Plastics executive pay pops up in Wisconsin US Senate race

Sen. Ron Johnson (R-Wis.) is under fire for a $9 million payout he received from the plastics company that he ran before he was elected to the U.S. Senate in 2010. Not a surprise — it's an election year for Johnson, and opponents will take every opportunity they can to remind voters that he's a wealthy millionaire.

What surprised me about the story is that Johnson is citing Plastics News' executive pay rankings to defend himself.

First, some background. Johnson was CEO of Pacur LLC, an Oshkosh, Wis.-based sheet extruder, before he decided to run against three-term incumbent Democrat Sen. Russ Feingold.

Now, six years later (and with Johnson now the incumbent facing a challenge in the November election from Feingold), Democrats are challenging how Johnson funded his 2010 campaign.

Johnson loaned himself about $9 million for the 2010 race. What Democrats say is suspicious is that after Johnson was elected, Pacur paid him $10 million. They're calling that an undisclosed corporate contribution to his campaign, and they filed a Federal Election Commission complaint against Johnson.

Johnson recently explained the $10 million payment in an interview with the Devil's Advocates radio program in Madison, Wis.

At about the 11 minute mark, you'll hear the discussion of the FEC complaint and Johnson's explanation.

Basically, he says that in his 13 years at Pacur, he never took a salary from the company. All the profit was plowed back into the company. When he was elected to the Senate, he needed to sever his relationship with Pacur, so he negotiated a severance package — basically back-pay — for the previous 13 years. They came up with $10 million, or about $769,000 per year.

The radio hosts joke "that's not a half-bad living," but Johnson argues that it's a "reasonable compensation level" based on the executive pay ranking in Plastics News.

"It was a successful company. Compare that to the CEOs and owners of other plastics companies in the same business," Johnson said. "Take a look at Plastics News, you'll see CEOs making millions of dollars, $6 million, $9 million. You know, $700,000 in the scheme of things — and of course it's all relative — is a pretty reasonable compensation level."

Measuring against the executives in our ranking, Johnson is right. Compensation of $769,000 wouldn't even put him in the top 100 of the executives in our ranking. (Donald J. Walker, CEO of Magna International Inc., tops the list this year with $21.2 million in total compensation).

Is that a fair comparison? Well, the Plastics News executive compensation issue ranks officials at U.S. and Canadian companies that have publicly traded equity or debt and that generate at least half of their annual sales from plastics manufacturing. Pacur isn't publicly traded, but if it was, it would definitely qualify as a plastics manufacturer.

From what we can tell, though, Pacur would likely be one of the smaller companies in our executive pay ranking, if it was included. The company tied for No. 105 in our just-published ranking of North American film & sheet manufacturers, with estimated sales of $40 million. Pacur does not disclose sales information.

Plastics company CEOs would probably agree that a $700K annual compensation package for the owner and CEO of a $40 million-per-year sheet extruder is fairly typical.

But that doesn't stop attacks from some corners — including OpposingViews.com and Huffington Post — pointing out that Johnson, who opposes a federal minimum wage, says that his own salary as a company owner was "pretty reasonable."