Pay packages for Baltimore-area CEOs last year mostly reflected how well or poorly companies performed, in keeping with a national trend that's taken hold in recent years.

"We expect to see a strong connection between company performance and CEO pay, and I think we do see that," said Sue Holloway, executive compensation practice leader at Arizona-based WorldatWork.


As companies recovered after the recession, that meant pay increases. But last year the pace of gains slowed along with economic growth, analysts said.

Nationally, overall compensation increased just 2 percent in 2015, according to Willis Towers Watson.

The business advisory firm looked at 315 companies in the S&P 1500 with the same CEO in place for the past three years. The pace of gains has slowed since 2014, when total CEO pay jumped more than 12 percent, the firm reported.

CEO pay packages typically include a base salary, short-term cash incentives based on annual performance, long-term equity incentives tied to stock performance and other items, such as pensions.

CEO base salaries in the United States rose by an on average of 3 percent, WillisTowers Watson found, while long-term incentives were up 6 percent — less than the 2014 rate.

CEOs are typically given stock options and restricted shares that vest over a period of years and are tied to future performance goals.

"Particularly toward the end of last year ... we saw a weak stock market relative to prior years, so packages are generally down reflecting that," Holloway said.

More than a third of the 25 highest-paid CEOs in the Baltimore area earned less in 2015 than in the previous year. They included the CEOs of money managers Legg Mason Inc. and T. Rowe Price Group, Chesapeake Lodging Trust, Medifast Inc., McCormick & Co. and Under Armour.

Legg Mason CEO Joseph A. Sullivan, the area's second-highest-paid executive, earned a total package of $10.2 million, down 2.2 percent. The CEO's salary and incentive award alone were down 20 percent. The firm reported a loss of $25 million in its 2016 fiscal year.

"This decrease was appropriate in light of Legg Mason's financial performance ... and a comparison of Mr. Sullivan's compensation to that of chief executive officers of other competitor firms, despite Mr. Sullivan's excellent personal performance and leadership in significant strategic accomplishments during the year," the company's compensation committee said in a Securities and Exchange Commission filing.

An analysis by ISS Corporate Solutions of 17 publicly traded companies in the Baltimore region showed little change in median salary in 2015 compared to the previous year, edging up less than 1 percent, among the smallest increases of any U.S. city.

"Boards have become much better at monitoring both the magnitude and structure of the pay programs they administer for executives and have become more sophisticated in managing the year-over-year levels of compensation," said Peter Kimball, associate director of ISS Corporate Solutions, a division of Institutional Shareholders Services.

Still, some Baltimore area CEOs earned significantly more or less than they did in 2014.

W.R. Grace & Co. CEO Fred E. Festa earned about 22 percent less — mostly because in 2014 he earned a $1.5 million bonus tied to Grace's emergence from one of the longest-ever corporate bankruptcies.


The $4.3 million salary for Jeffrey W. Eckel, CEO of Hannon Armstrong Sustainable Infrastructure Capital Inc., which provides financing to renewable energy markets, represented a 52 percent jump. The increase reflects an increase in 2015 in the value of stock awards tied to company performance.

And Under Armour's Kevin Plank earned 31 percent less last year, with a total package of $2.43 million, largely because of a decrease in his annual cash incentive award. That award was tied to reaching an operating margin goal in conjunction with strong net revenues.

"While we achieved the net revenue and certain operating income growth targets set forth in the plan, our adjusted operating margin fell below the target set by the Compensation Committee," the company said in an SEC filing.

Performance-based pay accounted for three-quarters of total compensation for CEOs at S&P 500 firms last year, including either long-term incentives or bonuses, Willis Towers Watson found. CEO performance is measured based on goals for earnings, sales and increasingly to metrics such as return on invested capital and return on equity.

The greater emphasis on performance-based pay "is sending much stronger signals on what's important to the company," said Rob Mustich, managing director of executive compensation practice in the eastern United States for Willis Towers Watson. "It sends a pretty clear message to executives and shareholders on what's important and what's going to be recolonized. ... There's more focus on the goal setting."

The area's top-paid executive was new to the job last year. Matthew L. Trerotola, CEO of Annapolis junction-based Colfax Corp., an industrial pump and valve maker, landed a $17.5 million pay package when he moved from DuPont.

His compensation included a $1 million first installment of a signing bonus and more than $14.5 million in stock and stock options under the company's long-term incentive plan.

"When you have a long-tenured CEO who leaves and an internal executive gets promoted, you tend to see lower compensation," Kimball said. "Whereas when hiring from outside, it tends to be a more expensive proposition for the board because that person has unique negotiating leverage and often ... is forfeiting unvested equity from the previous company."

While Baltimore-area companies saw little change in median pay, other cities — especially those with a concentration of a single industry — experienced greater increases or decreases. Thirty-two of 40 metro areas with at least 10 companies with the same CEO in place for three years had greater median increases than Baltimore's, Kimball said.

"There are cities with real industry concentrations, and you see more significant swings," Kimball said. He cited Detroit, where a greater median increase reflected the growing strength of auto sales.

"Baltimore has a diverse set of companies based there," he said. "Diversification ... tends to smooth out extremes."