Genuine Parts awarded Chief Executive Thomas Gallagher $10.7 million for 2012, continuing a string of big pay increases in recent years as the Atlanta auto parts retailer remained profitable but investors’ gains slowed.
The biggest chunk of the 65-year-old CEO’s 30 percent pay increase last year came from a $5.7 million increase in the value of his pension benefits, even as the company disclosed last week that it is making additional cuts to other employees’ pension benefits.
Last week, Genuine Parts’ shares dropped 3 percent after the company reported fourth-quarter revenues that were weaker than expected. Profit rose 19 percent, but mostly with the help of gains from a planned freeze of its employees’ pension plan this year.
A separate pension plan that provides the bulk of future retirement income for most of Genuine Parts’ top executives, including Gallagher, was not included in the freeze. The executives’ “future [executive pension] benefits will remain unchanged following the Pension Plan freeze,” the company said in a proxy statement filed Tuesday.
Under an agreement when he joined Genuine Parts as CEO in 2004, Gallagher gets pension credit as though he has worked more than 45 years at the company, allowing him to collect the maximum pension under the plan. At the end of last year his pension benefits had a total value of $18.8 million, according to the firm’s proxy.
Gallagher’s 2012 pay included a $1.0 million salary, $2.4 million bonus, $1.3 million in stock-related awards, and $134,008 in perks, including personal use of a company jet.
With 2012’s pay raise, Gallagher’s annual compensation has more than doubled over his 2007 pay, while shareholders reaped a 65 percent gain during the same period.
The company shed more than 2,000 employees during the recession, but has since grown again to almost 32,000 employees through an acquisition last year.
In 2008, the company partially froze most employees’ pensions, limiting the growth of future retirement payouts, but excluded most top executives from the benefit cut. Last week, the company disclosed that it will freeze the benefits of all employees at year-end and recognized a $23.5 million gain that was included in its fourth-quarter results.
AJC reporter Russell Grantham is tracking what Georgia’s major public companies pay their top executives. Look for periodic news and trend stories in the weeks ahead, as well as up-to-date statistics, as Grantham pores through this year’s corporate proxy statements.