Analysis: CEO pay in Charlotte skyrocketed last year despite the pandemic

Analysis: CEO pay in Charlotte skyrocketed last year despite the pandemic
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Despite layoffs and furloughs and company-wide cost-cutting last year during the pandemic, compensation soared for leaders of the largest publicly traded companies in the Charlotte region.

What’s happening: LendingTree’s Doug Lebda was by far the highest paid CEO in Charlotte last year, a security filing late Thursday shows. His total compensation skyrocketed to $52 million in 2020, up from $9 million the prior year. The vast majority of his pay ($50.3 million) comes in the form of options to buy company stock.

  • Those options were issued as part of a retention agreement late last year. Per that agreement, company stock must rise a certain amount for Lebda to be able to get the full amount.

Bank of America’s Brian Moynihan was the next highest paid CEO in Charlotte, with a total compensation of $25.9 million in 2020, roughly unchanged from the year prior. Lowe’s CEO Marvin Ellison saw his compensation almost double from what he made in 2019, soaring to nearly $23.1 million last year.

Why it matters: The COVID economic downturn cost thousands of Charlotteans their jobs amid months-long restrictions on all sorts of businesses. But companies rewarded their top executives for navigating last year’s turmoil.

  • And importantly, the stock market has been soaring. Executive pay reflects those gains.

Total pay increased about 17% on average for the 20 executives who lead the largest publicly traded companies in the Charlotte metro, according to our analysis of 2020 CEO compensation. Local pay figures come from summary compensation tables in the proxy filings that companies reported to the Securities Exchange Commission in recent weeks.

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Zoom out: Trends in local CEO pay mirror what’s happening nationally, as a recent New York Times analysis shows. Jannice Koors, a compensation consultant at Pearl Meyer who works with companies to determine executive pay, told the Times that CEO pay reflects how corporate leaders respond to “external occurrences” like a pandemic.

“If you think about stores closing, furloughs, etc., CEOs are getting rewarded for making those decisions,” Koors told the Times.

In Charlotte, some companies reduced their CEO’s salary because of the damaging effects the pandemic had on the business’s finances.

  • Window maker Jeld-Wen last April temporarily reduced its executive officers’ base salaries by 25% “in response to the impacts of COVID-19.” Still, CEO Gary Michel’s overall pay rose to $8.38 million last year, up more than 50% from 2019. (A Jeld-Wen spokesman says the company reimbursed its employees who were furloughed for lost wages).
  • The retailer Cato trimmed the salary of its CEO John Cato by 50% from April-August. Cato was one of the local CEOs who saw his pay drop in 2020, though: It fell to $2.8 million, down from $5.3 million the year prior.

A CEO’s salary, however, typically makes up less than 10% of their total compensation each year, as the AP reported last year. A bulk of a CEO’s total pay comes in the form of stock, which the board awards to them for meeting certain targets like increasing share prices.

Pandemic cuts: Some companies that laid off or furloughed workers still increased their top executives’ total compensation.

  • Coca-Cola Consolidated last April furloughed 700 employees, including 200 at its Charlotte headquarters, a cost-saving measure that that company said was “in the interest of our stockholders” and “due to the economic impact of the COVID-19 pandemic on our business.”
  • Coca-Cola CEO Frank Harrison’s total pay still increased to $12.5 million last year, up from $11.7 million in 2019.

Covid spending: Although its CEO saw the biggest year-over-year jump in pay, last year Lowe’s spent nearly $1.3 billion in coronavirus-related support to employees, communities and store safety, the company says. That figure includes bonuses to frontline workers.

  • Lowe’s — and other home-improvement retailers — also did very well last year in general financially. Stuck-at-home Americans embarked on all sorts of DIY projects. The surge in demand helped drive up profits, and same-store sales, a key retail metric, surged 26% last year.
  • Lowe’s is also in the midst of a major company-wide transformation that Ellison initiated when he took over as CEO in 2018.

At LendingTree, an online lending marketplace CEO Lebda founded in 1996, total revenue fell nearly 18% in 2020, the company says. The economic damage from the pandemic was isolated to a few areas (credit card, personal loan and small business exchanges), though those areas are recovering, per the company.

  • The vast bulk of Lebda’s pay is considered incentive compensation, meant to drive company profitability and growth. The 2020 pay reflects the entirety of his long-term executive compensation, meaning “our CEO will not receive any additional long-term incentive awards in 2021, 2022 or 2023,” LendingTree says.
  • Lebda’s pay has been structured like this before. He received a $59.6 million pay package in 2017 that was mostly composed of options, as the Observer reported.

The gap between what executives make and what typical employees make keeps widening, as the Times noted.

A recent Economic Policy Institute analysis found that typical American CEOs make 320 times as much as the typical worker at their company.

  • “CEOs are getting more because of their power to set pay — and because so much of their pay (about three-fourths) is stock-related, not because they are increasing productivity or possess specific, high-demand skills,” the EPI’s Lawrence Mishel and Jori Kandra wrote.

Thanks to a rule the SEC adopted a few years ago in response to the recession, publicly-traded companies now must disclose the median pay of their employees, and how that figure stacks up to the CEO’s pay.

Among Charlotte companies, the highest median employee pay in 2020 was $184,185 at Brighthouse Financial, the financial services company that MetLife spun off in 2017. That median pay was up from its 2019 level of $150,678. Brighthouse Financial’s employee base is highly skilled and comprises roles like consultants, auditors, analysts and engineers.

  • Cato had the lowest median employee pay, at $11,716. A large portion of that worker base comprises part-time workers, such as cashiers. 

Here’s how compensation breaks down for Charlotte-area CEOs:

Data: SEC; Chart: Will Chase/Axios


 

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