Career events drive executives' pay changes

Promotions, resignations and other significant career events were behind the biggest raises and pay cuts given last year to executives of Long Island's largest public companies, according to a Newsday analysis of compensation data.

The biggest dollar raise went to David Sandler, chief executive of MSC Industrial Direct Co., a tools supplier based in Melville. He received $8.1 million more in 2011 than in the previous year as part of a succession transition. His total compensation was almost $12.9 million.

Former Pall Corp. chief executive Eric Krasnoff had the biggest dollar reduction: $6.6 million. The drop was due to his January 2011 announcement that he planned to retire after informing the board of directors of an extramarital affair with a subordinate. His total compensation was $3.4 million.

Every year, public companies are required to report executive pay -- for the chief executive, chief financial officer and the three other highest-compensated executive officers -- to the U.S. Securities and Exchange Commission. Company size is often a factor, so the chief executive of a small company may earn less than the fourth- or fifth highest-paid officer at a large one.

Total compensation includes salary and cash bonus, the estimated value of stock awards and retirement plans, and other pay such as use of a corporate jet or chauffeured car.

Stock awards can be worth much more -- or much less -- in future years based on the company's performance. The awards usually include both restricted stock, which executives must sell over time, and stock options, which give them the right over several years to purchase shares at a set price. If a company's stock price falls, the value of the restricted stock drops and the options may become worthless.

The numbers for Newsday's analysis were compiled by Manhattan-based S&P Capital IQ, a data and analysis business.

Overall, the typical chief executive, president or other high-level corporate officer in Nassau and Suffolk counties took home 5.4 percent more in 2011 than a year earlier. The average pay package totaled $1.45 million compared with 2010's $1.38 million.

The figures for local executives are derived solely from Long Island-based companies. Some executives received additional pay from businesses located elsewhere.

Top executives' compensation in 2011 rose faster than the earnings of all workers. On average, workers' pay climbed 1.6 percent last year from 2010, according to the state Department of Labor. The typical local worker earned $53,181 in 2011 -- just 3.6 percent of the average pay given to top corporate brass.

When executive pay swings sharply, changes to stock awards are almost always the reason, said Paul Hodgson, chief research analyst at GMI Ratings, a corporate governance research firm in Manhattan. Nationally, he said, "There were some fairly extreme examples of people's pay dramatically going up or going down from 2010."

The windfall for MSC's Sandler came from $10 million in restricted stock he received as an incentive to remain at the company while his successor settles in. An MSC representative said Sandler did not receive stock awards that he was entitled to for the past two years in lieu of the $10 million award.

Asked about Sandler's raise, Jeffrey Kaczka, MSC's chief financial officer, said the company "takes succession planning very seriously." He also said MSC had "experienced strong, consistent growth" since 2005 with Sandler at the helm.

The stock award was criticized as overly generous by Institutional Shareholder Services, a research firm in Rockville, Md. However, in January investors overwhelmingly approved a nonbinding resolution endorsing MSC's pay practices.

Krasnoff's departure from Pall, a Port Washington-based maker of filtration devices, precipitated his steep pay cut. Pall spokesman Doug Novarro said, "In anticipation of retirement, Mr. Krasnoff did not receive stock/option grants in 2011."

The executive with the second-largest pay reduction in 2011 was also the highest compensated for the year: Thomas M. Rutledge, former chief operating officer of Cablevision Systems Corp., earned $23 million last year, a drop of $5 million from 2010.

Rutledge resigned in mid-December and days later was named chief executive of Charter Communications, another cable television provider. He forfeited nearly $4 million in stock but received a cash bonus and other stock owed to him under an employment contract signed in December 2009.

Cablevision chief executive James L. Dolan took home $2 million less in 2011, and board chairman Charles F. Dolan's compensation from the company fell by $2.8 million. The Bethpage-based company owns Newsday.

Cablevision spokeswoman Kelly McAndrew declined to comment on Rutledge's pay because he's no longer an employee. Referring to other Cablevision executives' compensation, she said, "despite challenging economic conditions, Cablevision delivered year-over-year growth in net revenue, adjusted operating cash flow and operating income in 2011."

Stanley M. Bergman, chief executive of medical supplies distributor Henry Schein Inc., had the second-largest dollar raise in 2011: $6.6 million. His total compensation was $10.8 million. Melville-based Schein, the area's largest public company by sales, reported increases of 13 percent in both sales and profits for 2011 compared with a year earlier.

Most of Bergman's pay hike, a company spokeswoman said, came from $5 million in restricted stock that he received when he signed a new employment contract in November 2011.

Notes: Excludes executives whose 2010 compensation was not listed in proxy statement

* Job title changed in 2011

** Promoted in 2011

*** Retired, resigned or terminated in 2011

**** Figures exclude compensation received from another public company not based on Long Island

SOURCE: Company filings to the U.S. Securities and Exchange Commission