CEO Pay Dropped Again in 2009

April 1, 2010 ( - CEO compensation edged lower in 2009 - the first time in two decades that pay declined for two consecutive years, according to the Wall Street Journal.

An analysis for the Journal by the Hay Group management consultancy found the median value of salaries, bonuses, long-term incentives, and grants of stock and stock options for the chief executives of 200 major U.S. companies declined 0.9% to $6.95 million. In 2008, pay fell 3.4%.      

The news report said this year’s overall decline reflected the recession, government controls, and continued public outcry over big pay packages. Long-term incentive awards, mostly stock and stock options, were hardest hit, falling 4.6% to a median $5 million. Salaries and bonuses rose 3.2% to $2.64 million.       

As the recession deepened in late 2008, “many boards lowered targets for 2009—and so some CEOs collected bonuses even as profits declined,” said Irv Becker, head of Hay’s U.S. executive-compensation practice, in the news report.      

The analysis also showed that highly paid CEOs generally run companies that deliver better-than-average shareholder returns.       

Jeffrey R. Immelt, chief executive of General Electric Co., declined a bonus for the second straight year, pushing his total pay lower by 4.7% to $5.1 million. GE’s stock fell 6.6% last year. In contrast, Ray R. Irani, CEO of Occidental Petroleum Corp., collected $52.2 million – making him the highest paid executive surveyed. The company’s stock rose 36% last year.      

However, Charles Ergen, CEO and founder of Dish Network Corp., earned the distinction of having the harshest drop in pay – he drew a $623,100 salary that was 92.5% lower than his 2008 total compensation – even though the company’s stock doubled.