Stock awards play a growing role in the compensation of e-retail executives

Executive pay at 28 of the largest publicly traded web-only retailers averaged $1.08 million, up almost 5% from 2007. Stock options and awards accounted for 47% of that compensation, an increase from 39% in 2007, according to a study by Internet Retailer of the proxy statements of the e-retailers.

Predictably, the top brass at Amazon.com Inc., No. 1 in the Internet Retailer Top 500 Guide, helped push the average compensation higher. On average, the top five Amazon employees made over $3.4 million, even though CEO Jeff Bezos earned a relatively modest $1.3 million.

47% of compensation for e-retail executives came in the form of stock options or awards, a big increase from 39% in 2007. The recession led even more companies this year to link executive pay with company performance, says Wendy Weber, president of executive recruitment firm Crandall Associates Inc. “There is far more emphasis on incentive-based compensation versus base salary,” Weber says. “Companies are asking for more skin in the game.”

Base salaries for the 137 execs reviewed by Internet Retailer rose almost 4% in 2008 to $454,006. On average, base pay accounted for 32% of total compensation.

Here are the 10 highest-paid executive in web-only retailing, with their 2008 total compensation, company and title, based on 2008 proxy statements:

• Sebastian Gunningham, senior vice president, seller service, Amazon: $5,044,125
• Marc A. Onetto, senior vice president, worldwide operations, Amazon: $4,598,107
• Joseph M. Redling, chairman/president/CEO, Nutrisystem: $4,572,312
• Mitchell S. Klipper, chief operating officer, BarnesandNoble.com: $4,191,511
• Tally Liu, CEO, Newegg.com: $4,191,410
• H. Brian Valentine, senior vice president, e-commerce platform, Amazon: $3,877,118
• Dawn G. Lepore, chairman/president/CEO, Drugstore.com: $3,591,786
• Mindy Grossman, CEO, HSN: $3,328,665
• Stephen Riggio, CEO, BarnesandNoble.com: $2,978,940
• Zev Weiss, CEO, American Greetings: $2,829,198

Last year, CEO/president was the highest-paid title for the 28 retailers examined, earning $1,362,852 on average. Chief operating officers followed with an average of $1,312,021, chief financial officers earned $841,957, executive vice presidents earned $614,135 and senior vice presidents earned $1,337,211. The last average is skewed, however, by the impressive stock compensation packages given to the three senior vice presidents at Amazon.com, each of whom earned at least $3 million in stock-based compensation last year.