ARKANSAS EXECUTIVE PAY: Tyson, 3 at Wal-Mart atop state pay list

Arkansas firms pack exec ranks with family

Arkansas Democrat-Gazette Photo Illustration about the HIGHEST PAID EXECUTIVES of 2015
Arkansas Democrat-Gazette Photo Illustration about the HIGHEST PAID EXECUTIVES of 2015

John Tyson, chairman of Tyson Foods, and three Wal-Mart executives were among the five highest paid executives at Arkansas public companies in 2015, according to the firms' proxy statements.

Tyson earned $21.2 million, including almost $12.5 million from the value of exercised stock options.

Doug McMillon, Wal-Mart's chief executive officer, made $19.6 million; Gregory Foran, a Wal-Mart executive vice president, earned $11.5 million; and Neil Ashe, another executive vice president, made $10.8 million.

[FULL CHART: Arkansas executive pay in 2015]

Roger Jenkins, chief executive officer at Murphy Oil, had the third highest income last year at $12.3 million.

The high salaries are not uncommon for executives at some of the country's top companies, said Brent Longnecker, chief executive officer at Longnecker & Associates, an executive-compensation consulting firm in Houston.

Nationally, at least six chief executive officers made more than $50 million last year, according to a list of the highest paid chief executive officers published in The New York Times. Dara Khosrowshahi of Expedia earned almost $95 million last year to top the list.

"Most of that compensation is on the long-term incentive side, I am sure," Longnecker said. "That shows that those guys are not only performing well, but they are doing a good job in -- I wouldn't say a bad economy -- but an interesting economy. [Tyson and McMillon] are doing a good job for companies that big."

The 96 executives on the list of Arkansas firms earned a total of more than $293 million, an average of more than $3 million per executive. The $293 million is an increase of about 3 percent from $284 million earned in 2014.

The average is more than 135 times the average per capita annual income of $22,595 in Arkansas, according to the U.S. Census Bureau.

Two-thirds of the 96 executives made more than $1 million last year.

The information was compiled from the most recent proxy statements of 20 public companies in Arkansas. A proxy statement, sent to stockholders every year to provide information about the annual meeting, includes details of business that will conducted at the meeting and the income of the company's top executives.

The Arkansas Democrat-Gazette calculates executive compensation using The Associated Press' formula of adding salary, bonus, incentives, perks, above-market returns on deferred compensation, the estimated value of stock options and grants awarded during the year and other income such as retirement contributions and insurance premiums paid on the executives.

The three Dillard brothers had the highest value of executives' stock with more than $320 million each. The stock of Alex Dillard, the firm's president, is worth about $460 million. William Dillard II, the company's chief executive officer, has about $356 million in stock and Mike Dillard, an executive vice president, had about $324 million in stock.

The children of Sam Walton, founder of Wal-Mart Stores Inc., own more than $117 billion in the corporation's stock, the highest value of any nonexecutive at the 20 public companies.

Alice Walton, Jim Walton, Rob Walton and the estate trust of John Walton together share about 1.6 billion shares of Wal-Mart stock.

Bank returns

The stocks of three of the public banks in Arkansas were among the firms with the highest return on investment.

Bank of the Ozarks had the best return among the 20 public companies on a $100, five-year investment. Investing $100 in Bank of the Ozarks on Dec. 31, 2010, would have returned $486 on Dec. 31, 2015.

Home BancShares was second with a return of $394 over the five years. Simmons First National was fifth with a return of $206 over five years.

All three banks were well-positioned during the recession, said Matt Olney, a Little Rock banking analyst with Stephens Inc.

"All three banks were able to be aggressive coming out of the downturn [in 2008-2009]," Olney said. "That allowed each of them to make a number of acquisitions."

Since 2010, Bank of the Ozarks has made 15 acquisitions, Home BancShares had 14 purchases and Simmons made nine. Most of those were outside Arkansas and almost half of them were failed banks bought through the Federal Deposit Insurance Corp.

How well the banks perform over the next five years depends largely on the health of the economy, Olney said. And it depends on how the economy performs in each of the markets where the three banks have offices, Olney said.

"Each one of those three banks have very good senior management and a very good underwriting culture," Olney said. "So each one is in probably a relatively good spot to continue to grow."

Family ties

The proxies also often include insider information about other executives at the companies.

Deltic Timber directors Madison Murphy, Robert Nolan and Christoph Keller III are first cousins, and director Hunter Pierson is married to a first cousin of Murphy, Nolan and Keller. The families of these four directors together own 26 percent of Deltic.

Murphy, Claiborne Deming and Caroline Theus are first cousins and directors of Murphy Oil. Together they own about 5 percent of Murphy Oil's stock.

First cousins Murphy, Deming and Keller are directors for Murphy USA and own about 6 percent of the Murphy USA stock.

Brothers William, Alex and Mike Dillard own almost 100 percent of the company's Class B shares. They and their sister Drue Matheny own about 11 percent of Dillard's Class A shares.

Five other members of the family are included in the Dillard's proxy.

Denise Mahaffy, a senior vice president and sister of William, Alex and Mike Dillard and Drue Matheny, made $747,000 last year. She also was paid a bonus of about $246,000 on April 1, 2016, for the 2015 year.

William Dillard III, a senior vice president, made $736,000 for 2015 plus a bonus of about $246,000 that was paid on April 1, 2016.

Alexandra Dillard, a divisional merchandise manager and daughter of Alex Dillard, earned $311,000 last year. Annemarie Dillard, a manager and daughter of Alex Dillard, made $288,000 last year. And Michelle Dillard, also a daughter of Alex Dillard and a company manager, was hired in June 2015 at a salary of $160,000.

Stephens Insurance, which is owned by Dillard's director Warren Stephens, received commissions of about $1.9 million from the sale of insurance benefits to Dillard's employees.

Lori Haynie, sister of Wal-Mart's Doug McMillon, is an executive officer of Mahco Inc. of Bentonville. Wal-Mart paid Mahco about $27 million last year for purchases of sporting goods products.

Greg Bray, a senior director in Wal-Mart's finance department, is McMillon's brother-in-law and made almost $345,000 last year.

Brittney Duke, a senior director in Wal-Mart's marketing department, is the daughter of director Michael Duke and made almost $300,000 last year.

Four other relatives of Wal-Mart officers or directors earned between $163,000 and $215,000 last year.

Arvest Bank of Fayetteville, which is owned by Jim Walton, Rob Walton and the John Walton estate trust, and some of Arvest's subsidiaries paid about $500,000 to Wal-Mart to rent space in supercenters and Neighborhood Markets. Jim Walton is chairman of Arvest, the second-largest bank based in Arkansas.

Home BancShares has more than $5o million in loans outstanding with its directors and officers. All the loans were made under regulatory requirements, the bank said in its proxy statement.

Two sons-in-law of J.B. Hunt Transport Services Inc. Chairman Kirk Thompson earned $333,000 and $164,000 last year. The husband of Shelley Simpson, a J.B. Hunt executive vice president, made $543,000 last year.

The daughter of Donnie Smith, chief executive officer of Tyson Foods, was paid about $121,000 last year as director of continuous improvement training.

Stephen Young, son of ArcBest Chairman Robert Young III, earned almost $138,000 as the director of warehousing for ABF Logistics, an ArcBest subsidiary.

SundayMonday Business on 08/21/2016

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