No Tears for CEO Pay Decline

Multi-million dollar bonuses for chief executives are scorned these days, but a study released today shows that the financial chieftains already got a noticeable hit in the pocketbook last year.

Cash bonuses fell by 20.6 percent between 2007 and 2008, according to Equilar, a company which tracks executive compensation. For S&P 500 companies, that drove overall compensation down by 6.8 percent over the same period, the study found.

This was the first significant drop in CEO pay since the economic downturn in 2001 and 2002, but may well not be the last. The hardest hit were chief executives at financial services firms who saw their median compensation plummet 38.3 percent between 2007 and 2008, to $6.5 million compared to $10.5 million.

Their median bonus payments fell 100 percent, from $2.6 million to zero, which Equilar said is due to the fact that fewer than half of the CEOs surveyed received a bonus last year.

Even the mightiest chief executive knows that multi-million dollar take-home packets are being scrutinized and criticized as never before.

That includes Lloyd Blankfein, the chief executive of Goldman Sachs, who proposed new guidelines for executive pay in a speech earlier today.

Blankfein, whose compensation was $1.1 million last year* - and $70 million in 2007 - said he recognizes the "real and visceral" public view of Wall Street pay. Greeted by protestors waving placards, he told a group of public and private pension funds that pay packets need to be overhauled. Cash would go mostly to junior employees, and higher-earning employees would receive a greater percentage of pay in company stock, he suggested.

Even as the economy began to flounder last year, the median total pay package for S&P 500 CEOs was $8.5 million. That was down from a little over $9 million the prior year.

Salaries went up - increasing by 5.7 percent to slightly more than $1 million. That's noteworthy, Equilar pointed out, because compensation in excess of $1 million is not tax deductible unless it is performance based.

Cash is where the chief executives took the hit, raking in only $1.5 million, some 20 percent less than the median payout of nearly $1.9 million in 2007.

Chief executives also received cash bonuses less frequently - only 85.6 percent in 2008 compared to more than 92 percent in 2007.

Overall, the sum of all bonuses for CEOs dropped 19.6 percent, to $465.2 million from $579 million in 2007, according to the review of 208 chief executives at companies with fiscal years ending between June 2008 and January 2009. Equilar only includes chief executives who have been in the job for at least two full fiscal years.

At the same time, the median value of CEO stock awards at the S&P 500 companies went up ever so slightly - 1.4 percent - to $2.3 million. About three-quarters of all chief executives studied received them in each of the last two years.

by Elizabeth Olson

* Update: An earlier version of this story erroneously reported Blankfein's 2008 compensation was $43 million.