Not all CEOs are hauling in huge take-home pay for their work last year. The CEOs of Sears and UPS saw their pay packages decline sharply in 2012, according to mandated proxy filings with securities regulators.
Sears CEO Louis D'Ambrosio took a pay cut of nearly 90% in 2012. He became CEO of Sears in February 2011 and stepped down last month due to heath issues involving his family.
And D. Scott Davis, chairman and CEO of UPS, was awarded stock worth $8.7 million, down 7% from the $9.5 million he got in 2011. The UPS board did give Davis a 3% hike in salary, which totaled $1.1 million, but stock awards make up the lion's share of his take-home pay annually.
Sears-- At Sears, D'Ambrosio's salary rose to $1 million last year from $930,769 in 2011. However, the value of his perks, such as corporate housing and travel from his primary residence in Philadelphia to Chicago, shrank to $278,741 from $852,037 in 2011.
D'Ambrosio received no bonus or stock awards in 2012. He was awarded a signing bonus of $150,000 and $8 million in stock awards in 2011, when he joined the struggling retailer. A representative for Sears was not immediately available to comment.
Edward Lampert, the company's chairman and largest shareholder, took over as CEO in February at the start of its 2013 fiscal year.
Sears disclosed in early March that it signed a contract with Lampert to keep him on as CEO of the company at a salary of $1 per year. But if he meets certain performance targets for the company, he will be paid a bonus of up to $2 million in cash or stock and up to $4.5 million in stock per year.
Sears, which operates the Sears and Kmart chains, is trying to turn itself around after years of weak sales and failing to attract new shoppers. Some investors are concerned that Lampert may continue the same strategies D'Ambrosio had initiated to improve the shopping experience at Sears and Kmart.
The company announced plans last year to restore profitability by aggressively cutting costs, reducing inventory, selling off some assets and spinning off others.
Sears reported a loss of $930 million, or $8.78 per share, for its 2012 fiscal year. The company's adjusted loss from continuing operations was $2.03 per share. Its annual revenue fell 4% to $39.85 billion from $41.57 billion.
UPS-- D. Scott Davis' stock awards were less in 2012 because the giant shipping company failed to hit targets for revenue growth, return on investment and other financial metrics. He, too, did get a 3% increase in salary to $1 million but it was not enough to offset the decline in his stock awards.
The company also awarded Davis stock options in 2012 worth $463,675 on the grant date, $426,034 in cash incentives, and $40,292 in other compensation.
In 2012, increases in pension expenses and other one-time items drove UPS' net income down 79% to $807 million, the lowest level since 2008. The company's adjusted profit and revenue each rose 2%.
The Atlanta-based company has struggled with the sluggish global economy and a shift by customers to using slower and cheaper delivery options. In January, UPS told investors that the first quarter of 2013 would be "relatively flat," and it offered profit forecasts for the quarter and full year that fell below analysts' expectations.
Shares of UPS rose less than 1% in 2012, though signs of an improving economy and the stock market's broad runup in the first quarter of 2013 have lifted UPS shares 16.5% year to date.
Davis, 61, has been CEO of the Atlanta-based company since 2008 and was chief financial officer before that. He joined UPS in 1986 when it bought the Oregon-based technology company where he was CEO.
The Associated Press formula calculates an executive's total compensation during the last fiscal year by adding salary, bonuses, perks, above-market interest that the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year. The AP formula does not count changes in the present value of pension benefits. That makes the AP total slightly different in most cases from the total reported by companies to the Securities and Exchange Commission.
The value that a company assigned to an executive's stock and option awards for 2012 was the present value of what the company expected the awards to be worth to the executive over time. Companies use one of several formulas to calculate that value. However, the number is just an estimate, and what an executive ultimately receives will depend on the performance of the company's stock in the years after the awards are granted. Most stock compensation programs require an executive to wait a specified amount of time to receive shares or exercise options.