Mark Alsentzer, Vic De Zen and Anthony Hooper all are chief executive officers who probably wouldn't mind rewinding the last year or two on the job.
Alsentzer's firm, U.S. Plastic Lumber Corp. of Boca Raton, Fla., is in bankruptcy. De Zen was on the hot seat from shareholders for getting overpaid for his work at Royal Group Technologies Ltd. And Hooper left his job at Insituform Technologies Inc. last year.
They share something else in common: The three of them fared the worst among 34 executives on a ``pay for performance'' score card set up by Plastics News.
There's no simple way to compare executive pay with performance, and any one-size-fits-all rating system like ours surely will miss complexities or things beyond an executive's control, like a poor economy or sky-high resin prices.
Some observers - like Bill George, the head of a National Association of Corporate Directors commission on executive pay and a former chairman and CEO at Medtronic Inc. - argue that egregious compensation may be limited to a minority.
Others, like compensation watchdog group Corporate Library, argue that the pay-for-performance link continues to be weak.
``People figure out how to game the system,'' said Beth Young, a senior research associate at the Portland, Maine, group. ``Executives have good legal talent helping them and [company compensation] consultants typically have their allegiance to the executives.''
Even those who say it's a few bad apples spoiling the barrel, like the NACD commission, argue that companies should do more. An NACD report from December urged companies to create independent-minded compensation committees, give them the power to hire and fire their outside pay consultants, and use specific performance metrics, not stock price, to set pay.
It can be tough to make generalizations about the pay-for-performance link from looking at our survey: For sure, some companies that fared well, like Winpak Ltd., shun stock options and have pay systems that seem to link rewards to tight metrics.
Executives at a few of the worst-performing plastics companies found themselves in trouble, and overall, pay for plastics processing industry executives dropped sharply last year. That might suggest that pay for performance works, perhaps imperfectly.
Plastics News took a look at shareholder returns and compared them to executive compensation over three years from 2001-03, trying to take a more analytical approach to the question.
PN looked at 34 plastics industry CEOs who were in the same job for all three years, thinking that such a longer-term approach is fairer than looking at a single year's performance.
So who delivered the most to shareholders in return for their dollars?
That distinction belongs to executives at three of the smallest firms: Henry Schnurbach at Polyair Inter Pack Inc., Anthony Bova at Atlantis Plastics Inc. and Fred Lampropoulos at Merit Medical Systems Inc.
Each of them more than tripled shareholders' money in the period, with Lampropoulos returning more than 10 times what shareholders invested, the best in our score card.
For Merit, sales were up across the board for the company's medical devices, and the company was named to Fortune Small Business Magazine's list of the fastest-growing small public companies in America for the past two years.
Small-cap CEOs better?
That's not to suggest that small-company CEOs are better executives.
Our performance score card winds up favoring smaller companies, because their executives generally don't get paid as much. A CEO at a $2 billion firm can have the same return to shareholders as a $200 million firm, but rank lower, because he or she probably is getting paid more to steer a much larger ship.
When you factor in company size, the picture changes.
Among the big companies - those with sales topping $1 billion a year- the CEO who delivered the most bang for the buck was A. Schulman Inc.'s Terry Haines.
Shareholder return at the Fairlawn, Ohio, compounder was up 46 percent, and Haines took home $3 million. By contrast, compounder/distributor PolyOne Corp. in Avon Lake, Ohio, had a 17 percent return and CEO Tom Waltermire made $3.4 million.
Toronto-based Magna International Inc.'s Belinda Stronach delivered the biggest return among the big companies, more than doubling investment. She also made the most money, taking in US$13.9 million.
The executive who fared worst among the big companies was clear: Royal's De Zen.
He collected US$6.8 million, but Woodbridge, Ontario-based Royal was among only two of 11 large companies that lost money for shareholders: $100 invested in 2000 was worth just $44 three years later.
De Zen had the worst return to shareholders and the worst pay-for-performance ratio among companies with more than $1 billion in annual sales.
De Zen is not typical among CEOs: He founded Royal in 1970 and was a personal force in building it into one of the largest plastics-oriented companies in the building industry. The company was named Plastics News' Processor of the Year in 1999.
But the firm hit troubles in recent years, and last year, De Zen was moved out of the CEO slot and away from day-to-day management.
For longtime Royal watcher and investment analyst Anthony Scilipoti, executive vice president of Veritas Investment Research Corp. in Toronto, the firm's basic problem was not adopting more open management practices when it went public in the mid-1990s. ``De Zen ran the company like a private company,'' he said.
Now, he said, the company seems to be changing. In 2003, the board for the first time had a majority of independent directors, and it set up its first compensation committee of outside directors.
Royal's example may be extreme; most companies have compensation committees made up of outside directors. But it illustrates a point made by groups like NACD: that compensation should be set by outside directors who question company pay practices and have resources to hire outside experts, which the group said many compensation committees still don't have.
NACD, which includes corporate executives and directors, urges companies to adopt a principle of ``fairness'' that discourages ``unexplainable gaps between executive pay and that of other employees.''
``If you followed [the principle], a lot of these pay packages wouldn't be what they are,'' said Doreen Kelly Ruwak, NACD vice president. She said she was not commenting on specific firms.
One of the better-performing CEOs worked in a system that's unusual.
Winpak CEO J. Robert Lavery fared best in our ranking among middle-sized companies, those with sales from $300 million to $1 billion. He took home $1.9 million, and for that he more than doubled shareholders' money. He had the highest shareholder return and was the ``best-value executive'' among the midsize companies.
Lavery retired at the end of 2003, but his successor, Bruce Berry, said the Winnipeg, Manitoba-based flexible packaging company has seen growth in the past few years because it has introduced new, proprietary cast extrusion technology that has helped to clear up bottlenecks at its factories.
What sets the company apart in its executive pay system is that it doesn't give out any form of stock compensation.
Lavery and Berry received ``rights'' based on a complicated series of performance metrics, including earnings, and those rights then have a value based on stock price and company performance. The two executives held rights worth a minimum of C$1.3 million (US$ 930,000) last year.
``We've always had the philosophy that management shouldn't be treated any differently than the shareholders,'' Berry said. ``It's very well-received by the public, especially during these days of strange things happening in the business community.''
Others in the middle rank of companies didn't fare well. More than half of the midsize firms lost money for investors, with Insituform's Hooper ranking worst.
Hooper and Chief Financial Officer Joseph White both left Insituform last year. At the time, the company said the 55-year-old Hooper left to ``pursue other interests.''
The maker of pipe systems declined to comment on its stock price, but said in Securities and Exchange Commission documents that it has been beset the past three years by poor economic conditions, increased competition and two underperforming acquisitions. The St. Louis firm said in an Aug. 12 statement that it feels good about how its business is operating.
Hooper had guided the firm through strong growth in the late 1990s, pushing shareholder return way up. But then stock performance plummeted. His departure might suggest that at some level, pay for performance works and executives have to turn in consistent growth - or at least that shareholders may not have much patience for yesterday's accomplishments.
For Corporate Library's Young, the link between pay and performance is strongest among chronically underperforming companies, where the pressure from shareholders can be greater. But Young said that among companies that muddle along, or even among those doing well, not enough questions are being asked.
``I think where there has not been as much success on the pay-for-performance side is at the middle and the top,'' she said. ``An important thing is to strengthen the boards and get them to do their jobs.''