July 18, 2010|By Hanah Cho, The Baltimore Sun
Jos. A. Bank Clothiers navigated a tough consumer market to gain in profit and stock price in the past fiscal year. The Hampstead retailer's chief executive, R. Neal Black, also did well, taking home $2.6 million in pay, more than double his compensation in 2008.
On the other end of the executive pay spectrum, A.L. "Tom" Giannopoulos, head of Columbia-based MICROS Systems Inc., saw his total compensation drop $4.1 million. Giannopoulos' $2.8 million pay package, while not a small sum, reflected the declining profit and stock market value at the information systems company during the past fiscal year.
The crushing economic downturn — and an uneven and sporadic recovery — hit not only rank-and-file workers but also the top echelons of corporate boardrooms. Some CEOs were rewarded as their companies weathered the recessionary climate and benefited from last year's rebounding stock market. Other CEOs saw their paychecks shrink along with corporate profits.
The Baltimore Sun analyzed compensation packages at 18 publicly traded companies in the metro area that paid their CEOs at least $1 million in one of the past two years. About half of the companies reported that total pay fell for the top executives, often in keeping with the declining fortunes of the companies they run.
And at two companies — Columbia-based biotechnology companies Osiris Therapeutics Inc. and Martek Biosciences Corp. — CEOs who made more than $1 million in 2008 dropped off the list last year.
"Because performance was off in a down economy, all the measures you would use to award executives would suggest lower salaries," said Charles M. Elson, director of the John Weinberg Center for Corporate Governance at the University of Delaware. "It's lower but not dramatically lower. That's an issue."
Elson, who has been critical of high levels of CEO pay, said pay packages could rebound along with the economy this year. "Have we fixed the compensation problem? No," he said. "That's the important take-away."
Many executives saw the value of their stock and options awards, which often make up the largest chunk of pay packages, fall last year compared to the previous year. That's because most awards are made in the beginning of the year — and in early 2009 the market had barely begun to recover from its free fall.
Still, some executives got larger cash bonuses and more incentive-based pay that reflected a recovery in company performance from depressed levels in 2008.
Total CEO compensation, including salary, bonus, stock options and other pay, fell 7 percent to a median $1.4 million in 2009 — a decline for the second straight year, according to a preliminary survey by The Corporate Library, a governance watchdog group. Even among large companies, CEO compensation dropped 15 percent to a median $5.3 million.
"People always say executive pay never goes down," said Jon Weinstein, who heads the executive compensation practice for consultant Towers Watson & Co.'s East region. "2009 was a year in which executive pay decreased."
The spotlight on executive compensation comes each year with increasing scrutiny, especially during the recent recession. Last week, Congress approved a sweeping financial reform package, including provision for a nonbinding shareholder vote on executive pay. Some shareholders have pushed for "say on pay" proposals with modest success in the past several years.
Warren Chen, managing director of Glass Lewis & Co., a firm that provides guidance on proxy proposals and corporate governance issues, said the mandate could make companies more accountable.
Weinstein said boards have been sensitive to financial difficulties facing their shareholders and employees, particularly when it came to making annual stock-based grants last year amid the economic downturn.
"Stock performance wasn't there. People got smaller or less value in equity, which is what drove the overall package down last year," he said.
Mayo A. Shattuck III, CEO and chairman of Constellation Energy Group Inc., has frequently been among the most highly paid executives in the Baltimore region and ranked No. 1 last year for the fourth year in a row.
While the value of his stock and options took a hit, he earned a $3 million cash incentive payout as the company turned a $4.4 billion profit from a near bankruptcy in 2008. That boosted his pay package to $10.9 million.
"The company successfully executed a complex and comprehensive turnaround strategy during the course of the year, and as a result, the board felt that the superior performance deserved the [annual incentive] award," Constellation spokesman Larry McDonnell said.
Shattuck's compensation was lower than the $20.3 million he received in 2008. But half of that year's pay package reflected an increase in pension value and deferred earnings that the company attributed to an accounting change.
