Women leading men in CEO pay
By Alexis Leondis
Bloomberg News Service
Chief executive officers' pay is shattering the glass ceiling.
Boosted by a $47.2 million package for Carol Bartz of Yahoo! Inc. and $26.3 million for Irene Rosenfeld of Kraft Foods Inc., compensation for female CEOs at the biggest U.S. companies is booming.
Sixteen women heading companies in the Standard & Poor's 500 Index averaged earnings of $14.2 million in their latest fiscal years, 43 percent more than the male average, according to data compiled by Bloomberg News from proxy filings. The women who were also CEOs in 2008 got a 19 percent raise in 2009 — while the men took a 5 percent cut.
"When you see numbers like this, one can truly say that the glass ceiling in corporate America has been shattered," said Frank Glassner, CEO of San Francisco-based Veritas Executive Compensation Consultants LLC. "I don't remember seeing women ever getting paid more than men."
Graef Crystal, a pay expert who analyzed the data for Bloomberg News, said that "compensation committees are saying we don't want to have any trouble" over underpaying women, "so if we err, let's err on the side of giving them too much."
Darwinian competition is also playing a role, said Sheila Wellington, a professor of management and organizations at New York University who studies women business leaders.
"These are the strongest, fittest and toughest who survive," according to Wellington, who said she was offered half the salary of male peers for her first job at a mental health facility in 1968. "They've had to negotiate all the way up the ladder."
'NOT A MILESTONE'
Compensation consultant Todd Gershkowitz, senior vice president of Los Angeles-based Farient Advisors, said he couldn't recall a female CEO ever receiving as much as the 61-year-old Bartz. Her package was bolstered when she joined in January 2009 by a five-million share options grant from Yahoo, valued at $27.2 million, and a $7.5 million share grant.
"Welcome aboard" packages are standard fare for new CEOs. But Crystal said Yahoo went overboard when it added $7.4 million in additional stock and options to Bartz's pay just 25 days after the initial award.
In the broader workforce, women working at least 35 hours a week in the first quarter of 2010 received 79 percent of the wages earned by men, according to the U.S. Labor Department. Female heads of companies of all sizes made about 75 percent of what men did in a 2009 department survey of 1.1 million CEOs. About 24 percent were women.
Pay riches for women CEOs at big companies may be "an important indicator, but not a milestone because of what happens down the line" among average workers, said Robin Ferracone, founder of Farient.
"Even at the CEO level, with equal pay comes equal scrutiny and a narrower band of acceptable behavior," said Ferracone, whose clients have included Margaret Whitman, the former eBay Inc. CEO, and Carleton Fiorina, the former head of Hewlett-Packard Co.
At Kraft, Rosenfeld received a 41 percent raise last year as the shares fell behind the S&P 500's performance by 21 percentage points. In a Crystal model that adjusted pay for shareholder return, she would have taken an $18 million pay cut, and was rated as the 16th most overpaid CEO among 271 studied.
Crystal looked at S&P 500 companies that had filed 2009 fiscal year proxies by April 16.
Rosenfeld, 57, was awarded $10.6 million in a performance-based bonus, which Kraft's proxy attributed in part to her pursuit and acquisition of Cadbury Plc, which made Kraft into the world's largest confectioner.
Michael Mitchell, a spokesman for Northfield, Ill.-based Kraft, said company officials "strongly believe" the Cadbury acquisition was "absolutely the right decision" and will boost earnings. The pay package for Rosenfeld, who led Kraft to "strong operating results in 2009" in an "extremely volatile and challenging operating environment," was driven by a payout from a 2007-2009 long-term incentive plan, he said.
Other female CEOs in the S&P 500 considered overpaid in 2009 in the Crystal model were Susan Ivey of Reynolds American Inc., Mary Agnes Wilderotter of Frontier Communications Corp. and Indra Nooyi of PepsiCo Inc.
Debra Cafaro, CEO of real estate investment trust Ventas Inc. for the past decade, received $6.25 million last year, and was rated as underpaid in the Crystal model. She took an 18 percent pay cut in 2009. Ventas has been the best-performing stock in the S&P 500 financial sector under her tenure, with a 35 percent compound annual return for shareholders.
"Once you're in the CEO seat, I believe directors use a very even-handed approach to compensation," Cafaro, 52, said. "But getting there can be a different story and women executives may be judged more critically."