Annual raises are no longer automatic for corporate CEOs. - 10 May 2009

By Kevin G. DeMarrais, The Record, Hackensack, N.J.

May 10--Annual raises are no longer automatic for corporate CEOs.

And compensation committees at North Jersey's public companies have
largely replaced guaranteed bonuses with performance-based incentives.
Taken together, that meant less money in the pockets of many chief
executives last year, reflecting the sharp drop in earnings and stock
prices.

Still, more than half the men and women who led the 50
companies included in The Record's 14th annual report on CEO pay took
home more than $1 million last year, including five who topped the $10
million mark.

In almost every case, the biggest chunk of their
compensation came from cashing in stock options granted in previous
years, according to proxy and 10K forms that public companies file
annually with the Securities and Exchange Commission.

Included
are CEOs of two Paramus-based companies, Ronald Hermance of Hudson City
Bancorp, who cashed in $37.5 million in options, and Steven Roth of
Vornado Realty Trust, who got $26.7 million from options.

Hudson City's stock rose by 6.3 percent, and Hermance was rewarded with
increases in salary and bonus. But Roth also cashed in, more than
making up for a salary freeze and a token $5,700 cut in his bonus in a
year in which Vornado's stock fell 31 percent.

But drops in
stock prices at other companies, along with lower sales and earnings,
left many CEOs with no options to cash in, tiny salary increases, and
the loss of bonuses and other incentive-based payouts.

In that
way, trends in North Jersey were similar to those nationally, where CEO
pay raises averaged 3.5 percent in 2008. The average among companies in
The Record's survey was 4.8 percent and the average CEO compensation
last year was $688,303.

And more than half of the nation's top
executives are not getting any increase this year, said Peter
Oppermann, a worldwide partner at Mercer Inc., a New York-based
human-resource consulting company.

At Parsippany-based Avis
Budget Group Inc., CEO Ronald Nelson saw his salary frozen at $1
million -- one of eight CEOs who got no increase in base salary. He
also did not receive a bonus, after getting $900,000 a year earlier.

The reasons were spelled out by the compensation committee, which cited
revenue retention and cash flow results that did not meet "all of the
performance goals contained in our incentive programs."

As a
result, "our pay-for-performance discipline resulted in compensation
paid ... for 2008 being well below the compensation targeted ...

For more information on Performance Pay for Executives.

Posted by Dan Walter

Performensation: Equity Compensation for High Performance Companies.