Who says CEOs have to suffer over their mega paychecks?
The groundswell of criticism anticipated at Magna International Inc.'s annual meeting because of the board's decision to pay Frank Stronach US$36.2 million last year turned into a love fest.
``Do you think I deserve the monies I make?'' he asked shareholders May 6 in Toronto. The responses were unrestrained applause and shouts of ``yeah.'' At one point, investors gave him a standing ovation.
The 71-year-old company founder, dressed in a dark suit and shimmering tie, saved his punches for Canadian pension and investment funds that threatened to withhold support for the re-election of Magna's board because they contend the directors lack independence in deciding the size of Stronach's pay envelope.
Last year he made a salary of $200,000, $1.5 million in other compensation and $34.5 million in consulting fees.
Pension funds complain that it is not at all clear what he does for the bulk of money. But critics sat on their hands during the meeting. The motion to re-elect the 12 board members carried.
The outrage over the truckloads of money paid to CEOs in North America has been an issue picked up in recent years by the real corporate owners - mutual funds and pensions. So far they have had little or no impact on automotive supplier chief executive officers and even less on Stronach.
Besides, the rough-hewn Austrian immigrant who built Magna from a tool and die shop in his garage is hardly the poster child for bad corporate governance. The company's constitution dictates that 6 percent of pretax profit goes to executives, 10 percent to employees and 20 percent to shareholders in the form of dividends. All have fared well from the company's record operating profits in recent years.
Pension-fund anger is sparked by Stronach's near-total control of the publicly traded Magna, which is based in Aurora, Ontario.
The Stronach family trust owns 758,000 class B shares, or less than 1 percent of total shares outstanding. But because each class B share equals 500 class A shares, the Stronachs effectively control Magna and its board, including its compensation committee.
That committee has seen fit to make Stronach the highest-paid top executive in recent years among North America's auto parts suppliers.
Magna board member Siegfried Wolf credits Stronach for Magna's success. The company posted record sales last year of $15 billion and record operating profits of $1.04 billion.
``The company has grown because of entrepreneurship,'' Wolf said. ``[Pension funds] invest in the past where entrepreneurs invest in the future.''