CEO salaries: 10 travesties, trends and token gestures

Stronger company performances and improving stock prices led to bigger pay packages for tech CEOs in 2010.

As companies rode out the recession and slowly regained some sales momentum in 2010, profits started improving and stock prices began to recover. For CEOs that could only mean one thing: pay raises.

As companies rode out the recession and slowly regained some sales momentum last year, profits started improving and stock prices began to recover. For CEOs that could only mean one thing: pay raises.

CEO compensation rebounded in 2010, according to professional services firm Towers Watson. Median cash compensation -- which includes base salary and bonuses -- increased 17% for CEOs in 2010. Total direct compensation -- which includes cash compensation plus long-term incentives and equity awards -- increased 9%.

CEO PAYDAY: What tech's top execs raked in for 2010

That's a significant comeback from 2009, when median cash compensation increased just 3% and total direct compensation declined 1%.

"Compensation for CEOs has returned to levels we haven't seen since before the economic crisis," said Doug Friske, global head of executive compensation consulting at Towers Watson, in a statement.

What does that mean for the tech industry? Here are 10 pay trends and observations gleaned from Network World's analysis of 36 tech companies' 2011 proxy statements.

1. Bonuses got bigger. Few tech CEOs saw their bonuses shrink in 2010. Most got bigger - and some by a lot. IBM CEO Sam Palmisano, for instance, earned a cash bonus of $9 million, which is nearly double the $4.8 million bonus he received in 2009. Cisco CEO John Chambers netted a bonus of $4.6 million, up from $2 million in 2009. NetApp CEO Tom Georgens got a $2 million bonus, up from $339,716 a year earlier.

2. Stock awards rose as performance improved. VMware grew revenue by 41% and profit by 81% in its 2010 fiscal year, and CEO Paul Maritz tripled his compensation, thanks to a grant of stock awards valued at $3.9 million (he didn't receive any equity awards in 2009). F5 Networks grew revenue and income by 35% and 65%, respectively, and CEO John McAdam received stock awards valued at $7.5 million (up 92% compared to a year earlier). EMC CEO Joe Tucci took home a $12.4 million package in 2010, including stock awards valued at $7.4 million (up 23%) and option awards valued at $1.3 million (up 39%); the company, meanwhile, reported a 21% revenue bump and 75% increase in net income.

3. Token gestures didn't amount to much. Oracle CEO Larry Ellison agreed to decrease his annual salary from $1 million to $1 last year. He's by no means the first: Apple CEO Steve Jobs and Google's Larry Page and Sergey Brin have been taking a $1 salary for years. The difference is, while Jobs, Page and Brin have declined any new stock awards as part of their compensation packages, Ellison typically nets tens of millions in equity grants. Last year was no exception: Ellison received option awards valued at $61.9 million in Oracle's 2010 fiscal year.

4. Some said no to big packages. Apple and Google aren't the only companies with execs who decline beefy pay packages. Microsoft CEO Steve Ballmer netted a modest $1.4 million pay package in 2010, which includes his $670,000 salary, a $670,000 cash bonus, and $11,121 in perks. Ballmer didn't receive any new equity awards in 2010, even though the company reported record revenue and grew its net income by 29%. Similarly, Michael Dell's 2010 pay package consisted of his $950,000 salary and $13,623 in perks; the Dell CEO didn't receive any equity awards or bonuses.

5. Nothing says goodbye like a generous severance. Former HP CEO Mark Hurd, who's now at Oracle, departed HP with a $12.2 million severance payment. John Swainson parted CA with a $4.5 million severance payment upon his retirement, and Extreme Networks' former CEO Mark Canepa collected $426,494 in severance pay after resigning in October 2009.

6. Temp work paid well. Apple COO Tim Cook, who stepped in as CEO during Steve Jobs' 2009 medical leave of absence, netted a whopping $59.1 million in 2010, including a $5 million cash bonus and stock awards valued at $52.3 million. HP CFO Cathie Lesjak, who served as interim CEO during the search for Mark Hurd's successor, earned $8.1 million in 2010, including some extra bonuses ($1 million cash and $2.6 million worth of equity awards) in recognition of her service as interim CEO.

7. Pricey perks fell out of favor. While AT&T paid $215,954 for club memberships for CEO Randall Stephenson in 2009, last year that tab was slashed to $15,174. "The company car is going away quickly. Club memberships are gone, by and large. Preferential earnings on retirement accounts are fading. Executive physicals have stayed but are starting to go," says Nora McCord, managing director at executive compensation consulting firm Steven Hall & Partners. "Five years from now, I think we'll be in an environment where those types of perks don't exist."

8. CEOs still didn't want to fly coach. Using the company jet for personal travel is "the one perk executives are the least willing to give up," McCord says. One frequent flier is IBM's Palmisano, who received $311,288 for personal use of company-owned aircraft in 2010. Other CEOs accustomed to using company jets for personal travel include: Sanjay Jha, CEO of Motorola Mobility (to the tune of $186,189); former HP CEO Hurd ($158,816); Verizon CEO Ivan Seidenberg ($144,276); EMC's Tucci ($134,684); Greg Brown, CEO of Motorola Solutions ($133,530); former CA CEO Swainson ($106,589); AT&T's Stephenson ($77,182); and HP's Lesjak ($20,249).

9. Personal security tabs added up. One extra that's nonnegotiable for some companies is personal and residential security for the CEO. Proponents view it as a legitimate business expense, since safeguarding the CEO is effectively a benefit to the business that not only minimizes corporate risk but also is aligned with the interest of shareholders. Last year Oracle paid $1.5 million for security-related costs and expenses for Ellison's residence. Likewise, HP paid $362,899 for home security for ex-CEO Hurd, IBM spent $55,465 for Palmisano's home security, and AT&T spent $30,504 for Stephenson's. Bucking the trend is Dell, which used to pick up the tab for Michael Dell's personal and residential security - to the tune of $1 million in 2008 and $1.2 million in 2009 - but going forward has said it will only provide him with business-related security protection.

10. CEOs got help with numbers. Symantec CEO Enrique Salem didn't receive a lot of perks in 2010, but he did net $10,000 as a reimbursement for tax services. Other tech CEOs who benefited from expert financial and legal advice include: Motorola Mobility's Jha ($25,348 for legal fees); HP's Lesjak ($18,000 for financial counseling); EMC's Tucci ($15,000 for financial planning); AT&T's Stephenson ($14,000 for financial counseling, including tax preparation and estate planning); and former HP chief Hurd ($13,500 for financial counseling). Oracle hired a law firm to make sure its most senior executives don't run afoul of laws related to the reporting of their personal political campaign contributions; CEO Ellison tapped that service for $4,642.

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