Last year, several food companies’ CEOs saw significant hikes in their total compensation packages. Sometimes these pay bumps were in spite of declining financials, but others were a reward for a job well done. Here are a few of the most notable CEO compensation announcements from 2014.
Mondelez International Inc.
Mondelez CEO Irene Rosenfeld saw a significant increase in her total 2014 compensation— a 50% leap from $14 million in 2013 to $21 million in 2014, though it was still not quite the $28.8 million total of her 2012 compensation. Breaking down the compensation increase, her base annual salary increased marginally from $1.59 million to $1.6 million, but her annual incentive award more than doubled from $1.66 million in 2013 to $3.6 million in 2014.
The majority of the increase was a $5.1 million sum that included a pension plan increase and other retirement benefits. Other smaller pieces of her total 2014 compensation “also included $152,072 for personal use of the company aircraft and a $23,586 car allowance,” according to The Wall Street Journal.
Rosenfeld originally joined Kraft Foods Group, Inc. in June 2006 as CEO, and she remained CEO of Mondelez when the snack company was spun off from Kraft in 2012. Mondelez’s executive pay in general rose in 2014 even though the company saw a 3% dip in its 2014 revenue and a 5.6% decrease in net income for the year. Another significant earnings announcement, Mondelez saw a 72% drop in profit year over year. About 80% of the company’s revenue is in foreign currencies, which means Mondelez was hurt by the strength of the U.S. dollar last year.
PepsiCo Inc.
PepsiCo CEO Indra Nooyi also saw a sizable increase in her income — a 45% jump to $19.1 million in 2014. A breakdown of the pay package included “a base salary of $1.6 million, stock awards of $5.5 million and a performance-based bonus of $11.8 million,” according to the Associated Press. That bonus was mainly comprised of a long-term incentive payout that vested at the end of three years. This helped to triple her bonus from 2013. The rest of her compensation, about $155,000, was mainly allocated for her use of the company plane.
Nooyi was formerly PepsiCo’s president and CFO, the positions she held since 2001 after joining the company in 1994. For a time, she also held the positions of senior vice president of corporate strategy and senior vice president of strategic planning before being appointed president and CEO in 2006 and chair of PepsiCo’s board of directors in 2007. She guided the company through a series of restructuring initiatives, including divesting its restaurants into YUM! Brands, Inc., acquiring Tropicana, merging with Quaker Oats, when it gained the Quaker and Gatorade brands, and acquiring Wimm-Bill-Dann, PepsiCo’s largest international acquisition.
The drinks and snacks company reported that it met or surpassed many of its 2014 financial targets, as it saw 4% organic revenue growth for the year. Though PepsiCo has struggled with slowing demand, particularly for soft drinks, and the fluctuating U.S. dollar in foreign markets, the company has bounced back due to cutting costs, increasing prices, and growing its business in emerging markets, according to MarketWatch. PepsiCo has also turned to its snack business for positive reinforcement, particularly its Frito-Lay North America snacks division, which comprises almost half of PepsiCo's profit. This division saw 3% revenue growth and a 5.5% boost in operating profit over the previous year's fourth quarter. The company’s earnings growth from 2012 to 2014 led in part to Nooyi’s $11.8 million payout.
Coca-Cola Co.
Coca-Cola CEO Muhtar Kent too saw a rise in his compensation, though this was a jump of 24%, about half the pay bumps for Mondelez and PepsiCo’s CEOs. Though his increase in compensation was not as much percentage-wise, Kent’s total pay package at $25.2 million was still a cut above both Rosenfeld’s and Nooyi’s total compensation packages for the year. Kent’s base annual salary, which did not change from 2013, remained comparable to Rosenfeld and Nooyi, all of whom clocked in at around $1.6 million for 2014.
Looking behind the numbers, the increase in Kent’s total compensation was mainly due to an increased pension plan from $2.2 million to $7.1 million. According to The Wall Street Journal, “The board noted that the change in pension benefits for 2014 was significantly greater than the change in 2013 primarily because of a lower discount rate and revised actuarial assumptions.” Without that pension boost, Kent’s pay package slightly dropped in value from the year before, from $18.2 million to $18.1 million.
Even with the increase, Kent still earned less than his 2012 compensation of $30.4 million, which he received when the company was in a better position than it is currently. Fizzling soda sales have hurt the company as well as currency headwinds, and Coca-Cola reported a 55% drop in profit for Q4 2014 year over year. For full-year 2014, the company reported a 2% decline in revenue and 3% decline in adjusted net income. However, overall earnings numbers remain mixed as the company saw increased global value and value share in other beverage categories, including sparkling and still beverages, juices and juice drinks, ready-to-drink tea, and packaged water.
Kraft Foods Group
While several other CEOs saw significant pay bumps in 2014, former Kraft CEO Tony Vernon’s total compensation package actually fell more than 11% to $8.15 million from $9.2 million in 2013. He was replaced in December after helping head up the company following the 2012 corporate spinoff. During his final year with Kraft, Vernon saw a 10% increase in his 2014 annual base salary to $1.1 million, but other areas declined, primarily his stock awards and non-equity incentive pay. He also was not awarded a bonus.
In 2014, Kraft saw only a slight drop in revenue to $18.2 billion, but the company’s net income fell 61.6% to $1.04 billion. Now with a merger with H.J. Heinz Co. on the horizon, Kraft could face cost-cutting measures as Heinz did when it was bought by 3G Capital in 2013.
Will these changes in compensation packages have any effect on company leadership? It’s interesting to note that even with conflicting financial numbers, companies still find ways to reward their top bosses. As 2015 plays out, CEOs will be especially under the microscope as they navigate consumer trends toward healthier foods and away from the processed foods many of these companies produce.