Pay for CEOs in the Northwest shot up in 2007 - Seattle Times - Amy Martinez - June 14, 2008

CEO perks appeared less prevalent than in previous years, perhaps
because the U.S. Securities and Exchange Commission now requires more
disclosure of things like auto allowances, security costs and
health-club memberships.

By Amy Martinez

Seattle Times business reporte

Pay for the Northwest's top CEOs shot up
last year, despite a turbulent stock market and concerns about a
possible U.S. recession, according to a new analysis for The Seattle
Times.

The 20-best paid CEOs who were in place for both 2006 and 2007 saw
their median compensation rise to $8 million from $6.1 million the year
before.

InfoSpace CEO James Voelker soared to the top of this year's list of publicly traded companies with a $38.1 million pay package.

He was trailed by Clearwire's new CEO, Benjamin Wolff, at $15.1
million and Washington Mutual's Kerry Killinger at $14.4 million,
according to the analysis by Equilar, an executive-compensation
research firm in the Bay Area.

The median pay for CEOs of the nation's 500 largest companies —
meaning half made more, half made less — rose 1.3 percent to $8.8
million.

Among all Northwest CEOs in place for both 2006 and 2007, median pay increased 8.3 percent to $1.3 million.

Companies gave fewer bonuses but more equity awards, according to
Equilar. The median grant-date value of new stock and option awards for
Northwest CEOs increased 46 percent to $1.1 million.

"As short-term conditions weaken, companies are trying to get
executives to focus on long-term goals and recovery," said Alexander
Cwirko-Godycki, research manager at Equilar. "Equity awards with
multiyear vesting periods and/or performance-based vesting may help to
achieve this."

CEO perks appeared less prevalent, perhaps because the U.S.
Securities and Exchange Commission now requires more disclosure of
things like auto allowances, security costs and health-club memberships.

"We're seeing a gradual phaseout of some perquisites, but not a
dramatic shift overnight from where everyone had perquisites to now no
one has them," Cwirko-Godycki said. "It's difficult to take a benefit
away all of a sudden, so some companies are eliminating perquisites now
and maybe giving executives one-time special payments to make them
whole."

The new SEC rules, which went into effect in 2006, require companies to disclose perks worth at least $10,000.

Still, some perks seemed to go with the corner office. Personal use
of corporate aircraft and reimbursements for financial-planning fees
remained popular, Cwirko-Godycki said.

In the Northwest, benefits ranged from a $600 "Internet service stipend" at F5 Networks to $1.2 million for keeping Amazon.com CEO Jeff Bezos out of harm's way.

Amazon said the security costs were "reasonable and necessary and
for the company's benefit." They accounted for all but $81,840 of
Bezos' 2007 compensation; Bezos' salary has stayed the same since 1999.

"When I'm leading a company, I like to have my shareholder hat on,"
Bezos, 44, said at Amazon's annual meeting last month in Seattle. "I
always felt that I had enough ownership in the company that I didn't
need additional incentive to do my job."

Indeed, Bezos owns about 23 percent of the company, or 97.2 million Amazon shares, which, based on Friday's close price of $XX,
are worth about $7.7 billion.[After a three-year hiatus in selling
Amazon stock, Bezos sold 4 million shares worth nearly $304 million
since January.]

Michael Pickett, CEO of Seattle's Onvia, received the Northwest's smallest pay package at $253,375.

Marchex CEO Russell Horowitz, whose 2006 pay was the smallest last
year, had 2007 compensation worth nearly $10.8 million, thanks to $10.7
million in stock awards.

Fred Whittlesey, a Bainbridge Island compensation consultant with
Buck Consultants, said he tells corporate boards it's OK if their CEO
lands on the top-paid list — just not the overpaid list.

"The only way someone should make a lot of money is if their stock
does really well, and no shareholder should have a problem with that."
he said.

Nationwide, CEO pay is a hot topic at annual shareholder meetings,
said Carol Bowie, head of the ISS Governance Institute at RiskMetrics
Group in Rockville, Md. A significant number of companies face
"say-on-pay" resolutions, which seek to give shareholders input
annually about executive compensation.

Also, companies are seeing more "link pay to performance" proposals,
Bowie said. The proposals urge companies to not pay CEOs bonuses and
equity awards unless they can demonstrate their performance is
"superior" to peers. Nearly 30 of 67 such proposals that Bowie knows of
were withdrawn, an indication that companies agreed to at least some
concessions, she said.

Doug Kilgore, executive director of the Worker Owner Council of
Washington state, who monitors Northwest companies for building-trade
unions with large pension funds, said he asks board members to set CEO
pay at the peer-group median, with exceptions made for really good or
bad years.

"If everyone is setting pay above average, you've got an automatic escalator to the sky," Kilgore said.

Washington state Treasurer Michael Murphy said he worries that CEO
pay has become exorbitant, so he's pushing corporate boards to adopt
majority-voting standards, which be believes would make them more
responsive to shareholders.

At companies with a plurality standard, uncontested board members
need only one vote to win re-election even if most shareholders
"withhold" their votes. The majority standard would require them to
receive at least half of the votes cast.

"It's a good ol' boys club," Murphy said of some corporate boards.
"The way you change it is by giving control back to shareholders."

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