"The company's performance was down in 2008, and our CEO's compensation reflected that, declining sharply with no annual raise, no bonus and the same applied to nearly all our senior leaders," said Rob Gould, a Constellation spokesman. "Our progressive pay-for-performance policy holds executive leadership accountable in years when performance is below expectations."
Legg Mason also rushed to explain the nearly 40 percent increase in reported compensation for Mark R. Fetting, promoted to chief executive in January 2008. In a statement, the company said his $6.6 million package - fourth-highest in the metro area - includes the expense of stock and stock options that were awarded in earlier years but vested last year. Like Shattuck's options, Fetting's are under water. Legg Mason thinks a fairer measure of its CEO's pay is $3.5 million, down 29 percent from the previous year.
Companies trying to explain away increases in total compensation often do have a point, said Alan Johnson, managing director of a New York compensation consulting firm. SEC rules about how to value stock and stock options tend to overstate income when times are bad, he said - just as they understate in good times.
Even if executives didn't take big pay cuts, they aren't immune to the pinch of the recession, he added.
"We have many CEOs that own many, many times their pay in stock in the company," said Johnson, with Johnson Associates Inc. "I had a client tell me, 'I lost four years of pay last year.' It's not time for a pity party, because that's true for a lot of average citizens, too. Look at their 401(k)s. But it is a fact."
Still, Anne Sheehan, director of corporate governance with the California State Teachers' Retirement System, isn't impressed with a lot of the pay explanations out there. The argument that pension increases shouldn't be included in the tally? "It is an expense, and the company has to book that as an expense, so it's fair to count it," she said.
The refrain she keeps hearing is that executives need incentive pay in these tough times to keep them from leaving, to which she replies: "Where are they going to go?"
"It's a 'heads I win, tails you lose' kind of thing," she said of some compensation plans. "Are there truly disincentives vs. just incentives for doing your job and then a really big incentive for doing something in addition?"
Some companies don't need complex footnotes to show they've cut pay.
