Pay purview.

• Author: Tschida, Anne
• Position: Paychecks of North Carolina CEOs - Cover Story

Measured against their company's market performance, some CEOs don't earn their keep. Others show real value.

Add up the paychecks of Oakwood Homes' CEO, and you get - aside from dizzy - a good idea of what long-term incentive packages have done to change how, and how much top executives in North Carolina get paid.

Nick St. George pocketed $14.5 million in total compensation in 1996, making him hands down the highest paid among CEOs of Top 75 companies. Yet his base salary was only $450,000. The real money came from a million-dollar-plus bonus, a whopping $7.6 million long-term incentive payment and $4.7 million from stock options he exercised.

His total soared past that of First Union's Ed Crutch field, who boosted his pay to $8 million by netting $3 million from exercised options. In third place, United Dominion's Bill Holland's $6.5 million pay included a $4.5 million restricted-stock award.

With such eye-popping totals, it's easy to forget that these pay-for-performance packages evolved as a solution to exorbitant fees being paid to mediocre executives. Remember 1990, when heads of some of America's biggest companies collected fatter checks at the same time they dumped employees? The recession year when former Jefferson-Pilot CEO Roger Soles got a 243% boost in total pay? Pay for performance was supposed to correct the imbalance. Only if companies did well would executives cash in, through long-term incentives and stock options.

"Conservative stock-holder groups pushed for this," says Chip Thomas, principal in the Raleigh office of compensation consultant Sibson & Co. "And it was the right way to go. CEOs, knowing a good thing when they see it, didn't object. 'Yeah, load me up,' they said."

Load they did. Washington, N.C.-based Flanders Corp. piled 2 million stock options on Robert Amerson after he was promoted to CEO in January 1996. The air-filtration manufacturer, which went public last year, will let him buy half at $2.50 per share, the others at $7.50. Flanders' stock was trading at $7.88 in late May.

Thanks to exercised options that netted $5.2 million, Christopher Jesse, CEO of Raleigh-based software developer Tangram Enterprise Solutions, ranked fourth in pay with $5.4 million. That's ahead of NationsBank's Hugh McColl at $4.1 million. Jesse's base salary was only $185,000.

"When long-term incentives come due, they pay out big time," says Judy Fisher, editor of Fairfax, Va.-based Executive Compensation Reports. Of course, if the company doesn't perform, the awards are nearly worthless.

Oakwood Homes did perform. In 1996 the Greensboro-based maker of mobile homes saw net income jump by almost $22 million and its stock price rise 18%. And so St. George got paid handsomely. The company makes no apologies. "He got what he earned," Chief Financial Officer Mike Kilbourne says. "Our company has done very well. It's exceeded expectations."

Oakwood Homes stands out from other big North Carolina companies, he says, by putting so much emphasis on nonsalary...