Most of Idaho's CEOs got bigger boosts than workers did

Leadership changes resulted in one-time megapayments to some CEOs.

business@idahostatesman.comJuly 28, 2013 

Boise Inc. CEO Alexander Toeldte said that during the company's difficult period in 2007-08, it wasn't the three big ideas from the CEO that saved the company, but the ten smaller ideas that came from each employee that turned the company around. It went from a share price of around $8.50, to a price of around $.25, and is now back up around $9.

JOE JASZEWSKI — jjaszewski@idahostatesman.com

The compensation of the average CEO of an Idaho publicly traded company last year was 50 times more than the wage of the average Idaho worker.

Idaho’s average wage rose 1.5 percent last year to $36,152. For the 10 Idaho CEOs who didn’t change jobs between 2011 and 2012, the average total compensation rose 21.9 percent to about $1.8 million.

New people taking chief-executive seats were a big factor in CEO pay increases in their companies’ latest fiscal years, as former CEOs received big farewell payments and new CEOs at three companies took home bonuses and raises because of their new jobs.

Click here to see CEO compensation for Idaho's publicly traded companies. Click here to see how much other executives at those companies were paid.

Micron Technology led the way as it has in recent years, with new CEO Mark Durcan making $6.16 million. Durcan received $2.5 million in stock awards and $2.2 million in stock options. And the company said it paid $2.9 million in bonuses to certain employees, including $500,000 to Durcan, because of “successful litigation results over a period of years.”

But there was an outlier: Durcan’s predecessor, longtime CEO Steve Appleton, was the top-paid executive of all Idaho publicly traded companies last year, even though he was killed when his plane crashed in February 2012 at the Boise Airport. Appleton’s death actually led to higher pay. Micron paid his unused time off and fast-forwarded his stock awards — for a total of $7.5 million in stock — and paid an additional year’s salary as a result of his death.

The two other CEO changes during the fiscal year were:

- Dennis Pence, co-founder and CEO of Sandpoint women’s retailer Coldwater Creek, handed his job to Jill Dean. That meant Dean received a big raise and Pence received a $2 million retirement payout, a change from his recent-years pattern of taking a $1-a-year salary.

- James R. Baumgardner left Boise’s U.S. Ecology in an unexplained management shakeup at the hazardous waste management business. The company still had no CEO at its fiscal year end Dec. 31 (though it does now), and much of Baumgardner’s exit pay has not yet been reported.

Well-paid though they may be, Idaho’s CEOs still made less than CEOs nationally, though their raises were bigger. Idaho CEOs’ median overall pay increase — including bonuses, stock awards and other compensation — was 19.9 percent.

(The median differs from the average. Average pay is the sum of all pay amounts divided by the number of amounts. The median pay increase is the midpoint between the highest and lowest pay increases.)

The median pay for CEOs in the U.S. last year was $9.7 million, according to an Associated Press analysis of data from executive-pay research firm Equilar. That was a 6.5 percent increase from the year before.

The Idaho Statesman reviewed compensation data in proxy statements filed with the U.S. Securities and Exchange Commission by all 13 Idaho companies whose stocks trade on either of the two major U.S. stock exchanges, the New York Stock Exchange and the Nasdaq exchange, or their small-company companions, the NYSE Mkt (formerly the American Stock Exchange) and the Nasdaq Capital Market. The types of compensation are detailed in the table on page A7.

Here’s how the paychecks of the CEOs stack up, in order of company revenues or assets.

1. MICRON TECHNOLOGY

A rebounding memory chip market and efforts to tighten expenses led Micron to a $43 million profit last quarter, its first profit in two years.

Micron was jolted in February 2012 by the death of Chairman and CEO Steve Appleton in a plane crash at the Boise Airport. Mark Durcan, former company president who had announced his intention to leave the company not long before, stayed on and was named CEO.

Durcan’s annual salary is $950,000, the same as Appleton’s was.

Micron paid a year of Appleton’s salary and money for banked time off after his death. It also accelerated some stock and option awards in accordance with the company’s policy.

Micron is focused on its expected acquisition of Elpida Memory Inc., a bankrupt Japanese memory chip maker, which could make Micron the world’s No. 2 memory chip company. Micron jettisoned outlying, less profitable ventures in solar energy and LED lighting, and is clearing its decks of plants in Italy and Israel. It also is working to improve its money-losing wireless business.

2. BOISE CASCADE

A rebound in housing starts spurred the wood products and building-materials company to grant wage increases to its executive officers in 2012 — the first in several years.

The new incarnation of Boise Cascade, forged in 2008 after the company’s paper and packaging divisions split off into Boise Inc., went public in February. The company reported sales of $2.78 billion, up from $2.25 billion in 2011.

In recent years, the company says, its compensation committee gave salary boosts to executives only for promotions, such as when Thomas Carlile became CEO in 2009. But in 2012, Carlile saw his base salary increase from $700,000 to $741,667. His total compensation more than doubled, to $2.86 million.

3. BOISE INC.

Declining paper prices cut Boise Inc.’s net income for 2012 to $52.2 million from $75.2 million in 2011. Company leaders told shareholders they were pleased with the year’s performance, and Boise Inc. paid two special cash dividends to investors in 2012, totaling $1.20 per share.

CEO Alexander Toeldte’s total compensation increased to $4.67 million — of which about $838,000 was salary.

One worry for the future, company executives said, is uncertainty over what OfficeMax’s planned merger with Office Depot will mean. OfficeMax is Boise Inc.’s largest customer, accounting for about 19 percent of its sales in 2012.

4. MWI VETERINARY SUPPLY

The animal health products company ended fiscal 2012 with revenues about 3.5 times what they were in fiscal 2008. That’s partly due to buyouts of other animal-products companies in the U.S. and England. Revenues rose 33 percent in 2012.

CEO James Cleary’s salary rose 3 percent, which is a percentage MWI’s compensation committee set based on increased costs of living and the company’s overall financial performance. But Cleary doubled that with a bonus equal to 110 percent of his salary under a compensation plan that received an “unequival endorsement” from shareholders, the company said. His total pay reached $1.12 million, up 14.6 percent from 2011.

According to its filings, the company is leaving its peer group in the dust when it comes to five-year growth in returns for stockholders.

5. IDACORP

The holding company for Idaho Power — its other holdings are relatively minor — paid CEO J. LaMont Keen a base salary that was just under the 115 percent upper limit of the target range for his position, based on median market pay for similar jobs.

The board of directors praised Keen’s “continued strong leadership during a weak economic climate” in Idaho Power’s territory and his role in achieving regulatory and capital goals. He received $850,000 in stock and almost $1 million in performance-based pay.

So far this year, Idaho Power is facing a rejection by regulators of its plan to get more money from people who generate just a small amount of renewable energy from solar panels. The Idaho Public Utilities Commission recently ruled in favor of opponents of the plan, including homeowners, solar panel installers and small businesses.

6. HOME FEDERAL BANCORP

Len E. Williams, Home Federal’s president and CEO, earned $646,524, up 92.4 percent from 2011.

He was awarded $141,653 from the company’s incentive program when the bank’s $46.4 million in revenues topped a benchmark. He’ll earn another $47,218 in 2012 bonuses if the bank tops benchmarks for 2013, in addition to a 2013 bonus.

The Nampa-based bank continued pulling itself out of the recession by turning a $1.8 million profit in 2012, up 28.6 percent from 2011. The two years of profitability followed losses of more than $4 million in both 2009 and 2010. However, the bank’s assets declined 12.3 percent in that time to $1.05 billion. The bank dropped from 396 employees in September 2011 to 302 at the end of 2012.

7. INTERMOUNTAIN COMMUNITY BANCORP.

Last year marked a return to profitability for the Sandpoint banking company, which earned a $2.8 million profit after essentially breaking even in 2011. Intermountain joined the Nasdaq Capital Market last year. President and CEO Curt Hecker earned $237,118, up less than 2 percent from 2011. Hecker’s base pay accounted for virtually all of his 2012 compensation. The types of compensation available to Hecker and other Intermountain executives are limited because the bank has yet to pay off $27 million it received from the U.S. Treasury in 2008 from the Troubled Asset Relief Program. Intermountain executives cannot receive the cash bonuses, incentive pay and annual restricted stock awards that were available before the bank took TARP funds.

8. COEUR D’ALENE MINES

Coeur d’Alene Mines Corp. has changed its name to Coeur Mining as it prepares to leave its namesake city and move its headquarters to Chicago later this year. Revenue from gold and silver sales dropped 12.3 percent, from a record $1.1 billion in 2011, to $895 million last year.

President and CEO Mitchell J. Krebs saw his total compensation drop 8 percent, mostly because he received a $600,000 bonus the previous year after his promotion to head of the company. Krebs’ base salary increased by $129,000, or 33 percent, to $525,000. He also received more compensation in stock and option awards based on meeting performance and production benchmarks. Those incentive payments brought Krebs’ 2012 total compensation to $2.2 million, about $200,000 short of his 2011 level.

9. COLDWATER CREEK

The women’s retailer ended fiscal 2013 with mixed results and an optimistic management team.

As its peers’ stockholder returns bounced back after a 2008-to-2010 crater, Coldwater Creek’s fell, then plateaued between 2012 and 2013. By early 2013, the company was still losing money, but the pace of those losses had slowed.

New CEO Jill Dean, whose resume includes stints at several high-profile women’s retail companies, had taken over, as of Jan. 1, from co-founder and longtime CEO Dennis Pence. Pence requested no salary as the company slogged through quarter after quarter of losses. But he stepped down at the end of the fiscal year and accepted a $2 million retirement payment, saying he believed Coldwater Creek was on track to win back the hearts of its core customers: middle-aged women with fairly high household incomes.

Dean, who joined the company as president and chief merchandising officer in February 2011 with a $600,000 base salary, got a raise in December 2011 after making an “immediate positive impact,” and another raise in January 2013 with her promotion to CEO and president.

10. HECLA MINING

CEO Philips S. Baker Jr. hopes 2013 will bring a return to business as usual — and profits as usual — after a tragic and economically painful 2012. Two miners died and seven miners were briefly trapped underground in separate incidents in 2011 at the company’s Lucky Friday mine, leading to a shutdown to address safety concerns.

Losing use of Lucky Friday, its most productive mine, cut the company’s silver production by a third. Profits fell from nearly 46 percent from $265 million in 2011 to $142 million in 2012. The Lucky Friday reopened in February.

Most of his nearly $2.9 million compensation came from stock awards and incentive payments for hitting long- and short-term performance goals.

Baker earned more than Krebs even though Coeur Mining earned three times as much revenue and 10 times as much earnings per share.

11. U.S. ECOLOGY

The Boise-based waste company had a management shakeup and set new records in fiscal 2012.

James R. Baumgardner was terminated in fall 2012, two months before his three-year employment contract was scheduled to end. His termination agreement came with one year of salary at $325,000 paid in 2013, and other compensation. Jeffrey R. Feeler, who started at the company in 2006 and held several posts, stepped into the role of chief operating officer and acting president, garnering a 30 percent salary increase. He was named president and CEO seven months later. His compensation in that role has not yet been reported.

U.S. Ecology’s revenue rose by 9 percent and net income by 40 percent from the year before.

12. U.S. GEOTHERMAL

U.S. Geothermal’s perating revenues increased to $5.9 million in fiscal 2012 from $3.3 million the previous year as the company focused on expanding its San Emidio geothermal plant in Nevada and working to build the Neal Hot Springs project in Malheur County, Ore.

Co-founder and then-CEO Daniel Kunz saw a dramatic reduction in his U.S. Geothermal income during fiscal 2012 — a $55,000 cut in salary and a nearly $245,000 drop in total compensation — but he also dramatically cut back his hours, according to the company’s annual report. In September he signed a new employment agreement that set the amount of time he devoted to the company at 60 hours per month, for an annual salary of $120,000, plus benefits, in addition to performance bonuses and incentive stock options as determined by the company’s board. As a result of those changes, his salary for fiscal 2012 came in at $175,000.

Effective in February, he revised that agreement to work 120 hours per month and $240,000 per year. Kunz announced his retirement in April but said he would stay on as a consultant for one year. Dennis Gilles took over as CEO.

13. TIMBERLINE RESOURCES

The mineral exploration and development company continued to lose money in 2012 as exploration continues near Spencer in Southeast Idaho, and in Nevada and Montana. Its annual report notes that losses are expected to continue. The $7.2 million losses in continuing operations for the fiscal year that ended Sept. 30 were mitigated by profits from the November 2011 sale of Timberline Drilling, which brought $8 million in cash plus $2 million from Timberline Drilling’s working capital.

CEO Paul Dircksen received a $30,000 bonus in fiscal 2012, but he received substantially less from options than in 2011. His total compensation, including nearly $219,000 in salary, increased 29 percent. Dircksen has been CEO since March 2011.

Timberline was notified this spring that its listing on the NYSE is in danger because its stock prices — as low as 16 cents, but lately around 20 cents per share — fall short of listing standards. The company said in a news release that it expects to alleviate the exchange’s concerns thanks to improved market conditions and progress on permitting and production in Timberline’s Butte Highlands Joint Venture in Montana.

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