PYPL PayPal Holdings Inc

By Charlie McGee 

PayPal Holdings Inc.'s Daniel Schulman collected a pay package totaling $37.8 million in 2018, making him one of the highest-paid bosses in the S&P 500. But for Mr. Schulman and many of his fellow CEOs in the software industry, big paydays were backed by healthy returns.

Most companies selling software and related services thrived last year, with half delivering a total shareholder return of at least 10.3%, a Wall Street Journal analysis shows. That success translated to their CEOs, who received a median raise of 11.7%.

By contrast, median shareholder return for S&P 500 companies as a group was minus 5.8%, the first negative showing of any postrecession year. Despite those losses, most CEOs got a raise and the median pay reached $12.4 million last year.

PayPal outdid many other companies in the software and services industry with a 14.2% total return. Mr. Schulman's compensation nearly doubled from 2017, making him the industry's top-paid CEO. Similar to the industry's other top-paid chief executives, the bulk of Mr. Schulman's pay raise came in the form of equity awards, according to PayPal's proxy statement.

In its proxy, PayPal said a portion of Mr. Schulman's equity award will be earned only if stock-price targets are achieved over a five-year period. In comparison, PayPal's median employee received $69,600.

Other software chiefs also saw big increases to their compensation last year. Marc Benioff and Keith Block, co-CEOs of cloud-based services company Salesforce.com Inc., were both paid more than five times what they received in 2017.

Mr. Benioff -- who was Salesforce's sole chief executive until the company named Mr. Block co-CEO in August 2018 -- received a total of $28.4 million for the year, the third most among chief executives in the industry and closely behind Shantanu Narayen of Adobe Inc., whose company posted a total shareholder return of 38.3% for the year ended in November.

Mr. Block made $17 million total as co-CEO. That included a car, which Salesforce valued at nearly $212,000, along with a watch it priced at more than $86,000. The company also reimbursed Mr. Block for his tax bill on the items, adding nearly $218,000 to his pay, according to its proxy.

Salesforce's compensation committee concluded that the gifts were warranted to recognize Mr. Block's leadership, the company said in its proxy. Compensating the co-CEO "in a memorable and visible way would be motivational not only for the executive, but for other employees who observe exceptional performance being rewarded in exceptional ways consistent with the company's philosophy of paying for performance," the company said in the proxy.

The median employee at Salesforce earned just under $152,000 for the year. The company's total shareholder return for the year was 33.4%.

A Salesforce spokeswoman said in an email that the co-CEOs received a disproportionately high amount of equity awards in 2018 because of a shift in the timing of when such awards are given. They received none the previous year as a result of that shift.

For most software-and-services CEOs, pay generally rose or fell in the same direction as their companies' total shareholder return at differing magnitudes.

International Business Machines Corp. paid Virginia "Ginni" M. Rometty -- the only woman among the 27 software-company chiefs -- $17.6 million, a slight dip from 2017 because of a decline in her bonus. Total shareholder return for IBM was minus 22.6%, the second-worst in the industry. IBM declined to comment.

The Journal analysis used S&P's industry group for software and services companies, which doesn't include such high-profile internet-service companies as Twitter Inc. or Facebook Inc., or videogame-makers such as Activision Blizzard Inc. All three of those companies are in the media and entertainment industry group.

Some CEOs got pay cuts despite strong performance. Total pay for Visa Inc.'s Alfred F. Kelly Jr. declined 10.3%, to $19.5 million, even as the company posted a shareholder return of 43.5%, near the industry's pinnacle.

Meanwhile, Francisco D'Souza of Cognizant Technology Solutions Corp. received $14.1 million last year, a 13% pay raise, while his company posted a minus 9.7% total shareholder return. Mr. D'Souza left his role as Cognizant CEO at the end of March 2019, though he remains on the company's board.

Cognizant declined to comment beyond its proxy filing, and Visa didn't respond to a request for comment.

The Journal analyzed CEO compensation and company performance data reported by S&P 500 companies through May 1, using pay data provided by MyLogIQ LLC and performance measures from ISS Analytics, a unit of proxy adviser Institutional Shareholder Services.

The Journal's analysis excludes CEOs who changed jobs or served less than a full year, and companies with fiscal years that ended before July 1, 2018. See the full list here:

Theo Francis contributed to this article.

(END) Dow Jones Newswires

June 17, 2019 09:14 ET (13:14 GMT)

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