What public company CEOs make in Central Pa.

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Total compensation is everything listed in the summary compensation table — base salary, bonuses, stock and option awards and other benefits, including incentive plans and deferred compensation.

Averages were based on compensation totals for 16 of the 19 CEOs listed (see charts, page 6) because they have been in the role for at least the last two fiscal years.

The CEOs at Bon-Ton Stores Inc., Harsco Corp. and Select Medical Holdings Corp. assumed their roles in 2014.

Three of the 16 leaders reported declines from the previous year. Seven of the 19 total CEOs made less than $1 million last year.

The Business Journal analyzed only public companies based in its primary coverage area — Cumberland, Dauphin, Lancaster, Lebanon and York counties. Companies that were not registered with the U.S. Securities and Exchange Commission or not required to publicly disclose compensation — such as Burnham Holdings Inc. — were not included. Integrity Bancshares Inc., which is now part of S&T Bancorp Inc., also never publicly disclosed compensation with the SEC.

Click here to download a PDF chart with the compensation and stock holdings of the midstate’s 19 top public companies.

CEO pay hikes: Do they affect investor decisions?

The Hershey Co., Rite Aid Corp., Armstrong World Industries and Bon-Ton Stores Inc. each paid their CEOs — or former CEO, in the case of Bon-Ton — a base salary of $1 million in the last fiscal year.

The rest of the public companies based in the midstate were under that threshold.

Most of a CEO’s total compensation is spread across bonuses, stock awards and options, equity incentive plans and deferred compensation.

For example, Hershey CEO John Bilbrey made $17.8 million last year, according to the company’s annual proxy statement. But more than $7 million of that is listed as a change in pension value and nonqualified deferred compensation earnings.

Another $8 million is split between stock awards and options.

Does it matter to investors what CEOs make each year and how they receive their compensation?

Shareholders of midstate companies strongly support executive compensation programs, according to say-on-pay advisory voting records. Nationally, say-on-pay votes have forced some companies to lower executive pay or modify their compensation packages, while others have raised wages for lower-paid workers.

“It’s something we look at,” Joseph Garner, director of research for Manheim Township-based Emerald Advisers Inc., one of the largest registered investment advisers in the midstate, said of executive compensation. “Are management’s interests aligned with ours?”

Compensation should be tied to a company’s earnings per share and cash flow growth, among other factors, he said. That motivates CEOs and other executive officers to do more.

Emerald would prefer to see compensation increases more on the incentive side, not the base, he added, which pushes executives to execute on the metrics that will ultimately drive success for the company.

And those equity incentives and other benefits should be balanced between short- and long-term goals, he said.

Emerald also looks at executive stock ownership stakes.

“We want to see meaningful stakes and that a certain portion of their net worth is invested in the company,” Garner said. “We want to know that the stock price is as important to them as it is to shareholders.”

On company performance and stock returns, he added: “Sometimes a year is too short. There are factors beyond how a company performed that influence the stock price.”
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Cashing in: A snapshot of stock options

The majority of public company CEOs amass equity options and stock awards that take multiple years to vest as part of performance-based incentives and other annual compensation commitments companies make to their executives.

Stock options have value only if the price of the common stock increases, which encourages executives to enhance long-term stockholder value.

Rite Aid Corp. CEO John Standley exercised 1.7 million options priced at 96 cents per share at the end of last year. He sold those shares for $6.82 per share, according to a filing with the U.S. Securities and Exchange Commission. He was granted those options in 2008.

Rite Aid stock has been hovering around $8 to $9 per share recently.

Here’s a look at some option exercises by midstate CEOs during the last fiscal year, according to company proxy statements.
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