Tuesday, October 15, 2019

Beachwood, Ohio-Based Real Estate Investment Trust SITE Centers Corp (formerly DDR Corp) Top-Tier Executives Average Annual Pay and Employee Benefits Increase Was a Blistering 21.6% Per Year During the Past Ten Years

The third Democratic 2020 Presidential candidate debate was held in Houston, Texas on September 12, 2019.  The stickout strong performers in this debate were Amy Klobuchar, Pete Buttigieg, Beto O'Rourke and Cory Booker.  The only one of the Top Four candidates in the polls performing pretty well in this debate was Elizabeth Warren, with the other Top Three in the polls slipping in performance in this debate, especially two of them Kamala Harris and Bernie Sanders.

The most insightful recent move by the Democratic Presidential candidates is Pete Buttigieg's Bus, which is being driven now all over Iowa.  With this acquisition, Pete is showing his confidence in very effectively dealing with the media on a constant basis.  This move should eventually propel him into 3rd place in Iowa behind Elizabeth Warren and Joe Biden and give Pete a decent shot of eventually reaching the coveted 15% of Iowa's caucus vote.

The fourth Democratic 2020 Presidential candidate debate will be held on October 15, 2020 at Otterbein University in Westerville, Ohio, a Columbus suburb.  It's good to see that the New York Times will be one of the hosts.  The quality and relevance of the questions should improve substantially from what they were in the first three debates where the key economic issues played such a minor role.

The key issue to Ohio citizens should be the huge and continuing Income Inequality Expansion which is at the core of many critical problems the US faces.

While increasing the US federal minimum wage will help here, there is a much broader and critical problem that needs to be solved.  The annual percentage increase in the pay and employee benefits of Company non-executive employees are minuscule in relation to that of Company executive employees and this has been going on for decades.  When Corporate CEOs and CFOs primarily view non-executive employees as Costs rather than as People, this is what happens. And neither political party has had the courage to take on US Corporations here.

Thus I will be doing research and making posts on the average annual pay and employee benefits increase per year that the Top-Tier Executives of large Ohio Companies were rewarded with in the past ten years.

The 75th and last Ohio Company I am addressing here is SITE Centers Corp, a REIT.

From annual compensation information contained in Company Proxy Statement filings with the US SEC, the chart at the bottom below shows SITE Centers Corp's Top-Tier Executives Annual Total Compensation for each of two consecutive full years of employment for the past ten years.
   
SITE Centers Corp's Top-Tier Executives  Annual Pay and Employee Benefits Increase was a blistering 21.6% per year, which is the 25th highest of the 75 large Ohio-related Companies I have addressed.
  1. TransDigm Group +243.1% per year for the past ten years
  2. AdvancePierre Foods Holdings +170.8% for one year
  3. Milacron Holdings +111.0% per year for the past four years
  4. Worldpay +49.0% per year for the past seven years
  5. Victory Capital Holdings +41.5% per year for two years
  6. Installed Building Products +34.9% per year for past six years
  7. General Motors +29.5% per year for the past ten years
  8. AtriCure +29.1% per year for the past ten years
  9. Diebold Nixdorf +27.2% per year for the past ten years
  10. AK Steel +26.8% per year for the past ten years
  11. Ferro Corp +26.5% per year for the past ten years
  12. Advanced Draining Systems +25.7% per year for the past five years
  13. Signet Jewelers +24.4% per year for the past ten years
  14. Wendy's +24.2% per year for the past ten years
  15. Welltower +24.0% per year for the past ten years
  16. State Auto Financial +23.5% per year for the past ten years
  17. Greif Inc +23.5% per year for the past ten years
  18. Cardinal Health +23.3% per year for the past ten years
  19. Timken Company +23.3% per year for the past ten years
  20. Worthington Industries +23.0% per year for the past ten years
  21. Cedar Fair L.P. +22.5% per year for the past ten years
  22. Cooper Tire & Rubber +22.4% per year for the past ten years
  23. MPLX LP +22.4% per year for the past five years
  24. RPM International +21.8% per year for the past ten years
  25. SITE Centers Corp +21.6% per year for the past ten years
  26. Scotts Miracle-Gro +21.5% per year for the past ten years
  27. Cintas Corp +20.7% per year for the past ten years
  28. Andeavor Logistics LP +20.6% per year for the past seven years
  29. Teradata +20.2% per year for nine years
  30. Cleveland-Cliffs +19.4% per year for the past ten years
  31. Multi-Color Corp +19.3% per year for nine years
  32. Marathon Petroleum Corp +18.7% per year for the past ten years
  33. Designer Brands +18.6% per year for the past ten years
  34. Huntington Bancshares +18.4% per year for the past ten years
  35. Fifth Third Bancorp +18.0% per year for the past ten years
  36. A. Schulman Inc +16.7 per year for nine years
  37. Convergys Corp +16.6% per year for nine years
  38. STERIS plc +15.7% per year for the past ten years
  39. Nordson Corp +15.3% per year for the past ten years
  40. GrafTech International +14.9% per year for the past ten years
  41. Materion Corp +14.7% per year for the past ten years
  42. American Electric Power +14.5% per year for the past ten years
  43. Forest City Realty Trust +13.2% per year for seven years
  44. M/I Homes Inc +12.9% per year for the past ten years
  45. First Financial Bancorp +12.7% per year for the past ten years
  46. Eaton Corp plc +12.7% per year for the past ten years
  47. Cincinnati Financial +12.3% per year for the past ten years
  48. Chart Industries +12.2% per year for eight years
  49. Progressive Corp +12.1% per year for the past ten years
  50. Sherwin-Williams +12.0% per year for the past ten years
  51. Parker-Hannifin +12.0% per year for the past ten years
  52. Owens-Illinois +11.7% per year for the past ten years
  53. The Kroger Company +11.2% per year for the past ten years
  54. Park National Corp +10.9% per year for the past ten years
  55. Air Transport Services Group +10.8% per year for the past ten years
  56. Abercrombie & Fitch +10.3% per year for the past ten years
  57. FirstEnergy +10.2% per year for the past ten years
  58. TFS Financial Corp +10.2% per year for nine years
  59. KeyCorp +9.8% per year for the past ten years
  60. Chemed Corp +9.7% per year for the past ten years
  61. E,W. Scripps +9.1 per year for the past ten years
  62. PolyOne Corp +9.1% per year for the past ten years
  63. J. M. Smucker +8.8% per year for the past ten years
  64. CBIZ Inc +8.7% per year for the past ten years
  65. Big Lots +8.4% per year for the past ten years
  66. Dana Inc +8.4% per year for the past ten years
  67. Lancaster Colony +8.0% per year for the pat ten years
  68. Lincoln Electric Holdings +7.6% per year for the past ten years
  69. American Financial Group +7.6% per year for the next ten years
  70. Procter & Gamble +7.4% per year for the past ten years
  71. Macy's +6.6% per year for the past ten years
  72. Owens Corning +6.3% per year for the past ten years
  73. Goodyear Tire & Rubber +5.4% per year for the past ten years
  74. Mettler-Toledo +2.1% per year for the past ten years
  75. L Brands +2.0% per year for the past ten years

There have been many US Government laws enacted in the past two decades that have substantially increased income inequality expansion including the year after year after year of annual furtive tax extenders of predominately special interests additional tax loopholes, which both the Democratic and Republican Establishments voted for, but none more income inequality expanding than the Trump Tax Cuts Act.

On the other hand, the only highly effective US Government law enacted by either party in the past two decades that has substantially reduced income inequality expansion is Obamacare.

My objective is to get a better handle on just why the US and particularly here Ohio has such massive continuing Income Inequality Expansion ..... it appears to be predominantly about the relative long-term annual pay and employee benefits percentage increases for the executives of a Company vs the many non-executive employees of a Company, coupled with the stock price appreciation subsequent to the time the company executives were rewarded in their pay with stock equity compensation.

To fix Income Inequality driven mainly by Company and its Board of Director choices on Percentage Annual Pay and Employee Benefits Raises, the US Government should step in and pass wisely-designed, simple but effective Fair Pay Raise Income Inequality Narrowing Company tax incentives for Companies which reward non-executive employees with fair pay increases ..... the carrot ..... and Company tax disincentives for Companies which reward executive employees with clearly excessively high pay and employee benefits increases ..... the stick.  I am certain ..... it is simple math ..... that this tax proposal would be very effective in substantially reducing the huge income inequality expansion that has occurred for decades in annual percentage pay raises between company executives and the rest of the company employees.

The only Democratic Presidential Candidate to have the vision, courage and fairness to now propose a Company luxury tax on excess CEO pay is Bernie Sanders, who seems to always be ahead of the curve on key progressive issues like fair pay.  

But Bernie missed one key point here which is that US non-executive employees are substantially much more concerned about their own pay than they are about their CEO's pay. 

It is very effective if you were to reward Companies with a tax credit if they give in the aggregate clearly fair pay and employee benefit increases to non-executive employees in a given year.  And if instead they give in the aggregate clearly unfair pay and employee benefit increases to non-executive employees in a given year, these Companies should be assessed a tax penalty for being too cheap in paying their employees.  This carrot and stick approach would work really well.

Also it would be wise to assess the Company a luxury tax penalty for granting in the aggregate to all of its Higher-Paid Executives clearly excessive pay and employee benefit increases in a given year.

The fairest and most effective way to set up this combination Company luxury tax and Company tax credit proposal is to do it comprehensively.

First, in each year, sort the employees by declining current year compensation.  Then set up five quintiles of equal total dollars of US employees compensation.  The employees to include should just be ones who have full year compensation in both the current year and in the prior year.

The Company luxury tax would be computed by applying a tax rate to the current year increase in total employee compensation in the applicable quintiles.  For instance, the current year Company luxury tax could be set at say 30% for the highest quintile and at 5% for the second highest quintile.

And the Company tax credit would be computed in the same way.  For instance, the current year Company tax credit could be set at say 20% for the lowest quintile, at 10% for the second lowest quintile and at 5% for the middle quintile. 

The above Fair Pay Raise Tax proposal could also be applied to US Non-Profit Organizations like Hospitals and other Health Care Organizations, which are known for their huge and continuing income inequality expansion due to their discriminating policies on annual pay and employee benefit increases to their non-executive employees.  

And the continuing annual net tax revenues raised by the US Government here should be set up in a separate fund to be used only for wise additional income inequality narrowing initiatives.  This fund should be run by an outside group made up entirely of minorities harmed the most by Income Inequality Expansion of the past decades  .....all women, all blacks, all Latinos, all other non-white people, all past and present union members, all LGBTQ, all non-employee contract workers and all middle and lower income people of all ages, including those retired.

Also, the US Government should require all US Corporate Boards to include at least one worker representative and to exclude any Company Executive.

Further, the US Government should ban Golden Parachutes.

FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE
Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec
SITE Centers Corp 2018 2017 2017 2016 2016 2015 2015 2014 2014 2013
Top-Tier Total Total Total Total Total Total Total Total Total Total
Executive Comp Comp Comp Comp Comp Comp Comp Comp Comp Comp
$ 000s $ 000s $ 000s $ 000s $ 000s $ 000s $ 000s $ 000s $ 000s $ 000s
Lukes CEO  N/A   N/A 
Makinen COO  N/A   N/A 
Ostrower CFO  N/A   N/A 
Vesy Chief Accounting Officer           1,082               759               759           1,103           1,103               595               595               665               665               895
August Former CEO  N/A   N/A 
Freddo Former SEVP Leasing&Developmt           1,538           1,325           1,325           1,477           1,477           2,142
Oakes Former CEO  N/A   N/A            2,695           2,293           2,293           3,503
Petherbridge Former CFO  N/A   N/A         
Hurwitz Former CEO           7,360           3,512
 Totals        1,082          759          759       1,103       2,641       1,920       4,615       4,435     11,795     10,052
Annual % Change vs Prior Year 42.6% -31.2% 37.6% 4.1% 17.3%
5 Year Average Per Year % Change 14.1%
FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE
Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec
SITE Centers Corp 2013 2012 2012 2011 2011 2010 2010 2009 2009 2008
Top-Tier Total Total Total Total Total Total Total Total Total Total
Executive Comp Comp Comp Comp Comp Comp Comp Comp Comp Comp
$ 000s $ 000s $ 000s $ 000s $ 000s $ 000s $ 000s $ 000s $ 000s $ 000s
Vesy Chief Accounting Officer               895               481               481               393    
Freddo Former SEVP Leasing&Developmt           2,142           1,457           1,457           1,295           1,295           1,039           1,039           1,683    
Oakes Former CEO           3,503           2,112           2,112           2,014           2,014           2,339           2,339           2,428           2,428           1,386
Hurwitz Former CEO           3,512           3,491           3,491           2,604           2,604           4,023           4,023           8,214           8,214           2,619
Kokinchak Former SEVP Chief Admin Officer           1,064               995               995               736    
Wolstein Former Executive Chairman  N/A   N/A            4,176        11,916        11,916           4,536
Bruce Former EVP  N/A   N/A 
Schafer Former CFO       1,936          936          936          653
 Totals      10,052       7,541       8,605       7,301       6,908       8,137     13,513     25,177     23,494       9,194
Annual % Change vs Prior Year 33.3% 17.9% -15.1% -46.3% 155.5%
5 Year Average Per Year % Change 29.1%
10 Year Average Per Year % Change 21.6%



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