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Business

How we did it

The Sun's report on corporate chief-executive compensation in Marylandis based on data gathered by Aon Corp., a global benefits consulting firmbased in Chicago, under a contract with Tribune Co. newspapers. Aonobtained the data from the most recent proxy statements or annualreports filed by 88 Maryland-headquartered companies with theSecurities and Exchange Commission on or before April 30.

Figures represent compensation for the two most recent reportingyears, whether calendar or fiscal years.

Aon did its research for chief executive officers only.

Cash compensation consists of base salary plus annual bonus.

"Rest." refers to grants of restricted stock, which are shares the CEOgains full ownership of if he or she remains at the company for aspecified period of time.

LTIP stands for long-term incentive plans, which some companies have toreward executives for company performance over several years.

"Other" compensation includes such things as the value of personal use ofcompany automobiles or aircraft, country club memberships, financialplanning services, insurance premiums paid by the company, andcontributions to retirement plans.

Stock options allow an executive to purchase a specific number of sharesat a specified price in the future. They pay off only if the company's stockprice increases, although companies are required to estimate theirpresent-day value.

Companies can use several different methods of determining that value.To allow for uniform comparisons between companies, Aon calculated thevalue of options for all companies by using what is known as the Black-Scholes method, using standardized assumptions on interest rates andother factors that go into that formula. Because of this, Aon's computedvalues for stock options differ from those assigned by the companies inmany cases, even for companies that used the Black-Scholes method.

Total compensation figures exclude gains from exercising stock optionsbut do include value of options awarded during 2004 as calculated byAon.

-- Bernie Kohn
Assistant Managing Editor/Business

Copyright © 2015, The Baltimore Sun
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