Executive compensation at the top public manufacturing companies in Illinois was up 23 percent in 2013, according to analysis by Medill News Service.
The median executive compensation at Illinois’ 10 largest manufacturing firms rose to $10.68 million in 2013 from $8.19 million in 2012.
Jim McNerney, Jr., CEO of Boeing Co., was the highest-earning manufacturing executive, taking home $23.26 million in total compensation in 2013, including a base salary of $1.93 million and $14.85 million in bonuses and non-equity incentive cash compensation.
The median pay in 2013 for the top 200 CEOs of publicly traded companies nationwide was $13.9 million, up 9 percent from 2012, according to an Equilar/New York Times annual survey of executive compensation.
Three Illinois manufacturing executives ranked among the top 200 executive earners, including McNerney (No. 40), Deere & Co. CEO Samuel Allen (No. 89) and Navistar International Corp. CEO Troy Clarke (No. 135).
While corporations largely defend the burgeoning pay grade for top executives, it’s often a flimsy argument, according to Charles Elson, director of the John J. Weinberg Center for Corporate Governance at the University of Delaware.
“It’s based on what’s going on outside the organization, rather than the merits of what executives have actually done for the company,” Elson said.
The pressure, he said, comes from the desire to keep top executive talent at the company — or trying to woo them from competitors. And that dynamic keeps executive compensation on the rise.
But companies run a serious risk in continually ramping up executive pay: alienating the workers.
“If you separate CEO pay too far from the rest of the organization, it creates hostility and friction with the workforce,” he said. “And that creates problems in culture.”
Still, hefty executive paydays can often persuade CEOs to stick with a company during periods of transition or financial turbulence.
Clarke, for example, was among Illinois’ highest paid manufacturing executives in 2013 even though Lisle-based Navistar, maker of engines and large vehicles, posted a loss of $898 million for the year. He was named CEO in March 2013.
The 58-year-old took home $14.53 million in total compensation, including $13.21 million in total Navistar equity.
Navistar’s rough financial stretch is largely tied to a line of environmentally unfriendly engines, for which Navistar received ongoing fines from the Environmental Protection Agency.
Douglas Oberhelman, CEO of Caterpillar Inc., and Robert Livingston, CEO of Dover Corp., were the No. 4 and No. 5 earners. Their total compensation amounted to $12.03 million and $11.48 million, respectively.
The increase in compensation for Illinois manufacturing executives comes in a year in which economists expect the industry to gain momentum.