Featured: Jeffrey Boyd, CEO, Priceline.com
Originally published: May 2, 2012
At the popular travel site Priceline.com, consumers can famously name their own price on trip packages -- egged on until recently by spokesman William Shatner, who played Captain Kirk on " Star Trek ."
Behind the scenes, Priceline.com ( PCLN ) CEO Jeffrey Boyd has been beaming up some huge paychecks by virtually naming his own price as he cashes out stock options.
Last year, Boyd collected an impressive $73.5 million in pay. But he created this windfall in a straightforward way. He's collecting on stock options he was granted when he took over a broken company. He's held them as long as he could. Now he's cashing in big after simply stunning stock gains on his watch.
For beaming up so much pay in a single year -- about five times the average for CEOs at Standard & Poor's 500 ( $INX ) companies -- I'm making Boyd my latest "One-Percenter of the Week," but with a refreshing twist.
Yes, some will question whether anyone should make that much in a single year. But unlike many of the richly paid CEOs I've featured here, you'd likely find few shareholders questioning Boyd's pay -- because he's made a bundle by making them a bundle.
From $2 to $760 a share
In November 2002, when Boyd took over as CEO, Priceline stock traded around $2. Since then, Priceline stock has advanced more than 25,000%. It was trading north of $500 last year, when Boyd realized $52.6 million by cashing out options. (It recently traded above $760 a share.)
About 80% of those options were set to expire, so he waited almost as long as he could, the company says. He also got $16.4 million last year as shares vested, a $4 million bonus and a fairly modest base salary of $550,000. All told: $73.5 million in realized pay.
That was 1,221 times what Priceline employees made on average, or $60,200, according to PayScale , which estimates employee pay. The typical ratio of CEO to employee pay is more like 380. So Boyd does exemplify the widening pay gap in our country that troubles many economists.
And yes, Boyd will reap big gains again this year. So far he's sold about $36 million worth of stock, according to Thomson Financial, and we're only a few months into the year.
Big option grants, we're told, are designed to link a CEO's pay to shareholder rewards. Often, though, the process is short-circuited by payoffs collected because company stock simply rises with the market, something that infuriates CEO pay critics.
Not so at Priceline.
If you had put just $1,000 into the stock in November 2002 at $2 a share, when Boyd took over, it would now be worth $381,000, based on a recent high of $762. That's a 38,000% gain.
As a result, while we're seeing shareholders more frequently vote against big pay packages, Priceline shareholders are cheering. Last year, more than 90% of shareholders supported Boyd's compensation. Little wonder. Besides the great stock gains, it was another solid year for the company. Gross bookings increased 58.7% to $21.6 billion. Revenue advanced 41% to $4.35 billion. And net income doubled to $20.63 a share.
Now, you can certainly argue that CEOs are overpaid as a breed, and that's part of the troubling trend in our country. But Boyd's shareholders clearly think he deserves to be one of the highest-paid CEOs around -- and, given his record, I have to agree.
