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Region makes way for latest batch of snow; cancellations rise
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First Bell - On Education:
No City of Akron basketball tonight
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Pet telethon re-airs
The Heldenfiles:
Chipmunks "Squeakquel" on DVD/BD March 30
Akron Zips:
Late surge gives Zips ugly road win
Tribe Matters:
Blogmail response on Hafner
Cleveland Browns:
Stallworth's contract terminated
Balanced Ledger:
QB in Browns future: another mock draft
Kent State Sports:
KSU Notes – February 9
Cleveland Cavaliers:
NBA Power Rankings from Around the Internet
Buckeye Blogging:
Buckeyes grab 18 players on signing day
Varsity Letters:
Five local gridders to play in Big33
All Da King's Men:
Palin At The Tea Party Convention
Blog of Mass Destruction:
Republican Pre-Conditions
Akron Law Café:
Law, Love and Chocolate
Car Chase:
Collector Car Hobby Loses One of the Best—Jim Roll
Let's Talk Real Estate:
Decisions Decisions: Credit Cards or Your Mortgage?
Ohio Travels with Betty:
Loucile is looking for a Lake Erie getaway in June for three kids, ages 1, 3, and 5.
Sound Check:
Talk of the Town – Top entertainment picks for the weekend
HRLite House:
OFCCP Report
Akron Gamer:
Makers of 'Castle Crashers' unveil 'BattleBlock Theater'
See Jane Style:
Do IT this week: Layering
Median salary package hits about $8.4 million
By Rachel Beck
and Matthew Fordahl
Associated Press
Published on Monday, Jun 16, 2008
NEW YORK: As the American economy slowed to a crawl and stockholders watched their money evaporate, pay for chief executives chugged to even dizzier heights last year, an Associated Press analysis shows.
The AP review of compensation for the heads of companies in the Standard & Poor's 500 index finds the median pay package added up to nearly $8.4 million. That's a gain of about $280,000 from 2006.
The 31/2 percent pay increase for CEOs came even as the landscape for both workers and shareholders darkened considerably and the economy was choked by a housing market in free fall, layoffs and rising prices for fuel and food.
At the top of the AP list: John Thain, who took the reins of Merrill Lynch on Dec. 1.
His $83 million pay package was supercharged by a signing bonus and other enticements that lured him from the New York Stock Exchange to lead the investment bank as it was suffering its worst losses ever.
Collectively, the 10 best-paid executive made more than half a billion dollars last year. Yet half the members of this soaring club were leading companies whose profits shrank dramatically.
The AP examination of chief executive pay in 2007 mined data from the 410 companies in the S&P 500 that filed compensation disclosures with federal regulators in the
first six months of this year.
The AP's formula, based on data from the past two years, adds up salary, perks, bonuses, above-market interest on pay set aside for later, and company estimates for the value of stock options and stock awards on the day they were granted last year.
That provides a clearer picture than pay totals required by the Securities and Exchange Commission, compensation experts say, because the SEC totals include expenses companies book during the year for previously granted stock compensation and retirement benefits.
Pay for performance
The value of stock and options given to chief executive may turn out to be significantly higher or lower if they are ultimately cashed out, but the numbers in the AP formula do reflect the board of directors' estimate of the likely eventual payout.
The median salary figure of about $8.4 million means half the executive in the AP analysis made more than that and half made less.
There were some signs companies were pulling back on pay at the top: Out of the 316 companies in the AP survey that had the same chief executive two years running, about two-fifths lowered the total pay package. However, the primary culprit for some was falling stock prices that cut into the value of the shares included in pay packages.
In many more cases, overall pay ballooned. Rick Wagoner, chief executive of General Motors Corp., announced this month the company had to close four plants that make trucks and SUVs because of lagging demand as fuel prices soar. That followed the posting of a $39 billion loss in 2007, a year when its stock price fell by about 19 percent, without adjusting for dividends.
And Wagoner? His pay rose 64 percent, to $15.7 million.
Last year was rocky for the economy and the stock market, making it a useful test of a concept called pay for performance — a term companies use to sell shareholders on the idea chief executives are being paid based on how well the company does.
According to this concept, used frequently by the compensation committees of corporate boards in their proxy statements, a big chunk of executive pay is considered ''at risk,'' meaning it could disappear if executives don't meet established goals.
But the AP analysis found that their pay rose and fell regardless of the direction of a company's stock price or profits.
No profit, no problem
Take KB Home, battered by the subprime lending crisis and the weak housing market. According to the Los Angeles home builder's proxy statement, Chief Executive Jeffrey Mezger is entitled to a cash bonus based on a percentage of KB's profit.
The problem was, there was no profit. KB Home lost almost $930 million in 2007 and its stock lost 60 percent of its value. But Mezger still made $24.4 million, as valued by the AP, including a $6 million cash bonus.
He pocketed that bonus because he exceeded certain objectives the board had set out for him. Among them were improving performance on a customer satisfaction survey and developing senior leadership in his first year as chief executive.
''Compensation has become a shell game,'' said Richard Ferlauto, director of pension and benefits policy for the American Federation of State, County and Municipal Employees, a labor group representing government workers.
Pay packages were somewhat smaller in the financial industry last year — banks, investment firms, mortgage companies, insurers and other institutions all were roiled by the subprime lending disaster.
For companies in the financial sector that had the same chief executive two years in a row, median pay dropped 41/4 percent to $8.7 million in 2007. But that was still a smaller decline than the 6 percent drop in earnings and 15 percent slump in stock prices before dividend adjustments, according to Standard & Poor's Capital IQ data service.
NEW YORK: As the American economy slowed to a crawl and stockholders watched their money evaporate, pay for chief executives chugged to even dizzier heights last year, an Associated Press analysis shows.
Get the full article here.
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