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Originally published June 22, 2013 at 12:10 AM | Page modified June 22, 2013 at 8:38 PM

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In the C suites, pay can be sweet

At Amazon and Microsoft, it’s the other execs that get big paydays while CEOs rest on their equity stakes.

Seattle Times business reporter

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The CEOs of Amazon.com and Microsoft, two of the Pacific Northwest’s largest companies, are known for taking paltry paychecks.

But add up the total pay of the top five executives at each company and a different picture emerges: Amazon and Microsoft rank among the top five Pacific Northwest companies for executive pay.

Beaverton, Ore., -based Nike paid the most in total compensation to its top five executives — about $60 million in 2012. About 60 percent of it went to CEO Mark Parker, the Pacific Northwest’s highest-paid CEO.

Amazon ranked second in total compensation to its top five — $51.3 million, though only about 3 percent of that went to founder and CEO Jeff Bezos.

On average, CEO total pay was about 40 percent of the total pay of the top executive officers at 73 Pacific Northwest public companies with at least $100 million in annual revenue, based on a Seattle Times analysis of data from Bloomberg.

Starbucks ranked third and Microsoft fourth in total pay to their top executive officers. CEO Howard Schultz’s total pay accounted for almost two-thirds of total pay to Starbucks’ officers. By contrast, Microsoft CEO Steve Ballmer’s share was about 4 percent.

Bezos, at just 3 percent of the total pay to the company’s five top executives, took the smallest slice of any Pacific Northwest CEO in the study. Amazon’s highest-paid executive was Jeffrey Wilkes, senior vice president of consumer business, whose total pay was $17.7 million in 2012.

Such disparities may not be unusual when the CEO has a lot of equity.

On the other end of the spectrum are companies where the CEO’s total pay dwarfs the rest of the executive suite. Among the 73 companies The Seattle Times analyzed, Zillow’s CEO had the highest share, followed by Starbucks’ CEO.

Zillow CEO Spencer Rascoff’s total pay in 2012 was nearly $7.1 million, almost four times as much as the other four top executives combined.

Almost all of Rascoff’s pay was an options grant in December exercisable at $28.78 a share; Zillow’s stock price has stayed above $50 since this past March, which means those options are now worth more than $25 million.

That doesn’t mean Rascoff can cash them in yet.

At many big companies, equity awards constitute the bulk of executive pay — but executives can’t exercise those options or sell their restricted stock right away.

Companies structure these awards so executives must stay long enough to see their equity awards vest, typically in equal fractions over three to five years.

And some companies are devising vesting formulas that are downright convoluted.

Rascoff’s options grant vests at about 1 percent a month, with an additional 12.5 percent after the first year and another 12.5 percent after two years, according to Zillow’s proxy filing.

Monthly vesting is rare for any employee, especially a CEO, said Fred Whittlesey, an executive-compensation consultant on Bainbridge Island.

But Amazon’s vesting is even more irregular.

“Amazon is known to have some of the most complicated vesting schedules we’ve seen,” he said.

For example, Thomas Szkutak, Amazon’s chief financial officer, received an $8.4 million pay package in April 2012, almost all of it in restricted stock.

It vests in irregular installments between May 2013 and February 2018: In the first year, 5.7 percent of Szkutak’s stock award will vest, Whittlesey said. In the second year, another 12 percent. In the third year, another 3.6 percent.

Szkutak must work at Amazon until February 2016 to get just over one-fifth of his 2012 stock award. It’s not until February 2017 that an additional 44 percent of Szkutak’s award will vest, assuming he still is at Amazon.

Sanjay Bhatt: 206-464-3103 or sbhatt@seattletimes.com On Twitter @sbhatt

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