General Mills Chairman and CEO Ken Powell joined the company two years before H. Brewster Atwater Jr. became its CEO in 1981. They were both rise-through-the-ranks CEOs at a Minnesota blue chipper, but there's a big difference in their compensation packages.

Compared with Atwater's last year on the job in fiscal 1995, there's much more clarity in how the company pays its CEO and there's much more compensation expressly tied to the performance of the company and return to shareholders.

And, of course, there's just a whole lot more compensation.

Not that General Mills deserves any particular criticism for how it pays top officers. One of the first things you realize when you get inside the world of executive compensation is that it's all relative. Given the state of big-company CEO pay, General Mills seems to have fine practices.

Investors in General Mills certainly aren't grumbling, as "say-on-pay'' shareholder votes for fiscal 2011 and 2012 were overwhelmingly supportive.

The numbers are bigger now but it's also worth remembering that hand-wringing over excessive executive compensation was very much in the news when Bruce Atwater ran General Mills.

Powell

"Chief executive officers of America's largest publicly held companies received higher pay than ever," began a story on the cover of the Star Tribune's business section in May 1995, the month Atwater retired.

The Securities and Exchange Commission in 1992 mandated far greater disclosure of compensation and performance, with the SEC's chairman explaining that "the best protection against abuses in executive compensation is a simple weapon — the cleansing power of sunlight and the power of an informed shareholder base."

A year later Congress enacted a law that generally limited to $1 million the amount of current compensation paid to a corporate officer that can be deducted on the tax return. Excluded from this law were payments that were "performance-based."

"There were some unintended consequences of that particular law," said Brian Blackwood, the executive compensation practice leader in the Twin Cities for the consulting firm Towers Watson. "Cash incentives — bonuses and stock options — are considered performance-based. The growth of those instruments … was fueled."

It's not as though base salaries actually went down; it's more that every other component of pay went up faster.

In the case of General Mills, Powell's salary for fiscal 2012 was $1,108,333, and in Atwater's last year, he earned $610,000. Adjust to 2012 dollars and Atwater did not do as well.

Atwater did not get a bonus for 1995, but he got them totaling about $1 million for the two previous years.

Powell also did not earn his full potential bonus for fiscal 2012, receiving about $1.64 million. His three-year total is $5.26 million.

Restricted stock? Atwater's three-year total through his retirement was restricted stock grants of $255,000 and Powell's three-year total was $11.2 million. Atwater got no stock option grants in his last year, but did get them the year before and retired with exercisable options for about 937,000 shares.

The 2012 proxy said Powell had exercisable options for 1.51 million shares.

"We have a performance-based compensation program, and the basic construct isn't that different from what it was back in Bruce's day," said Mike Davis, General Mills' senior vice president of global human resources. "There was a base salary and a performance-oriented annual bonus. The majority of compensation is linked to our share price and our total shareholder return. The retirement benefit is exactly the same program that was in place."

The amounts are bigger.

"Well, the company is bigger," Davis replied.

It's not spelled out just why Atwater got no 1995 bonus, but there's no mystery why Powell is getting paid what he is.

The report of the 1995 compensation committee came to a little over 4,000 words. The fiscal 2012 compensation section ran to 13,720 words, and "almost everything that's in there is in there because it's required," Davis said. "In 13,000 words you can explain a lot."

Much of it discusses the CEO's pay at General Mills compared with CEOs at 13 other big consumer packaged-goods companies. Any mom-and-pop investor would have to conclude after spending an hour with the proxy statement that what General Mills really wants is to have its CEO better paid that half of his peers but not paid so well he lands in the top quarter.

One could look at that discussion of a peer group in a couple of different ways. One is that the market for CEO talent must be functioning well.

The other view is what seems to matter when setting CEO pay, which is roughly matching what other CEOs have managed to wring from their boards. So the level of compensation will keep climbing until the rest of us acquire pitchforks and lanterns from Mills Fleet Farm and take direct action.

The disclosure rules also produce tidbits like this in the 2012 proxy: Ken Powell's personal travel on the company came to $80,075.

According to a federal registry, General Mills has two very nice jets, Cessna Citation 750s. It's probably another sign of good practices that the company won't let Powell run over $100,000 in expense for personal use of these aircraft.

But $80,000 happens to exceed the income of 61 percent of the households in the Twin Cities.

It would be interesting to know if Atwater flew commercial when he went on vacation.

lee.schafer@startribune.com • 612-673-4302