Daniel Florness Fastenal Co., president and CEO
Total compensation: $1,637,231 for the year ended Dec. 31, 2017
Nonequity incentive pay: $1,041,901
Other compensation: $2,830
New stock options: 47,872
Total 2017 shareholder return: 19.7 percent
CEO Pay Ratio: 58:1
Median compensation: $34,967
Florness took home $1.6 million in 2017, down from $4.98 million a year before. In 2017, he didn't exercise any of his previously awarded stock options. In 2016, he exercised $4.4 million worth of options.
Florness and other executives at the Winona-based company did earn much larger cash-based incentive bonuses for performance. Florness earned about $1 million more in 2017 than in 2016. Cash incentive bonuses at Fastenal are paid quarterly and based on pretax earnings.
Fastenal is among the first Minnesota companies to report their proxy in 2018 and thus among the first to report the CEO pay ratio and median employee compensation under new reporting rules in place.
The CEO pay ratio rule was stipulated in the 2010 Dodd Frank Act, finalized by the SEC in 2015 and is being implemented for the first time this year.
The CEO pay ratio at Fastenal is 58:1 and median employee compensation $34,967.
The total compensation used for the CEO pay-ratio calculation comes from the summary compensation table of the proxy, which counts the value of long-term equity awards on the day they were granted. According to the summary compensation table in the Fastenal proxy, Florness's compensation for 2017 was $2,039,356, which includes 47,872 new stock options valued at $402,125.
The Star Tribune has long used the value of long-term equity awards in the year they are realized.
In calculating the CEO pay ratio, companies are allowed to use some assumptions, adjustments and estimates, primarily to determine the compensation of the median employee. Companies are allowed to exclude some foreign workers from that calculation.
From Fastenal's disclosure on the median employee compensation, the proxy reveals that Fastenal had 17,773 employees in the U.S. and 2,957 employees located in 26 other countries. It had fewer than 100 employees in 23 of the 26 other countries. To determine median employee pay, Fastenal excluded 646 employees in those 23 countries, or 3.1 percent of its total.