Pay for plastics processing executives leveled off in 2000 - further indicating that the rapid rise in salaries in the mid-1990s has cooled.
The average compensation of the top 100 was about $1.05 million, down a little bit from $1.09 million in 1999. Mainly that's because compensation from exercising stock options was way down. However, executives made up much of that in other ways - the average salary for the group rose much faster than inflation, climbing 7.3 percent to $351,000.
Several compensation experts say that means pay for performance is working, albeit imperfectly. But critics point out that plastics industry stocks were down 22 percent in 2000, yet executive pay stayed essentially the same.
Clearly there are a lot of companies where performance went down and so did pay, and some where performance was good and pay went up.
Some of the companies on our list do things that executive compensation experts praise. Tredegar Corp., for example, prices many of the options it gives to managers and senior executives at least 15 percent above the market value. Another example: Alltrista Corp.'s performance was not good in 2000, so it paid no bonus in 2000 and will dock the bonuses of executives in future years.
Executive recruiters candidly note there are risks for companies that choose that path. If a firm is too tough on executive pay, it risks not being able to hire and retain talented leaders.
Foam manufacturer Foamex International Inc. has a pay system that is so obviously wrong it's a poster child for reform. The company's compensation committee is chaired by the head of its Asian subsidiary - a former U.S. senator who also gets a $10,000 a month consulting contract from the firm.
Other, more subtle, examples make you wonder how much risk executives are willing to bear.
Compounder PolyOne Corp., for example, paid Chairman Thomas Waltermire $460,000 in 2000 as a retention bonus. The company points out that Waltermire could have taken a much bigger award if he had accepted the buyout available when Geon Co., which he formerly chaired, and M.A. Hanna Co. merged last year.
PolyOne's stock dropped 33 percent from its inception to the end of 2000, and the firm has announced plans this year to close 11 plants. Yet it paid its top executive a large bonus last year as a reward for not leaving the company and taking a much larger buyout package.
Plastic sheet maker and compounder Spartech Corp. reshuffled its executive team in October. The company agreed to pay former Executive Vice President David Mueller $545,000 a year through 2005 for consulting work, plus a promise not to take a job where he would compete with Spartech. Mueller also exercised stock options worth $5.2 million last year. Five months later, in March, the company said it would save $1.5 million during 2001 from three recent plant consolidations. In a down market, the company no doubt felt the cuts made it more efficient. Yet its Securities and Exchange Commission filings say it could pay Mueller at least $2 million in the next few years.
Makes you wonder how often companies apply the same hard-nosed thinking to their executive pay plans that they do when it's time to shutter factories.
Toloken is the Washington-based reporter for Plastics News.