The difference a title makes at Caterpillar __»

June 14, 2010

There’s still vigorous debate in some quarters about splitting the chairman and chief executive’s jobs at big companies. We’ve always wondered how much more work it is for someone to wear both hats at once.

Caterpillar (CAT), the heavy equipment giant in the onetime American bellwether of Peoria, Illinois, may give us a glimpse, at least assuming that pay roughly corresponds to duties.

The company earlier this year named Douglas R. Oberhelman as CEO-in-waiting. On June 9, it said he would succeed James W. Owens as chief executive on July 1, according to an 8-K that Caterpillar filed on Friday.

That move will bump Oberhelman’s salary up to $1.16 million from $729,966, and also increased his annual and long-term incentive opportunities to a combined $3.19 million from $1.53 million, according to the filing and the company’s proxy.

But Oberhelman is also scheduled to inherit Owens’ board chairmanship on Nov. 1. At that point, just four months later, Caterpillar’s board has decreed that he will receive another raise. His salary will rise to $1.37 million, and his combined bonus could reach $4.18 million.

We’ll spare you the math: The bump from chief executive to chairman-and-CEO promises to get Oberhelman $210,000 in salary and $988,500 in bonus and long-term incentive. Together, that’s a little over a quarter of his potential CEO-only pay. (Overall, he’ll be making about double his current potential pay.)

We’re guessing a stand-alone Chairman might prove more expensive for Caterpillar. Of course, none of this affects the good-governance arguments for splitting the roles — but for now, those arguments don’t seem to play in Peoria.

Image source: DioMakr via Flickr

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