Summa Industries Chairman James Swartwout took home $438,000 last year, guiding Summa to $123 million in sales and $7.3 million in profit.
Samuel B. Davis took home more than 21/2 times that - almost $1.2 million - yet the company he leads, packager Liqui-Box Corp., is not that much larger than Summa. Its sales hit $155 million, but it made a profit of $16.4 million.
Executive pay can vary widely from company to company, for many reasons. One firm may have better profit margins, or it may be in a rapidly growing segment of the industry or have a new technology that requires exceptionally strong leadership.
For Davis, one reason for the difference might be plain: He owns 36 percent of the company.
Not surprisingly, that's common among publicly traded plastic processing firms. Many of the best-paid top executives, if you measure pay as a percentage of sales, come from companies where the individual or family owns a large part of the firm and the stock is thinly traded.
Those variations are common among small, publicly held firms, where it isn't unusual to see president/owners make two and three times what outside presidents may take home in other firms, said Nick Fountas, managing director with executive recruiting firm JLI-Boston. Fountas specializes in plastics industry firms. As companies climb above $500 million in sales, pay tends to vary less, he said.
George and Robert Erikson, chairman and president, respectively, of pipe manufacturer Insituform East Inc. in Landover, Md., each took home about $225,000 last year, or more than 1 percent of the company sales for each of them. The Erikson brothers own 84 percent of a second company that controls Insituform.
Sherman McGinnis, who owns 42 percent of rotational molder Rotonics Manufacturing Inc., made $431,000 in 2000. The company generated sales of $45 million. His salary and bonus went up 9 percent, while the company's one-year return in its fiscal year, ended in June 2000, climbed 37 percent. Its return in calendar year 2000 dropped 52 percent.
Of course, executives at such companies have much more freedom to write pay plans as they like.
Davis at Liqui-Box has one of the more unusual versions - the company pays him a salary of just $70,000, and he depends on stock options and a cash bonus tied directly to pretax profit. His cash bonus fell from $1.25 million in 1999 to $1.1 million last year. If the company does not make a profit, then he does not collect any bonus, the company said in an SEC filing.
While family ownership may be a common thread among these firms, the executive with the highest pay compared with total corporate sales is not part of a family-owned company. Kevin Cornwell, the chairman and chief executive officer of Utah Medical Products Inc. in Midvale, Utah, made $333,000 last year, about 1.2 percent of the company's total sales.
Cornwell's salary and bonus fell 10 percent in 2000 because the company's sales dropped from $29.4 million in 1999 to $27.1 million last year, but the board noted his ``extraordinary performance'' in holding profit steady.
Not everyone agrees.
``I think he is highly overpaid for the size of the company,'' said Perry Lane, former Utah Medical chairman who resigned from the board after a bitter fight in 1998 and sold his stock.
Investors who put $100 in the company at the end of 1995 would see their stake worth $38 in 2000.
Paul Richins, UM's chief administrative officer, said Cornwell should be judged on profit, not sales. The company made $5.3 million in 2000.
Richins also said the stock price at the end of 1995 is not valid for comparison because share value spiked for a few months. Most company stock bought since then has increased in value, he said. Still, the company stock is down 43 percent if you measure from the end of 1996, a year later.
Lane said Cornwell's pay is high because the five-person company board is not very independent. It includes Cornwell, Richins and friends of Cornwell, Lane said.
Other observers say Cornwell's salary may be in line. The medical industry tends to pay more because its margins are higher, and companies there can see sales take off if a new product catches on.
``Maybe he is getting paid for future promise,'' Fountas said.