December 16, 2015
Total director compensation, 2006–2014: $6,199,216
Average annual director compensation: $688,802
Average compensation per full year of service as director: $247,969
Gordon M Bethune is well known in the executive world as the CEO who guided Continental Airlines back from the brink of bankruptcy in the late 90s. Bethune came to Continental after working his way up at several other airlines and then managing a major division at Boeing. He joined Continental Airlines in 1994 as COO, and became CEO within two years. He is credited with taking the airline from worst to first, a feat he accomplished with a bottom up management style and a bonus scheme that gave everyone, from baggage handlers to company executives, a pay increase conditioned on company performance in customer service and reliability.
Mr. Bethune now sits as a director on the boards of three companies, Prudential Financial, Honeywell International, and the Sprint Corporation. Bethune joined Honeywell’s board in 1999, and currently holds a position on the company’s Corporate Governance and Compensation committees. Bethune joined Sprint in 2004 and Prudential in 2005. He currently chairs the Compensation committee for Sprint and is a member of the Governance and Compensation committees for Prudential. Between 2006 and 2014, when data is available for all three companies, Gordon Bethune took home a total of $6,199,216 in compensation, averaging $688,802 each year. On average each directorship Bethune served a full year at paid $247,969 in annual compensation.
Of the three companies the highest paid CEO was David Cote, CEO of Honeywell International. Between 2006 and 2014 he was paid an average of $26.3 million annually. Sprint’s CEOs made an average of $20 million each year. However, this number is inflated due to an outlier in 2013 where a change in the office caused the total compensation to be $49 million for the year. If we use the median pay instead of the mean we find Sprint’s CEOs took home a median annual compensation of $15.5 million. Prudential’s CEO was paid an average annual compensation of $20.5 million. In terms of change in annual pay, however, Prudential’s CEO saw a far greater increase in pay than the others. CEO pay at Prudential increased from $11.3 million in 2006 to $37.5 million in 2014. This represents an increase of 232 percent. David Cote’s pay increased by 5 percent and Sprint’s CEOs say a pay raise of 2 percent.
The increase in pay for Prudential’s CEO stands in contrast with its stock performance during this same period. Between 2006 and 2014 S&P 500 share prices increased by 62.3 percent, while Prudential underperformed with growth in share prices of just 19.5 percent. However, the poorest performance during this period belongs to Sprint, whose share prices decreased by 82 percent. Of the three, Honeywell was the best performing company in terms of stock price. During this period Honeywell share prices increased by 166.7 percent.