Executive Pay Decreases

According to Business Week's 53rd annual Executive Pay Scoreboard, CEO pay packages in 2002 declined 33%, to $7.4 million on average. Although average exec pay plunged by a third, the median pay for  CEOs actually rose by 5.9%, to $3.7 million. compiled with Standard & Poor's ExecuComp. "There's no question: Compensation committees are taking a very hard look at the compensation of senior executives," says Dan L. Goldwasser, a member of the pay panel at Forest Laboratories Inc.  Longtime Forest CEO Howard Solomon receives only a modest salary despite outstanding performance, though a surging stock helped him to realize big gains in 2001 when he exercised options.

Of course, averages can be deceptive. What has really been wrung out of the system is the excess at the very top of the scale. In last year's ranking, Oracle Corp.  CEO Lawrence J. Ellison set a record with a $706.1 million payday after he exercised a big stash of options. This year, the highest-paid exec clocked in at just $194.9 million. Last year, the top seven execs on our pay scoreboard broke the $100 million barrier; this year, only two did. The numbers were also skewed by a handful of CEOs who, in light of weak performance and a backlash against obscene pay, elected to work for nominal sums or who gave back part of their take.  Yes, it's an increase, but not to a level that's apt to provoke investor outrage.