Study: CEO pay up despite weak economy

NEW YORK - As the U.S. economy slowed to a crawl last year and stockholders watched their money evaporate, chief executive officer compensation still chugged to yet more dizzying heights, an Associated Press analysis shows.

The median pay package for CEOs came to nearly $8.4 million, according to the review of the heads of companies in the Standard & Poor's 500 index.

That is a comfortable gain from 2006 of about $280,000, or 3.5 percent - and it was made as the landscape for workers and shareholders darkened considerably and the economy was choked by a housing market in free fall, layoffs and soaring prices for fuel and food.

At the top of the list: John Thain, who took the reins of Merrill Lynch & Co. Inc. on Dec. 1, 2007. His $83 million compensation package was beefed up by a signing bonus and other enticements to lure him from the New York Stock Exchange to lead the investment bank as it was suffering big losses.

The 10 best-paid CEOs made a combined half a billion dollars last year, although half of them were leading companies whose profits shrank dramatically.

The review comes from the 410 companies in the S&P 500 that have filed compensation disclosures with federal regulators so far this year. The total compensation for each executive covers 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.

The median compensation figure of $8.4 million means half the CEOs reviewed 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 survey that had the same CEO two years running, about two-fifths lowered the total compensation package for their CEOs. But the main reason for the decline for some of the executives was falling stock prices that cut into the value of the shares included in pay packages.

In many more cases, overall pay ballooned.

Pay for Rick Wagoner, chief executive of General Motors Corp., rose 64 percent last year to $15.7 million - though GM lost $39 billion and its stock price fell about 19 percent, without adjusting for dividends.

Then there is KB Home, the Los Angeles builder battered by the subprime-lending crisis and the weak housing market. CEO Jeffrey Mezger is entitled to a cash bonus based on a percentage of KB's profit.

There was no profit - KB Home lost almost $930 million in 2007 - but Mezger made $24.4 million, including a $6 million cash bonus.

He pocketed that bonus because he exceeded certain objectives the board had set for him. Among them were improving performance on a customer-satisfaction survey and developing senior leadership in his first year as CEO.

"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.

"So they take away the bonus," he said, "but then they still come up with ways to make sure the executive gets a big payout."