Bob Ulrich, Target
BIGGEST GAIN FROM STOCK-OPTION EXERCISE
Bahram Akradi, Life Time Fitness
HIGHEST CURRENT VALUE OF NEW OPTIONS
Still, mega-salaries accompanied by last year's meager returns raise the perennial question about CEO compensation: Are they worth the money?
"I represent executives and even I find it hard to explain a few of the numbers in the survey," said V. John Ella, a Minneapolis employment attorney.
"People who want to make the pay-for-performance argument are finding it harder and harder," said Robert Kennedy, professor of ethics and business law at the University of St. Thomas College of Business.
In recent months, media scrutiny of CEO pay has intensified. The outsize pay and compensation practices of McGuire and the board at UnitedHealth Group have attracted national attention and an informal inquiry from the Securities and Exchange Commission.
Other forces are coming to bear, too. Stricter accountability for chief executives is a cornerstone of the Sarbanes-Oxley Act passed in 2002 after the Enron scandal. Key provisions of the act are only now taking effect.
And after a decade-long debate, accounting rules are taking effect this year that require public companies to account for expenses associated with issuing stock options to employees. Stock options, in particular, have fueled the huge windfalls in executive pay since the early 1990s.
Separately, the SEC has said it will require far more extensive disclosure of executive perquisites beginning in 2007.
Either compensation gains will begin to moderate, Ella said, "or it will never change, because executives will always be able to game the system to their advantage. I happen to think we are on the cusp of change."
Others aren't so sure.
"If you are one of the players, then you can begin to demand certain benefits," Kennedy said. But "there is a certain lack of self-consciousness about this. Some people should be just be embarrassed that they are taking home this amount of money."
Brian Shapiro, a professor of accounting at St. Thomas whose research includes executive accountability, said that outsize executive compensation "violates people's basic sense of fairness. ... It bothers us to know people make this much money only because they have so much economic power."
As usual, stock-option gains accounted for the largest piece (46 percent) of total compensation. Forty-three Minnesota CEOs exercised $202.5 million in options last year.
In 2004, 50 CEOs had option gains totaling $261 million. But UnitedHealth's McGuire alone accounted for $114 million of the 2004 total. Excluding him from the year-to-year comparison reveals that option gains by the other 99 soared by 37.5 percent in 2005.
Of the 43 CEOs who sold stock last year, the biggest exerciser, appropriately enough, was Bahram Akradi, founder and CEO of Life Time Fitness, the chain of health clubs that went public in June 2004. Akradi benched $37.4 million in gains on his way to a $41.3 million payday.
Target's Bob Ulrich redeemed $34.9 million in the retailer's shares -- enough to make him No. 1 on our overall list with total pay of $45 million. Polaris CEO Tom Tiller zoomed into third place overall, with $29.4 million worth of options and total pay of $33.4 million.