- The Washington Times - Tuesday, April 16, 2002

NEW YORK (AP) Last year wasn't just bad for big business; it was bad for big businessmen: Many chief executives at large publicly traded companies saw their annual pay shrink for the first time in more than a decade.

Top company officers of major corporations still raked in millions of dollars, but the salaries that spiraled ever higher from the early 1990s through 2000 edged up only slightly in 2001 as recession took hold, compensation analysts said.

Huge year-end bonuses that business leaders customarily received were reduced sharply, causing a drop in overall cash compensation. Some bonuses were eliminated altogether because of poor company performance in a bad economy that was made worse by the September 11 attacks.

The compensation picture is emerging in year-end reports that companies are filing with the Securities and Exchange Commission.

It is the worst year in recent memory for chief-executive compensation, say analysts, who acknowledge that the executives still are well-rewarded.

"While pay is down, it's not as if pay is low," said Robin Ferracone, a partner and senior executive compensation consultant with William M. Mercer Inc. "CEOs aren't wondering where the next meal is coming from."

Salaries rose slightly but bonuses were reduced 13 percent at 100 of the nation's largest companies, meaning that the combined total annual compensation for chief executives dropped 2.9 percent in 2001, according to preliminary results of the annual Wall Street Journal/William M. Mercer CEO Compensation Survey.

The full survey is expected to show similar results. If so, it would be the first decline for chief executives since the survey began in 1990.

Other corporate-compensation analysts expect steeper declines. Pearl Meyer & Partners, for example, said cash compensation for executives at 200 well-known companies dropped 14 percent on average for companies that ended their fiscal years by Dec. 31.

Pearl Meyer said average compensation for chief executives came in at $12.5 million for 2001 after factoring in stock options they exercised during the year. That was down from $12.7 million for 2000.

Companies in industries particularly hard hit by the recession or other factors ended up reducing executive compensation the most.

FleetBoston Financial, which wrote off loans in Argentina, gave chief executive Charles Gifford a $992,200 salary, the same as in 2000. His bonus fell from $4.5 million to $2.25 million.

Cisco Systems, among the technology companies that suffered badly last year, paid chief executive John Chambers $268,000 down from $323,000 a year earlier. He received a $1 million bonus in 2000, but no bonus in 2001.

Sun Microsystems, another technology giant, gave chief executive Scott McNealy a $100,000 salary and no bonus. In 2000, he was paid $104,000 plus a $4.7 million bonus.

But executives who didn't see boosts in their pay often received other forms of compensation such as stock options or restricted stock grants.

IBM Corp. chairman and former chief executive Louis V. Gerstner Jr. got the same $2 million salary and $8 million bonus he received in 2001.

But Mr. Gerstner, who stepped down as chief executive on March 1, exercised options worth about $115 million in 2001. He retained about 4.3 million exercisable options valued at $296 million.

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