SBUX Starbucks Corporation

By Theo Francis and Joann S. Lublin 

Activist investors and politicians alike have taken aim at CEOs for getting big raises with lousy performance. But when a big-name chief executive's pay falls despite strong returns, it typically draws less attention.

Total pay for Howard Schultz, the longtime chief of Starbucks Corp., dropped 6.4% to $20.1 million in fiscal 2015. The company's shareholder return for the year, at 52.3%, far outstripped the -12.9% median return for consumer-services companies.

The decline in pay partly reflects the company's shift to compensating Mr. Schultz with restricted stock units tied to corporate performance, and away from stock options. His total equity award for the year fell by about $2.2 million to $14.4 million.

Most of Mr. Schultz's pay comes from long-term incentive compensation, a Starbucks spokeswoman said.

Mr. Schultz still benefited from his significant Starbucks holdings. Last year, he received $90.3 million from exercising options, and had restricted stock units vest that were valued at $33.6 million. Mr. Schultz and other top executives also earned bonus awards above their targets because of the company's strong performance.

At athletic apparel company Under Armour Inc., founder and CEO Kevin Plank made $2.4 million, down from $3.6 million in 2014. He received $2 million in options, instead of the previous year's $1.6 million in restricted shares, and cash incentive payments of $400,000, instead of $1.9 million.

Under Armour's shareholder return reached 18.7% in 2015, exceeding the median of 7.8% for consumer durables and apparel makers as a group. Mr. Plank owns about 16% of the company and controls it through a special class of voting shares. He takes a nominal salary of $26,000.

If recent history is any gauge, however, Mr. Plank's 2015 pay cut might not prove so steep. Equity awards are valued as of the date they are granted, but the sort Mr. Plank received can rise or fall in value before the shares vest or the executive chooses to exercise options.

In each of the past two years, Mr. Plank reached his "stretch" performance goals, which more than doubled his awards. If he meets his 2015 stretch goals, his option award would be valued at $5 million, rather than $2 million, according to Under Armour's proxy.

An Under Armour spokeswoman called Mr. Plank's performance goals very challenging.

At General Electric Co., Chairman and CEO Jeff Immelt's 2015 pay dropped by about 11% as the company posted a shareholder return for the year of 26.9%, well above the -3.2% median for capital-goods makers.

"We're obviously very proud of the performance this year," said a GE spokesman. "With one of the best total stock returns in GE's history, the largest-ever corporate restructuring, and earnings per share up 19%, the board believes Jeff performed extremely well in 2015," he said.

The entire decline in Mr. Immelt's pay stems from changes in the growth of his pension. In 2014, the company reported his pension as rising by more than $18 million. By contrast, last year, it increased substantially less -- by just over $6 million.

Much of the difference reflects changes in the assumptions used to calculate pension values, including life expectancy. Mr. Immelt's pension as a whole was valued at $78.3 million at the end of 2015.

Excluding the pension and deferred-compensation gains in both years, Mr. Immelt's pay rose about 43% to $26.6 million from $18.7 million in 2014.

Write to Theo Francis at theo.francis@wsj.com and Joann S. Lublin at joann.lublin@wsj.com

(END) Dow Jones Newswires

June 02, 2016 10:48 ET (14:48 GMT)

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