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Robert Trigaux

Executive pay drops at most companies in '08

3

April

Wake up and good morning. I've always been amazed at the vast differences in the size of paychecks for CEOs of corporations whose performance so often seems so out of whack with the chief executive's rewards. And it's sad but somehow amusing to read the typical board of directors' lame rationale for blessing extraordinary CEO pay packages based on these three excuses: (1) Other companies like ours pay just as much or more; (2) the outside consulting firm (that we paid) told us to pay this much, and (3) if we don't pay a bazillion bucks, this 'terrific' CEO will go somewhere else. It's a 3-legged stool of nonsense more befitting 3rd-grader Tommy telling his teacher: "It's not my fault. The dog ate my homework."

The Hay Group, a firm specializing in corporate compensation, just analyzed the 2008 pay of 200 large U.S. corporations at the request of the Wall Street Journal. A sampling of the Big Bucks and not-so-big bucks of CEOs is intriguing and certainly begs the question: Why is the spectrum of pay between CEOs -- in the Hay example approaching $100 million  just in 2008 -- so astonishingly huge?

Though I've written on this topic literally for decades, it's back in the spotlight now that the federal government is getting more aggressive in setting pay caps (soon to be circumvented, I'm sure) for those companies that choose to receive taxpayer assistance in this troubling recession.

Overall, the Hay analysis found that the increase of CEO pay reversed in 2008 as shrinking profits led to smaller bonuses.As reported by the St. Petersburg Times, Progress Energy was one such company reporting a drop in executive compensation. According to the Wall Street Journal, the median salaries and bonuses for the chief executives of 200 big U.S. companies fell 8.5 percent to $2.24 million. The analysis examined proxy statements for companies with more than $5 billion in annual revenue.

Including the value of stock, stock options and other long-term incentives, total direct compensation for the CEOs dropped 3.4 percent to a median of $7.56 million. The decline was the first in seven years and only the second drop since the Journal began tracking CEO pay in 1989. While median CEO salaries grew 4.5 percent, bonuses fell 10.9 percent as profits decreased by a median 5.8 percent.

Here's a sampling of 2008 total direct compensation from the Hay Group's analysis that appears in the complete 200-company listing in the Wall Street Journal (subscription required):

* Top 5 in Pay: Sanjay Jha, Motorola, $104 million; Ray Irani, Occidental Petroleum, $50 million; Robert Iger, Walt Disney, $50 million; Vikram Pandit, Citigroup, $38 million, and Louis Camilleri, Philip Morris, $36 million.

*  Pay of Top Bankers in  Florida Market: Vikram Pandit, Citigroup, $38 million; James Dimon, JPMorgan Chase, $21 million; James Wells, SunTrust, $8 million; Frederick Waddell, Northern Trust, $6 million; Dowd Ritter, Regions Bank, $4.7 million; John Allison, BB&T, $3.8 million, and Ken Lewis, Bank of America, $1.5 million.

* CEOs who received no compensation in 2008: Eric Schmidt, Google; John Mackey, Whole Foods Market; James Rogers, Duke Energy, and Richard Fairbank, Capital One Financial.

* CEO pay of two Tampa  Bay area companies: Tim Main, Jabil Circuit (St. Petersburg), $4.8 million and William Crenshaw, Publix Super Markets (Lakeland), just $775,000.

-- Robert Trigaux, Times Business Columnist

[Last modified: Tuesday, June 1, 2010 12:24pm]

    

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