It’s no secret that CEOs of public companies make a lot of money.
And in general, they earn it: It takes talent, hard work and vision to oversee thousands of employees, answer to impatient shareholders, guard against competitive threats, and keep the trains running on time, particularly at behemoths like Eli Lilly and Co., WellPoint Inc., Cummins Inc. and Simon Property Group Inc.
To no surprise, the leaders of those four companies took home the largest paychecks among executives of publicly traded companies in Indiana last year: Former WellPoint CEO Angela Braly led with compensation of $20.5 million, followed by Simon CEO David Simon ($17.2 million), Lilly CEO John Lechleiter ($10.2 million) and Cummins CEO Thomas Linebarger ($8.8 million).
Plenty of other executives also fared quite well. (Check out our searchable database at IBJ.com/executive-pay.)
Most of the income public company executives pocketed last year came in the form of salary, bonuses stock options and restricted stock.
But way too many executive-pay dollars fall under the category of perks: Extras like personal air travel, car allowances and country club memberships. At least 27 executives received more than $100,000 in “other pay.”
Hoosier public company executives took home an average of $69,000 in perks over and above their salary, equity awards and bonuses. That’s well above the $36,900 the average Hoosier took home in total pay in 2012.
Top executives can afford their own air travel, car payments and country club memberships. And they should pay for them.
Does the CEO of Cummins—who earned more than $8 million last year—need to use the company plane (at a cost of $54,000) for a getaway?
Could NiSource CEO Jimmy Staton, who took home $3.5 million in 2012, pay for his own financial planning and tax services? He billed the company $10,640.
Perhaps Zimmer Holdings CEO Bruno Melzi, who took home $2.7 million last year, could dig a little deeper and cover the equivalent of $2,762 per month he received for a car allowance? No word on what he drives, but it’s likely nice: That kind of payment would get you about $125,000 of car if the loan term were 48 months.
To be sure, there are cases where “other pay” may be justified. Simon Property Group, for instance, provided private flight time worth $357,000 to its president and chief operating officer, Richard Sokolov, presumably to ferry him from his home in Youngstown, Ohio, to the company’s headquarters in Indianapolis.
There are encouraging signs that companies are cutting back on perks: Medical supplier Hill-Rom Holdings Inc. shut down its corporate airstrip and sold its three planes.
A spokesman said the move will help the company “deliver increased shareholder value and reinvest in our business.”
Send comments on this editorial to firstname.lastname@example.org.