The compensation of chief executives at public companies remains a contentious topic: Business insiders and the general public have diametrically opposed views on whether CEOs earn their hefty pay. Howard Schultz, who stepped down as Starbucks CEO in April, is one example.

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CEOs of large public companies continue to win enormous compensation packages, fueling a running debate that touches on issues of fairness and merit, greed and incentive.

But Howard Schultz, after a remarkable run as one of the four best-paid Northwest CEOs every year since he returned as Starbucks chief executive in 2008, has likely made his final appearance in this pay elite.

Schultz stepped down as CEO on April 3, although he remains executive chairman. He also took a pay cut.

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As a result, Schultz has probably taken his curtain call from the top tier of the annual Seattle Times/Equilar CEO Pay study, which ranks Northwest public company CEOs by their total compensation.

For three straight years, ending in 2011, Schultz was the highest-paid public company CEO in Washington, Oregon and Idaho. Last year Starbucks paid Schultz $21.8 million, enough to rank him second.

No. 1 was Mark Parker, president and CEO of Oregon-based Nike. In 2016 the company paid Parker $47.6 million, the majority in the form of stock and option awards.

Since 2010, the average annual pay for Northwest public company CEOs has jumped nearly 60 percent to $3.6 million last year, Equilar data show. Meanwhile, the average annual wage for all workers in the three-state region during that time increased 12 percent to $49,143, according to federal wage surveys.

Polarized climate

Most public-company directors and shareholders believe their well-compensated CEOs earn their pay. Yet the public is skeptical, and most Americans are unaware of the size of CEO paychecks at large corporations.

In recent years, CEO pay has figured more prominently in the wider debate over income inequality, in which earnings for elites have grown more rapidly than for middle- and low-income workers.

The polarized political climate has only sharpened the arguments. During last year’s presidential primaries, Democratic candidate Bernie Sanders attacked the Walt Disney Co. for laying off workers while paying its CEO, Bob Iger, $46.5 million in 2014. Iger fired back, saying Disney had created 18,000 jobs in five years. In a Facebook post, Iger asked Sanders, “How many jobs have you created?”

The 200 best-paid CEOs nationwide pull down enormous paychecks. Their average compensation last year was $19.7 million, according to Equilar, the California-based research firm. On average, their paychecks crept up only 2 percent in 2016, but in absolute numbers even that increase equals about $394,000 — eight times the average annual wage for Northwest workers.

Average pay among Northwest public company CEOs last year fell 15 percent to $3.6 million, Equilar data show. The average is based on a pool of about 100 Northwest public companies that includes large and small firms.

An outsized compensation award can influence the average, as was the case when Bellevue-based Expedia paid $94.6 million to CEO Dara Khosrowshahi in 2015. That year the average pay for Northwest public company CEOs climbed 20 percent, beating the national trend.

Base salary of $1

At Starbucks, Schultz’s remaining portfolio as executive chairman includes oversight of the company’s Reserve Roasteries and its social-impact initiatives.

His 2017 pay is now based almost entirely on performance. Schultz could earn as much as $4.5 million this year in stock and cash bonuses, provided that he and the company hit performance targets, disclosure statements show. The only guaranteed pay for Schultz is his base salary of $1 a year.

Starbucks directors concluded that the pay package was appropriate because Schultz still plays an important role in the company’s strategic direction, a spokeswoman said in an email.

During his second stint as Starbucks CEO, the company paid Schultz a combined $169 million over nine years, with 78 percent of his compensation in the form of stock and options. Was he worth it?

Between 2008 and 2016, the company’s annual net revenue grew 105 percent to $21.3 billion. Starbucks’ combined net earnings over those nine years added up to $11.9 billion.

As an expense item against the company’s combined net revenue over that period of time, Schultz’s pay amounted to 0.13 percent.

Opposite views

A wide gulf separates corporate leaders and the public in their perceptions of executive pay.

Seventy-six percent of board members and CEOs believe CEOs are paid at “the correct level,” according to a 2016 survey by the Rock Center for Corporate Governance. The center is a joint program of the Stanford Graduate School of Business and the Stanford Law School.

The public holds the opposite view. When the Rock Center asked 1,202 Americans whether CEOs of large public companies were “paid the correct amount relative to the average worker,” 74 percent said no.

The perception gap between corporate directors and the public is worrisome, said David Larcker, a professor of accounting and a senior faculty member for the Rock Center.

“It plays into this whole wealth-inequality thing,” he said. Ordinary workers see the financial distance between themselves and business elites “is pretty wide and getting wider.”

Surveys also show that Americans routinely underestimate — by surprisingly wide margins — how much money CEOs make at large public companies.

When the Rock Center in 2015 asked Americans how much the average CEO earns at a Fortune 500 company, the median response was $1?million. The actual median compensation for those CEOs was $10.3 million, or 10 times higher.

Corporate directors in the last 10 years have generally become more specific about how they evaluate their CEOs, and how those evaluations determine pay.

Not surprisingly, research shows that boards rely heavily on financial metrics for grading chief executives. That includes such measures as operating income and share price, especially in comparison with the company’s rivals.

Less used are such nonfinancial benchmarks as workplace safety, employee satisfaction and innovation, a 2013 Stanford survey shows.

A lively debate is underway among some academic researchers over a particularly vexing variable for gauging CEO performances. It’s the variable of chance.

Unpredictable events from a variety of sources — employees, rivals, markets, global affairs — can unexpectedly reward or punish companies and their CEOs. How to account for luck — or the lack of it — is not as easy as it seems.

“We tend to ignore the element of chance in most compensation research,” said Markus Fitza, a professor at the Frankfurt School of Finance & Management in Frankfurt, Germany.

His research suggests that earlier studies overstated the influence of CEOs on company performance by giving too little weight to the effects of random events.

Corporate directors often try to account for chance by evaluating their CEOs with metrics that compare the company’s performance with its peers or the market.

Everyone is above average

The growing use of performance targets hasn’t silenced critics.

Fred Whittlesey, a Seattle-based compensation consultant, says corporate directors too often take the easy road by “checking the boxes” on standard performance metrics and calling it a day.

“Generally, compensation committees have punted on CEO evaluations,” he said.

Others say corporate directors and CEOs can still game the system so that it results in the preferred outcome: a pay raise.

“It’s our argument that it’s a rigged system,” said Brandon Rees, deputy director of the AFL-CIO Office of Investment in Washington, D.C.

The AFL-CIO has been especially critical of corporate boards that determine compensation by looking at what other companies pay their CEOs. Rees says directors and consultants can manipulate the method by picking peer companies with well-paid CEOs, driving up the average. Directors can also decide that their CEO is “above average” and pay accordingly.

“I have yet to read a proxy statement where the CEO is paid below average,” Rees said.

Don’t look for a lot of skepticism over CEO pay among shareholders who, by and large, have been reaping the benefits of a long bull market since the end of the Great Recession. In recent months a majority of stockholders have gone on record with greater enthusiasm for their companies’ compensation packages.

Public companies since 2011 have been required to have shareholders vote on executive compensation at least once every three years. Although the so-called “say-on-pay” votes are nonbinding, the ballots have become effective feedback loops between corporate directors and their shareholders.

Eighty-six percent of the 64 say-on-pay votes disclosed by Northwest companies as of June 30 had approval rates exceeding 90 percent. A year ago, 63 percent of the 30 disclosed ballots were as favorable.

Say-on-pay results are still coming in, although highly favorable votes appear to be more common nationwide, said Matthew Goforth, a research manager with Equilar.

“It’s certainly looking like shareholders are more supportive of higher pay,” he said. Goforth credited the trend to a strong stock market and better communications between corporate directors and shareholders.

Shareholders don’t give every company a back rub, though. Last year 8 percent of say-on-pay votes came back with approval rates below 70 percent, which sets off alarms in board rooms. Even approval rates below 90 percent tend to attract attention.

Companies often get dinged by low say-on-pay votes after directors reward their CEOs with outsized stock and option awards. The awards typically vest over several years but with the full amount recorded in a single year.

The numbers can be enormous. In 2015 Expedia awarded Khosrowshahi, its CEO, stock options valued at $90.8 million that vested in phases by 2022. The entire amount was entered into the books in 2015, pushing Khosrowshahi’s disclosed pay to $94.6 million. For that year he was the highest-paid public company executive in the country.

In mid-June Expedia’s shareholders weighed in on the executive-compensation plan with a say-on-pay vote. The result was an approval rate of 78 percent.

In public elections, such an outcome is a crushing landslide. In corporate life, it’s a shareholder message that says, “Needs work.”