At least 10 Colorado executives reported pay increases of 50 percent or more despite declines in their company’s stock price of nearly half or more last year, according to The Denver Post’s survey of compensation at the state’s 50 largest public companies.
ProLogis reported compensation increases of 171 percent for CEO Walter Rakowich and 137.9 percent for outgoing CEO Jeffrey Schwartz last year.
Investors in the real estate investment trust, in contrast, saw their holdings decline 78.1 percent in 2008, although shares have since rebounded.
Schwartz’s departure as the company’s CEO triggered his large payout. To replace him, ProLogis asked its chief operating officer, Rakowich, to delay his retirement.
The company had to accelerate the expensing of Rakowich’s equity awards by $7.1 million, even though those awards won’t vest until this year, next year and in 2011.
“He was originally supposed to retire,” said ProLogis spokeswoman Krista Shepard. “We had to report accelerated expenses on his options.”
Adjusted, his salary would have come in at $6.2 million, a 26 percent increase over 2007.
Of 93 top Colorado executives with two years of compensation data to examine, 55 received compensation increases and 38 saw pay decreases last year, according to proxy filings.
Only three of those companies had shares that rose in value last year.
To be fair, compensation packages weigh variables beyond one year’s stock return, and most examine how a company performs against its peers.
Also, last year’s stock declines punished even well-managed and profitable companies in industries far removed from housing and finance, sources of last year’s credit crisis.
But bigger payouts in bad times call into question the concept of “pay for performance” that underpins executive compensation.
“Executive pay today, even after the biggest meltdown since the Great Depression, is at levels stratospherically higher than pay levels of a generation ago,” said Sam Pizzigati, editor of Too Much, an online publication that tracks executive pay abuses.
Back in the 1970s, the average CEO made 30 times as much as the typical worker. That ratio is around 300 times today, Pizzigati said.
Excessive compensation goes beyond fairness. Companies that overpay, whether for raw materials or executive compensation, are by definition less efficient, he said.
And wide pay disparities, especially when they reward poor performance at the top, undermine American enterprise rather than promote it, Pizzigati contends.
Aldo Svaldi: 303-954-1410 or asvaldi@denverpost.com
