PPG leader tops list of top-paid executives

Fortunate 50

PPG Industries chairman and CEO Charles E. Bunch has dethroned three-time champ Robert Coury of Mylan to claim the title of the highest-paid executive at a publicly traded company based in the region.

Mr. Bunch, who finished second to Mr. Coury in last year’s tally, received 2013 compensation valued at $16.9 million. Mr. Coury, the Cecil generic drugmaker’s executive chairman, received $15.4 million. That was enough to edge out Consol Energy chairman and CEO J. Brett Harvey, who finished third for the third straight year based on a pay package valued at $15.2 million.

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The same two female executives who made the list last year requalified this year, but there were no other glass ceiling crashers.

Mylan CEO Heather Bresch repeated as the region’s highest-paid female executive for the fifth straight year. Her $9 million compensation earned the No. 5 spot on the overall list. Gretchen R. Haggerty, retired U.S. Steel CFO, pulled down $7.2 million, good enough for 13th place finish.

A third female executive, Michele Willoughby, Dick's Sporting Goods executive vice president, fell $1,140 short of qualifying for the listing of the 50 highest paid executives.

Four of the 20 companies represented on the pay roster accounted for more than 40 percent of the Post-Gazette’s “Fortunate 50. U.S. Steel and PNC Financial Services Group each placed six executives on the roster, while five each from PPG and Mylan qualified.

The average Fortunate 50 executive received 2013 pay valued at $5.7 million, down 15 percent from the previous year. Last year’s averages were skewed higher by the paychecks of five H.J. Heinz executives who made that list, including the $16.2 million awarded to William R. Johnson, former chairman, president and CEO. The ketchup maker’s top brass did not qualify for this year’s Fortunate 50 because the company was taken private by 3G Capital and Berkshire Hathaway, which acquired Heinz in June.

Average pay was also crimped by higher interest rates, which had the effect of curbing the projected value of executive pension benefits, one of the pay components that companies are required to list separately.

Because of that trend, the pay of CEOs in the S&P 1500 was flat last year, according to Towers Watson. The compensation consultant said pay rose less than 1 percent last year vs. nearly a 6 percent increase in 2012. Excluding the pension adjustment in both years, CEO pay rose 4 percent last year.

Two big determinants of executive pay are a company’s financial performance and the price of its stock. Towers Watson found that much of the rise in CEO pay resulted from long-term incentive payouts that increased because of the strong stock market.

The stock market went up 30 percent last year, but that increase was not matched by gains in earnings, cash flow or other metrics that companies use to determine pay, said Stephen Kline, who handles executive compensation matters in Towers Watson's Pittsburgh office.

“The financial results were by and large flat compared to 2012,” he said.

The elevated stock prices reflect expectations that companies will generate earnings this year to justify those expectations. If they don’t, the failure will be reflected when executive pay figures for this year are disclosed, Mr. Kline said.

Towers Watson said realizable pay, which takes into account the value of the CEO’s option and stock awards, jumped nearly 15 percent last year. The value of those incentives is tied to the surging stock market.

Collectively, the Fortunate 50 received compensation valued at $284.7 million. That’s enough to cover the 2014 opening day payroll of the Pirates for more than three and a half years, based on a tally by The Associated Press. Or it would cover the payroll for 6,800 starting teachers in Pennsylvania, who are paid an average of $41,109 annually, according to the National Education Association.

Pay data for more than 100 executives of regional public companies was analyzed to determine the Fortunate 50. The list is based on salary, bonus, stock and nonstock incentives; the change in the value of pension benefits; deferred compensation earnings; and perquisites, which range from free use of the corporate jet to country club dues.

The pay does not include gains that executives realized in 2013 by exercising stock options granted in previous years or from previously awarded restricted stock that vested last year. Those payouts can exceed the value of an executive’s annual pay.

For example, Mr. Bunch realized $36.3 million last year by exercising stock options, more than double his 2013 compensation and nearly $14 million more than retired PNC chairman James E. Rohr, who realized the second most by cashing in stock options.

Mr. Bunch also received $17.9 million when shares of restricted stock that he previously was awarded vested. Mr. Rohr, whose 2013 compensation was valued at $8.5 million, generated another $22.4 million by exercising stock options, $6.8 million from restricted stock that vested, and $33.9 million from pension payments he received last year.

A dozen members of the Fortunate 50 were awarded free use of the corporate jet, a perquisite that had been more prevalent before shareholder activists began questioning the practice a few years ago. Mylan accounted for four of the 12. Mr. Coury, the Cecil generic drugmaker’s executive chairman, led the way with jet use valued at $542,296. It was the sixth consecutive year Mr. Coury received more free use of a company jet than any other local executive.

Len Boselovic: 412-263-1941 or lboselovic@post-gazette.com.

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