Charlotte.com: Business
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• INSIDE
  Don't look nowSmile! When you are not making calls, the screen on this cell phone changes into a mirror. TECHLIFE, 4DSaving surveyStudy sponsored by Wachovia looks at attitudes toward saving and finds peer pressure and impulse shopping are among the biggest factors keeping people from saving more. DOLLARS, 5DEditor's NoteTo make room for today's special report on executive pay, some of the regular MoneyWise features -- including the sales column and the Take the Lead business profile -- do not appear this week. All the regular features will be back next week.
• THE CAROLINAS
  THE CAROLINAS CEO compensation soars by more than 60 percent Christopher D. KirkpatrickCompensation for the Carolinas 50 -- CEOs of some of the states' largest public companies -- surged last year as several chiefs cashed in rich stock options worth tens of millions in extra pay.The CEOs received $346 million in total compensation -- a more than 60 percent increase from the prior year. Average CEO pay shot up to nearly $7 million, according to the Observer's analysis.Perks and special stock aside, the group's salary and bonus pay still increased by more than 15 percent over the prior year. That compares to 4.2 percent for Carolinas' workers.Tom Kelly, a compensation expert with human resources firm Watson Wyatt, said strong markets and earnings last year triggered higher bonuses because executives met their targets."Most companies had what they considered strong performances," he said.Each year, the Observer shines a light on CEO compensation in the Carolinas.The tally is a reckoning of salary, bonus, stock awards, perks and profits from exercising stock options -- all listed in filings with the U.S. Securities and Exchange Commission.Under new SEC guidelines, companies are disclosing much more information about executive pay, although that's made it more difficult to make comparisons to previous years.Despite the options windfall, the practice of padding CEO pay with options has been leveling off, the 2006 data show.An option is the right to buy a share of stock at a particular price; it becomes more valuable as the shares increase above that price. Options are increasingly complicated because of new accounting rules and have become controversial due to some highly publicized incidents of cheating, Kelly said.Scores of companies were ensnared in a backdating scandal in which firms cherry-picked low share prices from the past to enrich executives at shareholders' expense."Restricted stock doesn't have all of these issues associated with it ... all these games being played," said Jane Sellers, a Charlotte securities lawyer and partner with McGuireWoods. "There used to be an incentive to choose options, but now that's gone."The Carolinas 50 were awarded more than $95 million in restricted stock -- straight company shares often pegged to CEO performance goals -- up from $57 million in 2005 and $36 million in 2004. That's a two-year, 169 percent increase.Forty company boards chose to make restricted stock awards last year -- up from 25 the year before.Thomas MacMahon, the now-retired chief at Burlington-based Laboratory Corporation of America, received the highest value restricted stock at $12.4 million. Bank of America's Ken Lewis and Wachovia's Ken Thompson were close behind with $11.7 million and $9.1 million, respectively. Duke's Energy Corp.'s Jim Rogers, who is paid only in company stock, received restricted shares valued at $7.9 million.Reflects Carolinas growthThe Carolinas 50 firms represent a wide range of goods and services, from ham and eggs at Denny's restaurants to cardiac surgical services at MedCath Corp.'s speciality hospitals. The top 10 by revenue includes four banks, four utilities and a home improvement chain.Seventeen of the companies call Charlotte home. Only one CEO is a woman.The list reflects an increasing economic status for the Carolinas and for the Charlotte region, which continues to grow from a rush of new residents and solidify itself as the nation's No. 2 banking center.Some other findings in the Observer's examination of CEO pay for 2006:• Highest paid again was BofA's Lewis, whose compensation //increased nearly five-fold to $97 million. Most of the increase was from cashing in $77 million in company stock options accrued over years.The last time Lewis saw his pay fall was in 2005, when his total compensation fell 2 percent to $19.1 million after the stock showed tepid gains. The bank then gave him a slightly smaller bonus and stock grant.• Lowest paid again was Robert Ingle, CEO of Ingles Markets Inc., a 200-unit grocery store chain based in Asheville. His compensation was $101,543 -- a 1 percent increase due to some extra expenses.• Average CEO pay was skewed upward because of several massive stock option paydays for CEOs, including Martin Marietta Materials Inc.'s Stephen Zelnak, who netted $18.1 million cashing in options.• Nineteen of the 50 CEOs sold options for more than $134 million, enough profit to cover the average salary for about 3,500 Carolinas workers.• The estimated value of new stock options issued to the CEOs increased to $58.7 million from $53.25 million the year before -- a 10 percent increase. That includes $6.37 million worth of new options grants for Lowe's chief Robert Niblock, even though his base pay and bonus fell to $1.9 million from $3.4 million the year before.Lowe's ties more than half of CEO compensation -- specifically the bonus -- to company performance. Its income last year fell short of the target. Making it would have earned Niblock an extra $1.9 million.• Nineteen CEOs exercised stock options and collected more than $134 million, up from $58 million the year before. Lewis' $77 million gain was the major factor.• Sealy Corp.'s David Mcilquham made an extra $6.7 million when the company was taken public last year. Most of the money was considered a bonus for agreeing not to immediately sell his shares during the initial public offering.• Susan Ivey, CEO of Reynolds American Inc. and the only woman on the list, received a substantial $3.6 million in restricted stock as part of her package. She ranked 14 in highest pay.The Carolinas 50 tacked a higher percentage onto their pay last year than the nation's CEOs.Average pay increased 9.3 percent, according to a study from The Corporate Library, an independent group that researches executive and board of director compensation. And S&P 500 chiefs with at least two years on the job received an average raise of nearly 24 percent, said Paul Hodgson, a senior research analyst with the library.But with the real estate market stumbling and the mortgage crisis deepening, Kelly said he expects a ripple effect to push earnings down and hit executive bonuses and performance stock hard this year, he said. "There's usually a lag effect."More Carolinas 50 Inside 2D | Full breakdown of CEO pay packages. 3D | The mega-payouts some chiefs could walk away with. Ken LewisBank of America Corp.$96,961,106 Stephen ZelnakMartin Marietta Materials Inc.$23,529,583 Thomas MacMahonLaboratory Corp. of America$19,198,958 Ken ThompsonWachovia Corp.$16,353,320 Marshall LarsenGoodrich Corp.$13,944,161
• Would you pay to avoid bad seat?
  How important is avoiding the middle seat or having extra legroom? Enough to pay extra for your seat while booking a flight?A couple of airlines that serve Charlotte think it is, and more could follow that model based on early returns at carriers that charge fees for seat selection. Between rising fuel prices and a desire to avoid big fare increases, airlines are increasingly exploring other revenue sources.In the last two years, Northwest Airlines and AirTran Airways -- who have about 20 daily flights from Charlotte between them -- started charging customers a fee to reserve certain seats at the time of booking.Northwest's Coach Choice program sets aside about 5 percent of seats for passengers who are willing to pay a $5 to $30 fee per flight for an exit-row, window or aisle seat.The other 95 percent -- including roughly 65 percent of the exit-row seats -- can be reserved free of charge, and any Coach Choice seats still available on the day of departure can go to any passenger at the time of check-in.Northwest started charging the fees in March 2006, and spokesman Dean Breest said they simply are a way for travelers to obtain preferred seats.Like Northwest, AirTran operates from Concourse A at Charlotte/Douglas International Airport. Its $5 per flight seat-reservation fee -- $20 for an exit-row seat -- began May 31 and applies to all seats, spokesman David Hirschman said.