If ever there was a year that you'd expect the state's top corporate dogs to get hit in the wallet, 2008 would be the one.
The stock market crashed, bankruptcies soared and millions of workers were sent packing -- at a time when public outrage over excessive pay for top executives reached an all-time high.
But not everyone got the memo.Seven of California's 10 highest-paid chief executives got huge raises compared with the previous year, bringing their average pay packages up about 6% to $32 million, according to The Times' annual survey of executive compensation at publicly traded companies in the state.
Pay for one, Ronald Havner Jr. of Glendale-based Public Storage, increased 593%, thanks to a bonus for the sale of one of the company's subsidiaries.
Hewlett-Packard Co. CEO Mark Hurd received $25.4 million in cash and $16.4 million in stock. Add that to rides on the corporate jet and other perks, and he took home $42.4 million for a 68% jump over 2007. The company's earnings were up about 15% last year.
Alexander Cwirko-Godycki, research manager at Equilar Inc., the Redwood Shores, Calif., data analysis firm that conducted The Times' survey, said he expected more reductions in executive pay when 2009's results are reported next year.
"There's a delay between when the message is sent and when companies start taking action," Cwirko-Godycki said. "I think you are going to see bigger cuts in 2009."
Already, he said, the data show that salaries and other forms of pay were reduced in 2008 at a third of the 100 companies tracked by The Times, bringing the total compensation down 6.8% for the year.
Among those whose pay went down last year were Jure Sola, CEO of Sanmina-SCI Corp., whose pay was sliced 70% to $2.2 million while his company lost $511 million during the year.
At Ingram Micro Inc., CEO Gregory Spierkel's pay dropped 68% to $1.4 million, largely because of worthless stock awards. In the wake of the real estate downturn, Ryland Group Inc.
CEO R. Chad Dreier's pay dropped 25% to $11 million, and KB Home CEO Jeffrey Mezger's compensation fell 41% to $9.6 million.
The Times' methodology of reporting total pay conforms with Securities and Exchange Commission guidelines, which reflect the cash and benefits received in a given year, plus the value of stock options granted and expensed by the company during that year.
Vineeta Anand, chief research analyst at the AFL-CIO office of investment, said she thought most of the pay cuts had been superficial.
"It seems as if companies have cut compensation and heeded the fact that this is a terrible economy and people have lost their jobs and homes," Anand said. "But when you look carefully at the proxy statements, you find that a lot of companies have gone to great lengths to compensate executives at the same astronomical levels as they have been."
Even with the pay reductions that some CEOs experienced this year, most are still earning hundreds of times more than their employees.
The AFL-CIO, which has become an activist shareholder on behalf of member pensions and whose website includes an Executive Paywatch section, says it would take the average worker more than eight lifetimes to earn as much as Ray Irani -- Occidental Petroleum's CEO and California's top-paid executive.
"I can't think of another country in the world where the disparity between senior executive pay and the rank and file is as high as it is here," said Thomas I. White, a professor of business ethics at Loyola Marymount University in Los Angeles. "I have always felt that this is going to emerge as a larger ethical issue."
Expecting pay that's 300 times more than an employee's should generate shame, he said. It's a form of economic gluttony.
Irani made $60.5 million in 2008, according to Equilar's report. That was actually down 22% compared with his pay the previous year.
Irani's pay declined because part of his compensation -- including a bonus and stock awards -- depends on shareholder returns, which shrank last year, according to the company's SEC filings.
The company's profit rose substantially during the year, but the company's stock price got trashed with the rest of the market and, by December, was cut nearly in half from its summer highs.
Activision Blizzard Inc. CEO Robert Kotick earned $28.9 million in a fiscal year that was just nine months long, up 93% from the entire previous year. The company used the three-quarter-year time frame in its regulatory reports because Activision changed its fiscal year.
Factoring in the shorter year, his pay was up 142%.
It's a big boost for the CEO of a company that swung to a $107-million loss from a $227-million profit in 2007.
Blizzard would not comment on Kotick's pay, but Chief Financial Officer Thomas Tippl said that although it might seem that the company had a down year, that was only because of accounting issues. Activision completed a "reverse merger" during the year, causing a portion of the company's profit to go unreported, he said.
