With the average compensation 21.5 percent higher than last year, it was a very good year for HR's top earners, but an exceptional year for one person in particular -- Daniel Walker of J.C. Penney.
Last year was certainly rewarding for the 50 individuals on our latest HR's Elite list. As a group, their average compensation was 21.5 percent higher than the year before. But it had to be especially gratifying for Daniel E. Walker, chief talent officer at J.C. Penney, who pulled in just north of $20 million last year (by far, the largest amount reported since Equilar and Human Resource Executive® began publishing the ranking in 2003).
The figure is particularly impressive when you consider Walker joined JCP in November 2011.
Indeed, Walker's handsome pay package -- which included an $8 million signing bonus and $12 million in stock awards -- was a big reason the average pay of the HR's Elite rose as dramatically as it did. Were Walker removed from the list, the overall figure would have shed 12.5 percentage points.
Most recently, Walker ran his own consulting firm. But before that, he served as chief talent officer at Apple and was responsible for recruiting Ron Johnson, JCP's new CEO, to his post at Apple.
Just as a point of reference, the most highly paid HR executive on the 2010 list pulled in $4,818,479 (Richard J. Ranieri, executive vice president of HR at Dendreon).
CHROs vs. CEOs
All told, the 50 highest-paid HR executives received an average annual compensation package of $2,840,643 last year. In contrast, those on the 2010 list averaged $2,337,071.
There's little question that Walker "skewed" the numbers this year, says Aaron Boyd, director of research with Equilar, a Redwood Shores, Calif.-based research firm specializing in executive compensation.
On a percentage basis as a group, the HR's Elite performed even better than their CEOs, whose average compensation increased by 17 percent from the year before, rising from $10,767,497 in 2010 to $12,593,257 in 2011.
As a percent of CEO pay, the HR's Elite average declined from 40 percent to 27 over that same period.
In 2011, Candace N. Krol, senior vice president of HR for Public Storage, had the highest percentage, earning 76 percent of what her CEO pulled in. (A year earlier, this distinction went to Ann L. McDaniel, who, as senior vice president of HR at the Washington Post Co., received 522 percent of what her CEO earned that year.)
In contrast, Anthony G. Ambrosio, executive vice president of HR and administration for CBS, earned the least; just 5 percent of what his CEO pulled in.
The 2011 HR's Elite list was culled from a universe of about 227 former and current HR executives at Russell 3000 companies who were among the five most highly compensated officers in their companies and were, therefore, included in those organizations' filings.
As might be expected, there was a huge gap between Walker and the executive occupying the No. 2 spot, Benito Cachinero-Sanchez, senior vice president of HR at DuPont. His total pay was $5,068,383.
Martha A. Burger, senior vice president of human and corporate resources at Chesapeake Energy Corp., ranked third on the list for the second year in a row, earning $4,824,165.
In determining the HR's Elite rankings, Equilar calculated total compensation as the sum of base salary, discretionary and performance-based cash bonuses, and the grant-date value of stock and option awards. It excluded other benefits and perquisites.
Bonuses and Stock
As in 2010, the equity piece, particularly stock awards, was a major reason behind the rise last year -- with the median value of stock awards jumping 33.5 percent, from $676,108 to $902,994.
The median value of bonuses among the HR's Elite, meanwhile, declined 5.6 percent, from $569,500 to $537,725.
"Across the board, executives are receiving more of their pay through equity," says Boyd, adding that it reflects the shift by companies to a longer-term horizon.
Further, he adds, the decline in bonuses suggests HR's Elite companies might be setting more aggressive goals than in prior years.
On average, total revenues of the companies featured on the 2011 list were only slightly greater than a year earlier ($11 billion in 2011, compared to $10.4 billion in 2010). Employee size, however, was another story, with the average workforce increasing from 31,000 in 2010 to almost 41,000 in 2011.
On a per-employee basis, average HR executive pay among the HR's Elite declined from $257 to $222 over that same period.
At the high end of the spectrum, Adam R. Kokas, senior vice president, general counsel, secretary and chief HR officer at Atlas Air Worldwide Holdings (with roughly 1,700 employees) took home $1,112 per employee. On the low end, John J. McDevitt, senior vice president of global transportation services and labor relations at United Parcel Service (with about 398,000 employees) reaped $6 per employee.
Women, meanwhile, represent a noticeably smaller portion of the overall list in 2011, decreasing from 38 percent of the total in 2010 to 20 percent last year. (In comparison, 43 percent of the CHROs on HRE's ranking of the nation's 100 largest employers are women.) Among the 10 most highly compensated, only one was female in 2011, compared to four a year earlier.
Of those included on both the 2010 and 2011 lists, 10 executives pulled in more money last year while seven individuals pulled in less. David K. Lenhardt, executive vice president of store operations, HR and information systems at PetSmart, led those experiencing an increase, with a 51 percent bump in total pay. He finished the year earning $3,090,005.
On the negative side of this spectrum, Carol A. Surface, executive vice president and chief human relations officer of Best Buy, received total pay that was 31 percent less than a year earlier -- finishing the year pulling in $2,217,787.