2009: Valley CEO pay down last year, but not by much

CEO pay fell in Silicon Valley last year, but it could have been worse.

The median pay package the valley's boards of directors awarded their chief executives dropped 5.6 percent, to $2.2 million, while overall pay among the Standard & Poor's group of 500 companies fell even more, 7.5 percent, to $8 million.

And though the recession hasn't spared the valley's CEOs, it did far worse damage to Wall Street, where CEO paychecks were down in the financial services industry by 38.5 percent as major companies vanished, zeroing out their leaders' pay.

But bonuses awarded to the valley's chief executives dropped sharply, falling 31 percent to a median of $242,000. That drop was bigger than what was seen among the S&P 500 group of companies, where bonuses were down 22.2 percent, said Alexander Cwirko-Godycki, research manager at Equilar, an information services firm specializing in executive compensation research that supplied CEO compensation data to the Mercury News.

The percentage of valley CEOs receiving bonuses, which are slightly more indicative than salaries of how boards view their CEOs' performance, fell from 87.3 percent to 73.6 percent.

"We saw significant declines in annual bonus payouts because performance was down last year, pretty much across the board," said Carol Bowie of RiskMetrics, a Maryland financial research service.

Even salaries fell among valley CEOs by 0.4 percent — they were up 2.1 percent

among the S&P 500 — and they could drop again this year as companies conserve cash in the midst of a dramatic slowdown in business.

Overall CEO pay was down in the valley, but while "2008 was a challenging year for everyone, companies in the technology and health care sectors seemed to fare better than most," Cwirko-Godycki said. "CEO pay levels in these industries were fairly steady, and even increased among the largest companies."

For the first time ever, a majority of the CEOs running the valley's 150 largest companies received stock awards, which include restricted shares and performance shares. Performance shares tie the vesting of stock to performance targets.

The median value of those awards was $309,259 last year. They made up 25 percent of pay, a 1 percent increase, continuing a climb that began in 2004.

"It's one area where we do see a change in the valley's compensation culture," Cwirko-Godycki said. "Silicon Valley is becoming more similar to everyone else."

Taken together, stock awards with some kind of string attached — restricted stock and performance shares — found their way into the pay packages of many more CEOs here. Last year, 53.6 percent received such stock, up from 42.7 percent in 2007.

"As Silicon Valley matures, the options-rich environment of past years is fading, at least among big companies in this survey," Cwirko-Godycki said.

Contact Pete Carey at pcarey@mercurynews.com.

Biggest cash compensation package
(Salary and bonus)
Mark Hurd, Hewlett-Packard: $26,044,577

Smallest cash compensation package
Steve Jobs, Apple: $1

Smallest overall compensation package
Joseph Liu, Oplink Communications: $158,545

Biggest raise
Thomas Werner, SunPower: 1,238 percent, to $7,078,029

Biggest pay cut
Lars Dalgaard, SuccessFactors: 84 percent, to $630,000