US: EXECUTIVE PAY; C.E.O. Pay Keeps Rising, And Bigger Rises Faster

CHIEF executives' pay continued to rise in 2005, although at a slightly slower pace than in 2004.

The average total pay for chief executives rose 27 percent, to $11.3 million, according to a survey of 200 large companies by Pearl Meyer & Partners, the compensation practice of Clark Consulting.

The 123 chief executives included in the survey for the last three years saw their compensation increase, on average, 15 percent, to $11.4 million in 2005. Last year, their pay was up almost 30 percent, to $10.2 million.

Chief executives' median pay -- the point at which half are above and half are below -- was $8.4 million in 2005, up 10.3 percent from 2004. A few executives who received very large long-term bonus and option awards account for the big difference from the average.

While ordinary workers' wages and benefits were squeezed last year, chief executives were largely immune from those pressures.

The median base salary for chief executives rose about 4 percent, to $1 million. The median bonus rose 8 percent, to $1.8 million. That compares with a 38 percent increase, to $1.9 million, in 2004, when profits were growing faster.

The fastest-growing part of executive compensation in 2005 was in new grants of restricted stock and long-term incentive payouts. For the typical chief executive, they rose almost 15 percent, to $1.9 million. In 2004, they grew almost 111 percent, to $1.4 million, reflecting rising profits and a shift away from stock options.

Of the 200 executives surveyed, about half stand to collect big pensions. At least 20 percent can expect $1 million in annual benefits.

There were some big winners but few real losers last year. Chief executives of the largest oil companies, homebuilders and Wall Street investment houses had the largest paychecks in 2005.

Ray R. Irani, the chief executive of Occidental Petroleum, topped the list, with more than $63 million in total pay. Next were Bruce E. Karatz of KB Home and William E. Greehey of the Valero Energy Corporation, who each received more than $40 million in total compensation.

The heads of Wall Street's four biggest investment houses -- John J. Mack of Morgan Stanley, Henry M. Paulson Jr. of Goldman Sachs, Richard S. Fuld Jr. of Lehman Brothers and E. Stanley O'Neal of Merrill Lynch -- were also near the top.

Next year may reveal even bigger paydays. In January, the Securities and Exchange Commission proposed 370 pages of rules to improve the disclosure of how -- and how much -- executives are paid.

The requirements, expected to take effect in 2007, call for companies to explain how much the five highest-paid managers and all directors receive.

Companies will also be expected to show deferred compensation, retirement benefits and severance pay -- figures so hard for investors to find that they are called ''stealth wealth.''

One area that has already changed is the disclosure of perks, which are usually reported in public filings as ''other compensation.'' This form of compensation rose 9.3 percent, to about $188,000, last year, after the S.E.C. took a more aggressive stance on perk reporting.

Companies ''are now putting a value on things that never had to be valued before,'' said Jannice L. Koors, a managing partner at Pearl Meyer & Partners. ''That affected tons of stuff with everybody: airplanes, cars, drivers, apartments. All the stuff that wasn't disclosed because it wasn't reported income now has to be disclosed as a perquisite.''

Chief executives at consumer products companies took a pay cut of about 4 percent after weaker shareholder returns. But boards at many automobile, retail and telecommunications companies appeared to ignore last year's bad news.

Gap, for example, more than doubled the compensation of its chief executive, Paul S. Pressler, to $19.1 million, even though the company posted its worst results in years. Still, the board withheld his annual bonus.

AMP Section Name:Executive Compensation

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