Books a Million CEO Breaks One Million in Pay

Books-A-Million CEO Sandra B. Cochran - the only woman CEO of a public company in the Birmingham area - got a 28 percent pay raise this year, which pushed her compensation package for the first time over the $1 million-a-year mark.

It's a big change from the 2 percent increase the year before.

According to Books-A-Million's annual proxy statement filed with the U.S. Securities Exchange Commission, the board gave Cochran a salary of $430,000, stocks and options worth $344,000 and incentive pay of $385,000, which totaled $1.2 million. She made $932,000 the previous year.

CEO pay at many U.S. public companies has been under intense scrutiny lately, but industry specialists contacted didn't flinch at Cochran's package.

That's because she led the company, which is the third-largest book retailer in the country with 200 stores in 19 states, to a 44 percent increase in profits in 2006 and managed to make money while her much-larger competitors Borders and Barnes & Noble struggled, said Rudy Martin, director of research for TheStreet.com Ratings, a firm based in Jupiter, Fla.

Stockholders also received a 35 percent return last year, Martin noted.

"You always want to come in as a skeptic and say they don't deserve it, but in this case, she deserves it," Martin said. "If she created this kind of magic last year, she's going to be someone to watch for next year."

Here is the rundown on pay for other Books-A-Million key executives:

Executive Chairman Clyde B. Anderson made $835,000 in salary, stocks, options and incentives.
President of Merchandising Terrance G. Finley made $746,000.
Former Chief Financial Officer Richard S. Wallington made $394,000.
Current CFO Douglas G. Markham made $166,000 since starting in July.

CEOs with not-so-stellar records have prompted criticism in recent months as they took home big sums while their company took a loss. One of the most publicized cases was the $210 million severance package for ousted Home Depot CEO Robert Nardelli, who left as the retailer's stock slumped. In another case, former Pfizer CEO Hank McKinnell received a $180 million package even after being forced into early retirement.

An industry report showed a less "eye popping" picture of CEO compensation that ranked no where near Home Depot and Pfizer proportions. Mercer Human Resource Consulting, in a study released earlier this month, said CEOs of publicly traded companies make an average of $8.9 million and found that 21 percent receive long-term pay, such as stock shares, based on performance. In other words, if they improve the health of the company, they make more money.

For now, stockholders don't have a direct say in CEO pay, but they soon could. The U.S. House of Representatives passed a bill April 20 that would require shareholders approve the executive's compensation package before it's given. It now goes to the Senate for adoption.

Before this year, stockholders weren't sure what their CEOs made unless the finance officers were specific in annual proxies. However, many times the wording was confusing and didn't include exact totals, said Paul Dorf, managing director of Compensation Resources Inc., based in New Jersey.

Now, after the Sarbanes-Oxley Act, every public company has to list compensation packages - and offer a total.

The rule has spurred renewed interest in compensation and could force companies to be more conservative with salaries and bonuses, Dorf said.

But, he said it will more than likely prompt CEOs to use competitors' salary reports that are now readily available as leverage to get more.

"With the more information shown now, CEOs could leave to go to other companies that are paying more," Dorf said.

Some boards have proposed making a standard rule for salary, such as not allowing the CEO to make more than the President of the United States, who now makes $400,000. Another option is limiting salary to 25 times the lowest-paid employee.

Those ideas are grand, Dorf said, but are not likely to happen.