The highest-paid CEO in 2007 received compensation worth $38.1 million. In 2008, the top award was $13.8 million.
A CEO had to make at least eight figures to rank as one of the Northwest’s five top-paid chief executives in 2007.
Not so in 2008.
Two of the five top-paid CEOs last year received total compensation worth less than $10 million, and the biggest pay package, at $13.8 million, was a far cry from the $38.1 million that ranked No. 1 in 2007.
The five top-paid CEOs in the Northwest received a combined $54 million in 2008, down from $93 million the year before, according to an analysis for The Seattle Times by Equilar, an executive-compensation research firm in the Bay Area.
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The decline was part of a nationwide pullback in pay for the heads of publicly traded companies as profits shrank and stock prices fell, though some might argue that CEO pay still has a long way to drop.
“Companies really are in a lose-lose situation,” said Alexander Cwirko-Godycki, research manager at Equilar. “Pay for top executives has outpaced rank-and-file employees for so long that even with a significant pullback, there’s still a big disparity. It remains to be seen if the average person thinks it’s enough.”
For the first time since at least 2003, the top five does not include Kerry Killinger, the longtime CEO of now-defunct Washington Mutual.
JPMorgan Chase, which took over WaMu in a late-September sale arranged by federal regulators, did not disclose Killinger’s 2008 compensation. Equilar puts Killinger’s total compensation since the early 1990s at more than $98 million.
InfoSpace’s James Voelker, who topped last year’s list with a $38.1 million pay package, dropped to ninth this year, at $6.2 million.
Although his 2008 cash compensation increased nearly ninefold, Voelker did not receive the multimillion-dollar “make-whole” payments and tax gross-ups that accounted for most of his total 2007 compensation. (Bellevue-based InfoSpace paid Voelker $21.6 million to cover the loss in value of his stock options after it declared two special dividends in 2007, plus $12.1 million for the taxes he owed as a result.)
Here’s a look at the five top-paid CEOs in 2008 for the Washington, Oregon and Idaho region:
• Mark Pigott, who had the largest pay package at $13.8 million, said he turned down a bonus last year because of the recession and will do so again this year, leaving $1.1 million on the table in 2008.
“I think it sets the right tone during these very challenging times,” Pigott said in a phone interview last week. “Every employee is being asked to make certain sacrifices, and I think it’s the appropriate thing to do.”
At 55, he is the fourth generation of the Pigott family to lead Paccar, the Bellevue-based truck company.
Paccar’s profit fell 17 percent to $1 billion in 2008, while its stock price ended the year down 47 percent at $28.60. The company also closed 2008 with 18,700 employees, 3,100 fewer than at the end of 2007.
Pigott’s overall pay went up because of a corporate program that encourages stock ownership: He exercised about 200,000 options in early 2008 and held onto 150,000 of those shares. The company then gave him matching shares worth $6.4 million, although they vest after five years, and only then if Paccar’s per-share profit growth compares favorably to that of its rivals.
Pigott also received $3.3 million in cash from a long-term incentive plan that measures his performance based on three key financial metrics over three years.
“Over 80 percent of my compensation is long-term and shareholder-related,” Pigott said. “If shareholders do well, then 80 percent of my compensation is related to that. It’s a good alignment.”
• For the second straight year, Clearwire’s Benjamin Wolff came in at No. 2, with a 2008 pay package worth $11.1 million, down 26 percent from 2007.
Wolff, 40, who helped create Clearwire in 2003 and take it public in 2007, left the CEO post this past March after the Kirkland telecommunications company joined with Sprint Nextel’s WiMax division. Sprint now owns 51 percent of Clearwire’s stock. Wolff, who stays on as co-chairman, was replaced by Bill Morrow, previously CEO at Pacific Gas & Electric in San Francisco.
Wolff’s pay declined because he received $2.4 million worth of stock options in 2008, down from $12.1 million in 2007. That drop was partly offset by a bigger salary and bonus and $6.3 million worth of stock.
His 2008 options allow him to purchase 250,000 shares at a strike price of $17.11, plus 100,000 shares at $11.03. Clearwire noted that its stock price must appreciate 224 percent from its year-end close of $4.93 before those options represent “any realizable value.”
As co-chairman, Wolff received a $1.5 million payout this past March and will get an additional $3 million in January.
• Schnitzer Steel’s John Carter, whose $10.9 million pay package was the Northwest’s third-biggest last year, could have made as much as $14 million, but he declined $3.2 million in bonus money because of the recession.
Carter, 63, left the CEO post in December and remains chairman. He was replaced by Tamara Lundgren, whose $8.8 million pay package as chief operating officer last year was the biggest among non-CEOs in the Northwest. Lundgren declined $2.3 million in bonus money.
Carter and Lundgren cited the “current macroeconomic environment and their desire to contribute to the cash position of the company” as their reasons for giving up the money, Portland-based Schnitzer Steel said. They still received bonuses of $6 million and $5 million, respectively.
Schnitzer Steel made a profit of $248.7 million for the 12 months ending in August. That was up 89 percent from the year before, as revenues rose 42 percent to $3.6 billion. The company’s stock ended fiscal 2008 up 17 percent at $68.41 a share.
• Starbucks’ longtime chairman, Howard Schultz, received total pay worth $9.7 million after reassuming the CEO position in January 2008.
The bulk of Schultz’s 2008 compensation came from options to purchase about 687,000 shares at a strike price of $22.87. Those options were valued at $7.8 million when they were given in November 2007.
Schultz, 55, also received an annual salary of $1.2 million, but in 2009, he’ll get a biweekly salary of less than $2, or just enough so that he and his family are eligible for medical- and dental-insurance benefits, said spokeswoman Anna Kim-Williams.
Most of Schultz’s 2009 compensation will be based on whether the company’s stock price increases. He won’t receive a bonus, and he’ll take all of his equity awards in options, meaning he won’t make any money off them until the stock price goes up, according to a regulatory filing.
“He just wanted to share in the burden of the challenges presented by the economic environment,” Kim-Williams said.
The Seattle-based coffee giant has been cutting costs amid a widespread pullback in consumer spending. Its profit fell 53 percent to $315.5 million for the fiscal year ending in September as sales growth slowed to 10 percent. That was off from an average annual sales increase of 21 percent for the previous three years.
Shares of Starbucks ended fiscal 2008 down 43 percent to $14.96.
• Mark Donegan, CEO of Portland-based Precision Castparts, a metal-fabrication company, rounded out the top five with total compensation of $8.7 million, a 10 percent pay raise from 2007.
The company’s fiscal year ends in March, so Donegan’s 2008 compensation is now more than a year old. His 2009 compensation has yet to be disclosed.
Donegan, 52, joined Precision Castparts in 1985 and became CEO in 2002.
For the fiscal year ended March 30, 2008, the company made a profit of $987.3 million, up 56 percent from fiscal 2007. Shares of the company ended the same 52-week period down 2 percent at $102.08.
Donegan received an annual salary of $1.2 million, a 9 percent increase, as well as a $1.8 million bonus because the company exceeded its goals for two key financial metrics.
Donegan also received options to purchase 150,000 shares at a strike price of $140.74, which were worth $5.7 million when they were given in November 2007. Precision’s stock currently trades in the low $80s.
Amy Martinez: 206-464-2923 or email@example.com