For the first time, a woman is NC’s highest paid CEO

Published: Jun. 20, 2015 at 11:46 PM EDT|Updated: Jul. 20, 2015 at 11:46 PM EDT
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CHARLOTTE, NC (Deon Roberts and Sarah Chaney/ The Charlotte Observer) - Of North Carolina's 50 biggest public companies, just three are led by women – and two of them are in Charlotte.

Susan DeVore, chief executive of Charlotte-based health care company Premier, was the highest paid executive among the top 50 last year, with total compensation of $24.9 million, according to the Observer's annual review of executive pay. That's the first time a woman has topped the list.

The other Charlotte female executive on the list is Duke Energy CEO Lynn Good, who ranked 13th, with compensation of $7.9 million. Susan Cameron, named in May 2014 to lead Winston-Salem cigarette maker Reynolds American, was paid $10 million, ranking her 10th.

The three are a rarity in North Carolina, where most of the biggest compensation packages go to white male CEOs. DeVore topped the list primarily because of millions of dollars in stock and stock options granted to her in connection with Premier becoming a publicly traded company in 2013.

The low percentage of women at the top mirrors a national trend: Among S&P 500 companies, women constitute only 4.6 percent of CEOs, according to Catalyst, a New York-based nonprofit focused on making companies more inclusive for women worldwide.

Although more women have joined the CEO ranks, "the pace is just glacially slow," said Rachel Soares, director of research for the nonprofit.

One hurdle for women holding the top job, Soares said: a lack of access to "informal networks," a term describing mentoring relationships or casual connections within a company. Women also have limited access in companies to influential sponsors who can advocate for them, she said.

DeVore joined Premier in 2003 and was named its CEO in 2009, the same year the company announced plans to move its headquarters from San Diego to Ballantyne. The company helps hospitals and other health care providers reduce costs and improve performance.

Her father started the Carolinas Hospital and Health Services Company, a predecessor company to Premier.

DeVore, a graduate of South Mecklenburg High School and UNC Charlotte, steered her company in 2013 to its stock market debut, which raised $874 million. That marked the biggest initial public offering for a Charlotte-based company since at least 1980. Premier's shares are up about 17 percent since it went public.

The vast majority of DeVore's 2014 pay came from the stock and option awards, both of which were granted to her immediately before Premier went public, the company said in a securities filing. DeVore did not own stock in Premier before that, the company said.

Premier spokesman Blair Childs said the awards have a three-year vesting period, with 80 percent tied to stock and company performance. DeVore's actual annual compensation for 2014 was $6.6 million, Childs said.

Premier did not make DeVore available for an interview. In a women's leadership forum last year at Wake Forest University Charlotte Center, DeVore reflected on her own career advancement: "I stayed really focused on performing in the job I had, keeping my eyes open for other opportunities."

Childs said DeVore believes "having a strong, diverse culture with effective and prepared leadership talent" is of critical importance.

He said DeVore, among other steps to foster leadership development, this year launched an annual, yearlong women's leadership program "to ensure continued development opportunity for women across the company while developing future female executives."

THE PAY GAP: Top execs took home nearly 137 times more than the average worker for the CEOs of North Carolina's 50 biggest companies, median compensation rose 5 percent last year, to $4.4 million. That means half the CEOs made more than that amount, and half made less.

Other workers in the state did not fare as well. The median annual wage for North Carolina workers increased less than 1 percent last year, to about $32,150.

As compensation for CEOs grew, so did the gap between their compensation and that of other workers.

Last year's median wage for the CEOs was nearly 137 times the median wage for the state's other workers. A year ago, the same 50 companies paid a median wage of $4.19 million, 131 times the median wage paid in North Carolina.

The rise in compensation for North Carolina's CEOs was mainly driven by an increase in bonuses and stock awards. In general, base salaries make up less than a quarter of the overall CEO compensation in North Carolina.

Chief executives elsewhere are also making more. Median CEO pay rose less than 1 percent last year, to $10.5 million, according to a study of S&P 500 companies by the Associated Press and data company Equilar.

Charles Elson, professor of corporate governance at the University of Delaware, said pay for CEOs nationwide has been rising as boards continue to base executive compensation on what companies in similar industries pay.

Boards tend to pick a bigger peer, which leads to pay climbing year after year, he said.

"Using the peer only accelerates pay because you want to pay the median or above. And that's the real problem," he said. "No one targets below the median."

Companies maintain that keeping compensation in line with their peers' pay helps to attract and retain top talent.

EXITS MEAN BIG PAYDAY: Some CEOs leave with big packages

Changes in leadership and headquarters at North Carolina companies helped drive some of the biggest gains in CEO pay last year.

? Ed Lonergan, the former CEO of Charlotte-based Chiquita Brands International, received a 248 percent increase in his compensation partly as a result of the banana giant being bought by two Brazilian companies. Lonergan's compensation rose as stock he had been awarded vested under terms of Chiquita's purchase.

Lonergan was let go as Chiquita's CEO in January, the same month the purchase of Chiquita closed. Also that month, the company announced plans to move its headquarters and more than 300 jobs from Charlotte.

Lonergan was given a $16.2 million termination package in connection with Chiquita's acquisition. The figure is not reflected in his 2014 compensation because it was awarded as part of his release in January.

? Former Reynolds American CEO Daniel Delen, who retired last year, saw his pay rise 108 percent to $21.8 million, making him the state's second highest-paid CEO. That total included $13.4 million the company paid him to stay on as a consultant for two years. Reynolds said the consulting contract was designed in part to ensure a smooth transition.

'SAY ON PAY': Shareholders vote against executive pay at SPX Shareholders of SPX, the diversified manufacturer based in Ballantyne, voted against the company's executive compensation plan in a nonbinding vote this year. It was the only company among North Carolina's top 50 to fail to win shareholder support for executive pay this year, according to Equilar.

The decision came after Chairman and CEO Christopher Kearney received a 38 percent raise in compensation in 2014, from $8.4 million to $11.7 million, according to a March proxy filing.

At the company's annual shareholder meeting on May 8, about 53.4 percent of voting shareholders voted against the plan in its say-on-pay referendum, securities filings show.

"One would infer that investors don't feel comfortable with the compensation structure," said David Rose, an analyst at Wedbush Securities. "Investors were looking for something a bit more conservative," he said.

In 2014, SPX announced its plans to split into two companies, spinning off its flow products division as a new, independent standalone. It expects to complete the transition this year. A spokesman for SPX did not return repeated phone calls and emails seeking comment.

Say-on-pay votes, mandated under the 2010 Dodd-Frank financial overhaul law, aren't binding, but failing a vote can embarrass a company and prompt changes in a company's compensation structure.

When Chiquita shareholders rejected the compensation for then-CEO Fernando Aguirre in 2012, the company said it held discussions with eight of its top 20 shareholders and the major proxy advisory firms. Chiquita changed its compensation plan when it brought Lonergan on board, tying his pay more closely to performance.

PAY FOR PERFORMANCE: Some N.C. execs didn't meet targets

As boards calculate pay packages for CEOs, they face ongoing pressure from investors concerned about one area in particular: tying compensation to the company's performance.

"That's really the hot issue today," said Don Kalfen, a partner with Meridian Compensation Partners, a Chicago-based executive compensation consultant.

Kalfen said firms that advise shareholders, as well as activist investors, are helping draw more attention to paying for performance. Companies, as a result, are re-evaluating their compensation structures.

Some North Carolina CEOs saw their compensation fall last year after their companies didn't meet performance metrics:

? Kelly King, the CEO of Winston-Salem's BB&T Corp., saw his pay shrink about 8 percent, to $7.3 million, as the lender failed to meet targets. For example, BB&T posted 2014 earnings per share of $2.90, below a target of $3. Failure to perform better on that and other metrics led to smaller cash bonuses to the company's top executives compared with a year earlier.

? Jeffrey Rea, CEO of Raleigh-based Stock Building Supply Holdings, a provider of materials for home construction, was awarded a $240,000 cash bonus, down from a cash bonus of $750,000 in 2013. The smaller bonus came as the company's gross profit in 2014 came up about $2.4 million short of what the company targeted.

? The CEO of Raleigh-based tobacco purveyor Alliance One International, J. Pieter Sikkel, did not receive a cash bonus again last year because his company failed to meet targets.