![Graco CEO Patrick McHale on the process pump assembly floor of the northeast Minneapolis manufacturer of industrial spray painters and other fluid-handling equipment Thursday, Feb. 9, 2012, in Minneapolis, MN.] DAVID JOLES*djoles@startribune.com - Graco CEO Patrick McHale started out 22 years ago as a machinist supervisor and now heads the northeast Minneapolis company. Graco manufactures mostly in the U.S. and exports more than 50 percent of its products overseas, reversing the trend of the las](https://arc.stimg.co/startribunemedia/DF6AOVCS6EYR6FBNFLPDLJZ5IY.jpg?&w=1080)
Total compensation: $2,837,860 for the year ended Dec. 31
Salary: $677,475
Bonus: $78,170
Non-equity incentive pay: $938,042
Other compensation: $15,975
Exercised stock options: $1,128,198
New stock options: 130,000
Total return to shareholders: 28.2 percent
Note: McHale's total realized compensation of $2.8 million was a 48 percent increase over his 2011 compensation, mostly due to previously granted options he exercised during the year.
According to the company's proxy statement, McHale's annual salary was determined by the company's compensation consultant to be below the 50th percentile of the company's peer group. The company's compensation committee then awarded McHale a 3 percent increase in his base salary to $677,475 for 2012.
McHale's bonus for the year, which is based on sales and adjusted earnings per share, was 138 percent of his targeted award for the year, but was down 5 percent from 2011.
The biggest increase to McHale's compensation was from the exercise of 35,156 options during the year worth $1.1 million. He exercised $260,000 worth of options in 2011.
The company also awarded McHale and other executives discretionary bonuses tied to the company's $650 million acquisition of the finishing unit of Illinois Tool Works, its largest ever.
As part of the ITW acquisition, Graco had to keep ITW's Liquid Finishing Business separate as the Federal Trade Commission weighed whether all or parts of that business have to be divested for competitive reasons.
McHale's discretionary bonus of $78,170 and bonuses to other executives were in part to "recognize their efforts in connection with the ITW Transaction and in maintaining the Liquid Finishing Business as a viable and competitive business."
Patrick Kennedy
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