Corporate Library to check if any other Milwaukee executives were red-flagged were not successful.)

All of this corporate scrutiny has led to a backlash on the part of the corporations and some politicians who contend the Dodd-Frank Act, passed in part to rein in executive compensation on Wall Street, goes too far.

The entire Senate Republican leadership has announced plans to repeal the act with a bill introduced by Sen. Jim DeMint that he calls the “Financial Takeover Repeal Act.”

A similar measure was introduced in the House of Representatives by Rep. Michele Bachmann.

Wisconsin’s highest-paid executives:

1) JOHNSON CONTROLS INC

(Milwaukee)

Stephen A. Roell – $17.56 million

2) WISCONSIN ENERGY CORP

(Milwaukee)

Gale E. Klappa – $10.32 million

3) BEMIS CO INC

(Neenah)

Henry J. Theisen – $9.69 million

4) ROCKWELL AUTOMATION INC

(Milwaukee)

Keith D. Nosbusch – $8.76 million

5) MANPOWER INC

(Milwaukee)

Jeffrey A. Joerres – $8.74 million

6) SENSIENT TECHNOLOGIES CORP

(Milwaukee)

Kenneth P. Manning – $8.4 million

7) KOHL’S CORP

(Menomonee Falls)

Kevin Mansell – $6.65 million

AO SMITH

(Milwaukee)

Paul W. Jones – $6.57 million

9) HARLEY-DAVIDSON INC

(Milwaukee)

Keith E. Wandell – $6.42 million

10) BUCYRUS INTERNATIONAL INC

(South Milwaukee)

Timothy W. Sullivan – $6.26 million

Complete data may be found here.

Post Footer automatically generated by Add Post Footer Plugin for wordpress.