Americas' obesity epidemic and continuous struggle to shed pounds has been a boon to some weight-loss outfits, not to mention NBC's "The Biggest Loser." The biggest beneficiary is arguably Michael Johnson, CEO of the nutrition company Herbalife (HLF), who was paid $89.4 million in 2011, making him the highest-paid CEO, according to a report from research firm GMI Ratings. (Here's the survey.)
Last year was the second year of double-digit pay increases, according to GMI. On average, pay to CEOs of companies in the Russell 3000 went up by more than 15% in 2011.
The top 10 highest-paid CEOs thus far in 2011 earned about 77% of their total realized compensation through stock option exercises and vested equity. A not-so-close second behind Johnson in terms of total 2011 compensation are some familiar names: IBM's (IBM) Sam Palmisano ($63.2 million); Tyco International's (TYC) Edward Breen ($63.1 million); Honeywell's (HON) David Cote ($58.2 million). Compensation includes base salary, bonuses and profits on vesting their stock options. Walt Disney's (DIS) Robert Iger had the highest base salary, of $2 million, with a $15.5 million bonus and nearly $1 million in perks.
Most of the CEOs who made the top 10 are there largely because of their companies' very generous stock option grant policies. Johnson exercised 1.8 million options for a profit of almost $77 million last year. GMI reported that most of the options that were exercised in 2011 were awarded between 2003 and 2005, when Herbalife's shares traded below $10. Since then, the stock price has done well: The stock is up by 179.1% over the last five years, and 401.6% over the last three years. During 2011, it was mostly trading in the $50-plus range.
Interesting timing for Herbalife given that the stock has stumbled this week, falling over 25% since Monday after hedge fund manager David Einhorn questioned its disclosure policy on the company's conference call. On Thursday Herbalife said it would purchase $427.9 million of its common shares. This week Herbalife reported net income of $108.2 million, compared to $88.7 million compared with a year ago.
GMI Ratings is a corporate governance firm, formed in 2010 by the mergers of three predecessor firms, The Corporate Library, GovernanceMetrics International and Audit Integrity.