Median pay for top execs of Northwest companies goes down for first time in several years

Northwest companies dialed back CEO pay last year as the U.S. economy sank into the worst recession since the Great Depression.

Median pay for the chief executives of publicly traded companies in the Washington, Oregon and Idaho region dropped 6 percent to $1.18 million, reversing several straight years of steep increases, according to a new analysis for The Seattle Times.

Although the top-paid CEO in the Northwest still made more than $13 million last year, that was nowhere near the $38 million that put another Northwest CEO on top for 2007.

Long a concern among investor activists and labor unions, CEO pay suddenly has become a hot-button issue, especially after big bonuses for the heads of troubled financial firms hit the headlines.

Widespread layoffs and shrunken stock portfolios also have led to renewed scrutiny of CEO pay.

Some Northwest CEOs who qualified for bonuses last year declined them anyway, citing the recession.

"CEOs are sensitive to the present moment, partly because of how dramatically catastrophic performance has been," said Doug Kilgore, executive director of the Worker Owner Council of Washington State, who monitors publicly traded companies in the Northwest for building-trade unions with large pension funds.

Lower pay for Northwest CEOs was part of a national trend: Median compensation for CEOs of the 500 largest U.S. companies fell 7.5 percent last year to $8 million, meaning half made more than $8 million, and the other half made less, according to Equilar, an executive-compensation research firm in the San Francisco Bay Area, which analyzed pay for The Times.

Pay is the sum of salary, bonuses, stock and options awards given during the year, and a catchall category called "other," which can include the cost of a health-club membership, car allowance, security detail or private use of a corporate jet.

Median bonuses fell 41 percent last year as profits decreased by a median 23 percent among Northwest companies whose CEOs were in place for both 2007 and 2008.

Kilgore said CEOs who made do without bonuses showed "good behavior," although he doubts that sort of restraint will continue in better economic times. He cited Seattle-based Nordstrom as an example of how bonuses should be handled.

Three of its top five executives -- Blake, Pete and Erik Nordstrom -- were entitled to no 2008 bonuses because they fell short of their goals for two key financial metrics.

"We didn't earn bonuses based on our results, so we didn't deserve them," said Nordstrom spokeswoman Brooke White. "We are proud of our team when we get the results that serve our customers and shareholders well, and bonuses are earned because of those results."

Paccar CEO tops list

Paccar CEO Mark Pigott topped this year's regional list with total compensation of $13.8 million, a 46 percent pay raise from 2007.

His pay went up because he bought stock in early 2008 and received a $6.4 million match from the company. Yet that match won't vest until 2013, and only then if Paccar stacks up well against its rivals.

Paccar's compensation committee noted in a regulatory filing that Pigott declined a $1.1 million bonus "in recognition of the challenging economic recession and the negative effect upon the company's employees and stockholders."

Pigott was trailed by Clearwire's Benjamin Wolff, at $11.1 million, and Schnitzer Steel's John Carter at $10.9 million.

Starbucks' Howard Schultz, who took over the CEO post last year from former grocery-store executive James Donald, debuted at No. 4 with a pay package valued at $9.7 million.

He was followed by Mark Donegan of Precision Castparts, at $8.7 million.

Not every CEO took home a hefty pay package, though.

Edward Bramson chose to not be paid at all last year when he replaced Robert Falcone as CEO of Nautilus, a fitness-products company in Vancouver, Wash.

Bramson must have figured he didn't need a paycheck to align his financial interests with the company's. Bramson's New York investment-management firm, Sherborne Investors, owns nearly a third of Nautilus stock.

In 2009, more CEOs are volunteering for pay cuts and forfeiting some or all of their bonuses as the recession drags on, said Alexander Cwirko-Godycki, research manager at Equilar.

About 375 publicly held companies in the United States have reduced salaries for top executives in the past year, according to Equilar. They run the gamut from a 10 percent reduction for the CEO of American Express to a salary of just $1 for the head of General Motors.

"At companies with significant financial difficulties or a large number of layoffs, it's almost expected that CEOs will share some of the pain," Cwirko-Godycki said.

A push for CEO pay caps

Public anger over CEO pay has grown after it was disclosed this year that troubled insurance giant AIG paid $165 million in bonuses, despite receiving billions of dollars from the federal government.

Now, the Obama administration is moving to adopt new pay regulations for companies that get taxpayer assistance, including capping executive bonuses at no more than one-third of their annual salaries.

For other publicly traded companies, the Obama administration plans to seek legislation that would give shareholders a nonbinding voice on executive compensation.

The legislation also would authorize the Securities and Exchange Commission to strengthen requirements that corporate compensation committees be independent from the managers whose pay they set.

Patrick McGurn, special counsel for New York-based RiskMetrics, a corporate-governance advisory firm for large institutional investors, called the administration's proposals a "good first step" toward linking CEO pay to long-term corporate growth, rather than short-term gains that can lead to excessive risk taking.

McGurn said the Democratic makeup of Congress practically ensures swift passage -- and possibly additional legislation later this year.

"Some in the business community are going to complain that this is unprecedented government intrusion," he said. "But I don't see any business groups being able to push back. It's just not going to happen in an environment where people are very upset."

Amy Martinez: 206-464-2923 or amartinez@seattletimes.com