What’s the going rate to hire a new CEO?
The Inquirer’s annual look at executive pay on Sunday showed a wide range of compensation for CEOs of publicly held companies. But when a company needs to find a new boss, other inducements come into play to seal the deal.
Three recent switches by area companies in transition show what new CEOs are getting locally.
On Friday, Armstrong World Industries Inc., a floor-coverings designer and manufacturer, lured its new CEO away from West Caldwell, N.J.-based Ricoh Americas Corp. Matthew J. Espe has been chairman and CEO of Ricoh Americas since the Japanese office equipment maker acquired Ikon Office Solutions Inc., of Malvern, in 2008.
In a filing with the Securities and Exchange Commission, Lancaster-based Armstrong World Industries disclosed what it took to persuade Espe to switch teams.
First, he’ll be paid an annual base salary of $980,000. That’s the same amount former CEO Michael D. Lockhart was being paid. Lockhart stepped down Feb. 28 after nearly a decade in charge of the floor-coverings designer and manufacturer.
Espe will also be eligible for a bonus based on certain performance targets that will range from 100 percent to 200 percent of his base salary. Lockhart had been eligible for target bonuses of between 40 percent and 125 percent of his salary.
To persuade Espe, 51, to leave Ricoh, Armstrong World Industries awarded him a onetime “replacement grant” in the amount of $4.55 million, consisting of cash and restricted stock units that vest over three years.
He also will get a onetime “inducement grant” of stock options with a value of $3.5 million on the date they are granted, as well as “performance restricted stock units” with a grant date value of $1.5 million.
If you’re counting (and I am), that’s a total of $9.55 million just to attract Espe, a onetime high-ranking General Electric executive, to Armstrong World Industries, which emerged from bankruptcy in 2006.
CardioNet Inc. also recruited from the outside to hire its new CEO. It hired Joseph H. Capper on June 15. In an SEC filing, the Conshohocken heart-monitoring company said it would pay him a base salary of $515,000. That’s a little higher than the $500,000 CardioNet paid Randy H. Thurman, who resigned his executive roles on June 15 after only 16 months as president and CEO. CardioNet’s growth hit a wall last year when health insurers began cutting reimbursement rates for its services.
Capper, 47, had run a Florida medical diagnostics firm. CardioNet is requiring him to relocate to the Philadelphia area within a year. During that time, CardioNet will reimburse him for travel and commuting expenses from Florida. Plus, it will pay him a monthly housing allowance of $4,500 per month for temporary lodging expenses, and reimburse him for relocation expenses up to $100,000.
To make up for incentive and equity compensation that Capper will lose from his former employer, CardioNet agreed to pay him a $150,000 bonus by July 15.
Capper also received restricted stock units based on 60,000 shares of CardioNet common stock and stock options to buy 500,000 shares. The stock options, which were granted at the $6.56 per-share price on June 15, will vest over four years. The restricted stock units will vest entirely on June 15, 2013.
Finally, A.C. Moore Arts & Crafts Inc. promoted Joseph A. Jeffries, 44, as its new CEO on June 17. He’d been the acting CEO since March 31, when former CEO Rick A. Lepley, who’d been hired to turn around the retailer, retired from the Berlin-based company.
In an SEC filing, the company said it increased Jeffries’ salary to $475,000 from the $307,700 he was making as A.C. Moore’s chief operating officer. And that’s it - quite a bit simpler when a company promotes from within.
By the way, Lepley’s base salary had been $575,000, so even though Jeffries did get a raise, he’s not getting as much as his former boss.