Maryland CEO compensation rose and fell with corporate and stock market fortunes

Jos. A. Bank Clothiers navigated a tough consumer market to gain in profit and stock price in the past fiscal year. The Hampstead retailer's chief executive, R. Neal Black, also did well, taking home $2.6 million in pay, more than double his compensation in 2008.

On the other end of the executive pay spectrum, A.L. "Tom" Giannopoulos, head of Columbia-based MICROS Systems Inc., saw his total compensation drop $4.1 million. Giannopoulos' $2.8 million pay package, while not a small sum, reflected the declining profit and stock market value at the information systems company during the past fiscal year.


The crushing economic downturn — and an uneven and sporadic recovery — hit not only rank-and-file workers but also the top echelons of corporate boardrooms. Some CEOs were rewarded as their companies weathered the recessionary climate and benefited from last year's rebounding stock market. Other CEOs saw their paychecks shrink along with corporate profits.

The Baltimore Sun analyzed compensation packages at 18 publicly traded companies in the metro area that paid their CEOs at least $1 million in one of the past two years. About half of the companies reported that total pay fell for the top executives, often in keeping with the declining fortunes of the companies they run.


And at two companies — Columbia-based biotechnology companies Osiris Therapeutics Inc. and Martek Biosciences Corp. — CEOs who made more than $1 million in 2008 dropped off the list last year.

"Because performance was off in a down economy, all the measures you would use to award executives would suggest lower salaries," said Charles M. Elson, director of the John Weinberg Center for Corporate Governance at the University of Delaware. "It's lower but not dramatically lower. That's an issue."

Elson, who has been critical of high levels of CEO pay, said pay packages could rebound along with the economy this year. "Have we fixed the compensation problem? No," he said. "That's the important take-away."

Many executives saw the value of their stock and options awards, which often make up the largest chunk of pay packages, fall last year compared to the previous year. That's because most awards are made in the beginning of the year — and in early 2009 the market had barely begun to recover from its free fall.

Still, some executives got larger cash bonuses and more incentive-based pay that reflected a recovery in company performance from depressed levels in 2008.

Total CEO compensation, including salary, bonus, stock options and other pay, fell 7 percent to a median $1.4 million in 2009 — a decline for the second straight year, according to a preliminary survey by The Corporate Library, a governance watchdog group. Even among large companies, CEO compensation dropped 15 percent to a median $5.3 million.

"People always say executive pay never goes down," said Jon Weinstein, who heads the executive compensation practice for consultant Towers Watson & Co.'s East region. "2009 was a year in which executive pay decreased."

The spotlight on executive compensation comes each year with increasing scrutiny, especially during the recent recession. Last week, Congress approved a sweeping financial reform package, including provision for a nonbinding shareholder vote on executive pay. Some shareholders have pushed for "say on pay" proposals with modest success in the past several years.


Warren Chen, managing director of Glass Lewis & Co., a firm that provides guidance on proxy proposals and corporate governance issues, said the mandate could make companies more accountable.

Weinstein said boards have been sensitive to financial difficulties facing their shareholders and employees, particularly when it came to making annual stock-based grants last year amid the economic downturn.

"Stock performance wasn't there. People got smaller or less value in equity, which is what drove the overall package down last year," he said.

Mayo A. Shattuck III, CEO and chairman of Constellation Energy Group Inc., has frequently been among the most highly paid executives in the Baltimore region and ranked No. 1 last year for the fourth year in a row.

While the value of his stock and options took a hit, he earned a $3 million cash incentive payout as the company turned a $4.4 billion profit from a near bankruptcy in 2008. That boosted his pay package to $10.9 million.

"The company successfully executed a complex and comprehensive turnaround strategy during the course of the year, and as a result, the board felt that the superior performance deserved the [annual incentive] award," Constellation spokesman Larry McDonnell said.


Shattuck's compensation was lower than the $20.3 million he received in 2008. But half of that year's pay package reflected an increase in pension value and deferred earnings that the company attributed to an accounting change.

Jos. A. Bank paid Black $1.7 million in bonus and incentive pay tied to company performance last year, up from $423,750 in 2008. Black's base salary also increased.

The company told shareholders in its proxy statement that annual profit increased 22 percent to $71.2 million "in the face of extraordinary downturn in the United States economy in general, and in the retail sector in particular." That exceeded the target established for its cash incentive program.

One Baltimore-area executive broke the $1 million-plus ceiling last year. Michael S. McDevitt, chief executive of Medifast Inc., an Owings Mills company specializing in weight-loss programs, earned $1.2 million, up from $662,700 in 2008. The company's profit more than doubled last year.

McDevitt's bonus of $410,000, up from $75,000, largely contributed to his pay increase. The company said in a proxy statement that its executive bonus plan is tied to short-term performance goals, which were exceeded last year.

Other prominent Baltimore executives remained off the highly paid list. Under Armour Inc. CEO Kevin A. Plank saw a huge pay increase last year when the athletic apparel maker's profit bounced back, but his annual compensation still didn't crack $1 million.


In 2008, Plank received no incentive pay and voluntarily cut his base salary from $500,000 to $26,000 because the company did not meet revenue goals that year. He earned $1.5 million in 2007.

His compensation then skyrocketed to nearly $750,000 last year because of an annual cash incentive award tied to performance. Plank's base salary remained at $26,000.

The company's compensation committee "believed that Mr. Plank's continued leadership and superior performance were a critical part of Under Armour's ongoing strong performance," the company said in its proxy statement.

Another executive missing from the area's highest-paid CEO list is Nolan D. Archibald, the longtime head of Black & Decker Corp. That's because the Towson-based toolmaker was acquired by its former competitor The Stanley Works of Connecticut.

Nonetheless, Archibald — who made $13.7 million in 2008 — stands to make millions as executive chairman of the newly combined company called Stanley Black & Decker.

Under a three-year contract that began in March, Archibald will earn an annual base salary of $1.5 million and up to $1.9 million in annual bonuses. He also is eligible for annual stock-based awards valued at $6.7 million and a bonus of up to $45 million if he meets certain cost-cutting goals by the end of his contract.


Moreover, Archibald can continue to use a corporate aircraft for business and personal use, according to a regulatory filing.

For C. Randal Mills at Osiris Therapeutics and Steve Dubin at Martek Biosciences, both saw declines in bonus or incentive pay. Martek fell short on some financial performance targets, while Osiris implemented a lower range of bonuses for executives, including Mills, who qualified for the maximum amount.

Some companies made a profit last year, but not as much as the previous year. Their CEOs made less, too.

MICROS Systems reported a 2 percent decline in net income in the fiscal year that ended in June 2009. As a result, the company did not meet certain revenue and profit goals, which meant executives did not get bonuses and incentive pay. But CEO Giannopoulos pointed out that many of his rank-and-file employees did earn bonuses.

His compensation dropped from $6.9 million to $2.8 million because the value of his stock options fell. Giannopoulos had received $1.5 million in bonus and incentive pay in the previous fiscal year.

"You don't get a bonus at MICROS Systems for dressing nice or having nice hair for work," he said. "You have to meet specific revenue and specific profit objectives set at the beginning of the fiscal year set by the compensation committee. If you don't meet those, and even if you miss them by a dollar, you do not get a bonus."


Baltimore Sun reporters Jamie Smith Hopkins, Jay Hancock, Lorraine Mirabella, Gus G. Sentementes and Andrea K. Walker contributed to this article.