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The List: Highest-Paid Executives of Publicly Reporting Companies

Fri, Jun 5, 2009 (3 a.m.)

Name/Title Total compensation Salary Value realized on sale

of stocks/options
Cost to company
1

Gary Loveman

CEO, president-Harrah’s Entertainment
$92.3 million $2 million $89.1 million $39.6 million
2

J. Carlos Tolosa

president Eastern Division-Harrah’s Entertainment
$15.7 million $1.1 million $14 million $3.5 million
3

Charles Atwood

vice-chairman, former CFO-Harrah’s Entertainment
$13.1 million $1.3 million $11.8 million $3.7 million
4

Jim Murren

CEO, president-MGM Mirage
$9.9 million $1.5 million $7.9 million $3.1 million
5

Steve Wynn

CEO-Wynn Resorts
$8.5 million $3.3 million $0 $8.5 million
6

Richard Hadrill

CEO, president-Bally Technologies
$8.3 million $998,000 $7 million $3.8 million
7

Thomas Jenkin

president Western Division-Harrah’s Entertainment
$7.9 million $1.2 million $6.7 million $5.5 million
8

Jonathan Halkyard

SVP, CFO-Harrah’s Entertainment
$5.5 million $600,000 $4.8 million $3.6 million
9

Marc Schorr

COO-Wynn Resorts
$5.3 million $1.9 million $1 million $6.8 million
10

John Payne

president Central Division-Harrah’s Entertainment
$4.3 million $978,365 $3 million $4.2 million

Notes: The list posted here is an abbreviated version of the list published in the print edition of In Business Las Vegas. A more complete version is also available as part of the DataPlus subscription; call 800-254-2610 to subscribe. Source: The companies’ filings with the Securities and Exchange Commission and In Business Las Vegas research.

Executive Pay: A Primer

When the Securities and Exchange Commission changed reporting requirements for executive pay a couple of years ago, it made our task of reporting on these numbers simultaneously easier and more difficult. There are now two numbers to report for each executive: The actual take-home pay, before taxes, of the executive and the amount charged against the companies’ books.

The summary tables found in the companies’ annual filings only report the latter number directly, the objective being to show how much the company spent on executive compensation. The numbers reported here are the base salary, bonus payments, restricted stocks awarded, options awarded, non-equity incentive plan compensation, the change in value of pension plans and any nonqualified deferred compensation and all other compensation.

Few companies are now making standard bonus payments; instead, performance-based bonuses are reported under the incentive plan compensation column.

All other compensation includes a variety of items ranging from private use of company vehicles to life insurance contributions to stays in a company’s hotels for personal reasons, just to name a few. These payments vary widely depending on the executive’s employment agreement.

If we look at this year’s highest-paid executive on our list, Gary Loveman, CEO and president of Harrah’s Entertainment, we see a base salary of $2 million, no bonus, no awards of restricted stocks, $36.4 million in option awards, no incentive plan compensation, no change in deferred compensation and $1.2 million in other compensation. Other compensation in Loveman’s case included $442,186 for security services, $460,086 in aircraft usage, and $155,387 for lodging in company-owned properties. The total the company paid for Loveman’s services during the fiscal year ended Dec. 31, 2008 was $39.6 million.

But that amount is not what Loveman actually took home (before taxes) during the year. The stock and option awards do not represent actual money awarded to Loveman until the stocks vest or he chooses to exercise his options. At that point, the value realized from the sale of restricted stock or exercise of options becomes real money to Loveman. During the 2008 fiscal year, Loveman realized a gain of $89.1 million on the exercise of options. In this case, the value realized resulted from a change of options and stocks as part of Harrah’s going private.

In order to calculate accurate compensation as it relates to the executive, we always deduct any stock and option awards and add in value realized from exercises of options and vesting of restricted stocks. So the total compensation column on our list is arrived at as follows: Salary + bonus + non-equity incentive plan compensation + change in value of pension and nonqualified deferred compensation + all other compensation. For space reasons, we cannot break out all of these numbers; so we’ve chosen to report salary and a combined number for gains from options and stocks as well as the cost to the company.

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