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Forget a sluggish economy and sour stock market for the Fortunate 50 The good times rolled in 2000 for the PG's annual list of the highest-paid local executives Sunday, April 29, 2001 By Len Boselovic, Post-Gazette Staff Writer
The laws of nature being what they are, there are only four things you can be sure of in life: death, taxes, the Yankees winning the World Series and steady increases in executive pay no matter what the economy and stock market are doing.
A corollary to that rule is that with former Heinz Chairman Anthony J.F. O'Reilly comfortably retired, the most likely executive to head the list of the region's highest-paid executives is Paul H. O'Neill.
The relentlessly rising tide of executive pay has even led to inflation of the Post-Gazette's Fortunate 50 -- the annual list of the top-paid executives at the region's publicly held companies. This year, it's the Fortunate 52. Three executives tied for 50th place at $1.8 million, which is 30 percent more than it took to bring up the rear on last year's roster.
O'Neill, the U.S. Treasury secretary, earned $56.5 million in his last year as chairman of Alcoa. That's three times more than runner-up Alain J.P. Belda, O'Neill's successor, was paid. Stock options accounted for $53.2 million of O'Neill's compensation.
O'Neill also topped the list for his earnings in 1999, 1995 and 1994. Just think of the pay cut he took by working for the government. At $161,200 a year, he'll have to hold his new job 350 years in order to make as much as he did in his last year at Alcoa.
The average compensation of a member of the Fortunate 52 was $7,021,173, up more than $1 million, or 17 percent, from last year.
It increased even though the miserable stock market blunted the impact of stock options, usually a big sweetener to executive pay. Nearly half, or 48 percent, of the executives had to claw their way into the cash-endowed cadre without the help of options, whereas only 36 percent of last year's Fortunate 50 made it on the list without the aid of options.
The 10 executives on this year's list who earned the most from options collected a total of $112.1 million from the shareholder value-enhancing tool, down 13 percent from last year.
Before you get totally disillusioned, there's at least one redeeming value to The Fortunate 52 that was missing from last year's register: a woman. Equitable Resources Vice President Johanna O'Loughlin ranked 43rd with compensation of $2.4 million.
Three brothers form the roster's formidable rear guard. Holding down the last spot are James, Michael and Timothy Rigas, executive vice presidents of Coudersport cable operator Adelphia Communications. Say what you will about their pay, at least their father and Adelphia Chairman John J. Rigas (No. 34 at $3.4 million) doesn't play favorites.
Overall, the Fortunate 52 collected $365.1 million last year. That's enough to build PNC Park ($262 million), or the Pittsburgh Steelers new stadium ($284 million), or the expanded convention center ($328 million) or three Hillman Cancer Centers ($110 million).
Two companies -- PNC Financial and Verizon Communications, which is based elsewhere but employs thousands locally -- accounted for nearly a quarter of the executives on the roster. Each placed six. Alcoa and USX placed five each.
Verizon's half dozen received $71 million, almost twice as much as the $40 million in revenue the telecommunications company said it lost during an 18-day strike by union workers last summer.
In PNC's case, the six executives pulled down $33 million, $3 million more than PNC paid for 20 years of naming rights for the new ball yard on the North Shore.
Conspicuously absent from the compendium are FreeMarkets Chairman Glen Meakem and other officers of the Downtown online auction house. The company's proxy statement is being delayed by discussions FreeMarkets is having with the Securities and Exchange Commission over accounting issues.
Meakem is bound to make the list once those issues are resolved. According to Yahoo!, he exercised options for 312,000 options at $1.09 per share on Dec. 22, registering a paper gain of $5.5 million based on FreeMarkets closing price that day. Former executive vice president Sam E. Kinney Jr. exercised options and warrants between July and December that gave him a paper gain of $3.1 million.
American Eagle Outfitters, whose proxy hasn't been released, is also likely to place someone on the list. Vice Chairman George Kolber registered paper gains of $2.3 million from exercising options in April and June, according to Yahoo!
The Fortunate 52 is based on the most recent proxy statements filed by publicly traded companies headquartered in Western Pennsylvania or, in cases such as US Airways and Verizon, with sizable operations here. The proxies disclose what a company's top executives were paid the previous year.
In addition to salary, bonus and options, total compensation includes restricted stock awards, life insurance premiums, contributions to retirement and savings plans, as well as payments that reimburse executives for taxes they owe as members of the privileged class.
For example, $7.6 million, or 66 percent, of US Airways Chairman Stephen Wolf's $11.6 million compensation last year came from the company reimbursing him for taxes he paid on restricted stock he's received over the years. Another $3.1 million came from a new restricted stock grant.
Wolf wasn't the only one to benefit from restricted stock, which typically vests over a number of years depending on a company's performance. Rigas and his three sons each received $1.6 million in restricted shares last year.
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