A woman heads the list of top-paid local executives — finally

This article was originally published on May 28, 2006.

Carol A. Ammon, 55, a former lab technician who made millions of dollars from a pharmaceutical company she started nine years ago, earned the highest pay among Philadelphia’s top executives in 2005.

Ammon, chairwoman of Endo Pharmaceuticals Holdings Inc., is the first woman to top the list since The Inquirer started tracking local executive pay in 1994.

Not only that, but Ammon was among the most highly paid executives in the nation, judging from a list published by Forbes magazine.

Her total direct compensation of $171,674,814 last year put her in the same company as the chief executives of Yahoo Inc., Capital One Financial Corp., and Cendant Corp. — all among Forbes’ top five — and well ahead of some local millionaires, among them Comcast Corp.’s Brian L. Roberts, home builder Robert I. Toll, and Sunoco Inc.’s CEO, John G. Drosdick.

“I’m happy to see a woman at the top of the list, and I’m happy it is in Philadelphia,” said executive recruiter Sally Stetson, cochairwoman of a local group of businesswomen trying to get more women on corporate boards and in executive suites.

“It’s kind of surreal to me,” Ammon said in an interview Friday. “I feel like a kid in a candy store.”

The candy that Ammon is talking about comes in two flavors — time and money.

Last May, Ammon retired as chief executive officer of Endo with plans to spend her money and her time on philanthropy.

“I’ve been relatively successful,” she said. “I now have the rest of my life to give back.” She plans to focus on projects having to do with health, including hospitals, education, and helping children with physical or mental disabilities, funneling the money through a foundation she has started.

Ammon’s spot at the top is probably a onetime event and primarily reflects the value of options she exercised on 7.3 million shares of her Chadds Ford drug firm. Her actual cash compensation, $258,939, didn’t include a bonus.

Ammon said she had no plans to start another business. Some people, she said, are born entrepreneurs, but she is not one of them.

“Born entrepreneurs can’t stop,” she said, describing herself as a person fortunate enough to be in the right place at the right time to capitalize on an opportunity.

Total direct compensation for 722 local executives averaged $2.3 million, according to data compiled for The Inquirer by Equilar Inc., a San Mateo, Calif., compensation-research firm.

CEOs did even better, with average salaries of $601,455, bonuses of $819,729, and total direct compensation of $4.8 million, up from $3.6 million in 2004. The median total direct compensation for CEOs was $1.35 million.

The escalation in executive pay continues to attract criticism from labor and other groups who say it is far out of line with the pay of the average worker.

“The huge gap between the rich and the poor is fueled by these obscene compensation packages, and it’s harmful to our democracy in the long run,” said Fabricio Rodriguez, executive director of Jobs With Justice, a local alliance of labor unions, religious groups and community organizations.

“Capital is like manure,” he said. “If you pile it up too high in one place, it attracts flies and vermin. If you spread it out, it helps little plants grow.”

Equilar compiled compensation data for senior management at 143 Philadelphia-area companies from proxy statements filed with the Securities and Exchange Commission as of May 11.

Endo executives hold the top three positions on The Inquirer list. David A.H. Lee, executive vice president and chief scientific officer, received direct compensation of $69.2 million, and Jeffrey R. Black, chief financial officer and treasurer, received $60.7 million. Both got most of their total compensation from exercising options granted in previous years.

Ammon, who remains chairwoman, but retired as CEO last May, has been divesting her Endo Pharmaceuticals holdings, selling off more than $172 million worth of shares in the last year. She owned 703,614 shares as of April 16, according to Endo’s proxy statement. Based on Friday’s closing price of $29.58, those shares are worth $20.8 million. Black, who plans to retire in August, has also been selling shares.

Not only was 2005 a good year for Ammon, but it was also good for Endo. Revenue rose by a third to $820.2 million, with earnings at $202.3 million, or $1.52 a share, up 41 percent from 2004. Shares rose 44 percent in 2005.

Here are some other notable findings from the Equilar report:

Toll Bros. Inc. chairman and CEO Robert I. Toll was one of the 10 highest-paid executives in the region at $40.9 million, ranking just below the home-building firm’s chief financial officer and president, Zvi Barzilay, at $43.8 million.

Barzilay was among the executives seeing the biggest increase from 2004 — up $38.3 million — while Toll’s compensation fell $9.3 million. Last year, Toll topped the 2004 pay chart. This year, he is No. 6.

In 2004, Raymond V. Gilmartin, Merck & Co. Inc.’s former chairman, president and CEO, pulled in $37.8 million, making him No. 2, behind Toll. This year, he leads the list of executives who experienced the biggest decline in compensation in 2005. Gilmartin, who was succeeded May 4, 2005, by Richard T. Clark as CEO and president, received total compensation of $5.4 million.

In 2005, Endo had three executives in the top 10. In 2004, three Comcast executives — Brian L. Roberts, Ralph J. Roberts and Stephen B. Burke — were among the mostly highly paid.

This year, the Comcast trio are among the 10 whose compensation tumbled the most. Chairman and CEO Brian Roberts earned $15.7 million in 2005, down from $33.6 million.

Peter Boneparth, president and chief executive officer of Jones Apparel Group Inc. in Bristol, earned the highest salary, $2.5 million, in 2005.

Other top salary earners? Brian Roberts was second at $2.4 million. Toll earned $1.3 million; Merck’s Gilmartin pulled in $1.6 million. Commerce Bancorp Inc. president Vernon W. Hill 2d had $1.37 million in pay.

The biggest cash bonus — $27.3 million — went to Toll. It would have been more, but he turned some of the money down. Four Wachovia Corp. executives had bonuses of $3 million or greater.

Of the top 10 highest-paid executives, two of them — Toll and Ammon — were founders of their businesses. And that may explain why Ammon landed the top spot on the list this year.

“She started it. That helps,” said Vicki Kramer, a Philadelphia management consultant who is chairwoman of a national network of groups for executive women in seven regions, including Philadelphia’s Forum of Executive Women.

In 1973, Ammon was a lab technician at DuPont Co.’s pharmaceutical division in Garden City, N.Y.

“I realized my life’s quest was not going to be making the next lifesaving discovery,” she said in a 2005 interview. Instead, she rose through the ranks to become president of the U.S. Pharmaceuticals division of DuPont Merck in 1996.

She and Mariann MacDonald, both executives, were given the task of determining whether DuPont should keep several old pain medications. Their advice to DuPont? Invest or divest.

Ammon said that because her first scientific work was in pain management, she had always had a passion for it. Pain medicine, she said, can make a difference in someone’s life — “get an elderly person up and out of bed.”

So, in 1997, when DuPont decided to divest, Ammon, MacDonald and another colleague raised $277 million to buy the drug portfolio and the Endo name.

“How often does a woman get to be a CEO of a publicly traded company?” Kramer asked. “That is why so many women have left the corporate world. That is why women are starting businesses at a much greater pace than men.”

Ammon would not have gotten to the top, Kramer said, “if she had stayed at DuPont.” The man who did get to the top at DuPont — Charles O. Holliday Jr. — received total direct compensation last year of $2.98 million.

Data for this 13th executive-compensation report were compiled by Equilar Inc., of San Mateo, Calif., and further researched by Inquirer staff member Tricia Cerone from proxy statements and other documents filed with the Securities and Exchange Commission.