Byline: Mike Comerford Daily Herald Business Writer
Area executives have long been living by different pay and pension rules than their employees.
Yet as the fortunes of many firms flounder, the executive rule book now often looks more like an open checkbook.
This is the time of year when corporations are revealing the compensation of their top officers, which has produced some embarrassing moments for several of the area's biggest companies.
In the wake of the brouhaha raised over the special bonuses and pension guarantees given to AMR's American Airlines' executives, Chief Executive Officer Donald Carty was forced to resign on Thursday.
The largest airline at O'Hare International Airport, American has 10,000 Chicago-area employees. Its unions have each agreed to deep pay cuts.
Yet Carty leaves his post with at least $3.8 million in severance benefits, three years of medical coverage and more unspecified compensation, according to published reports.
Even business publications such as Forbes and Fortune magazines are shining a light on executive compensation outstripping company performances.
Fortune this month named Abbott Laboratories CEO Miles White and Lucent Technologies CEO Pat Russo to its list of "12 Piggy Offenders."
Russo made $38 million in total compensation last year as the 2002 shareholder return at Lucent, which has operations in Naperville and Lisle, fell 75 percent, according to Fortune.
White received total compensation worth $30 million, although shareholder return at Libertyville Township-based Abbott fell 27 percent, the magazine said.
"White's compensation reflected (strong) 2001 Abbott performance," said H. Laurance Fuller, compensation committee chairman at Abbott and former co-chairman of BP Amoco, according to Fortune.
On Friday, Forbes.com hammered the tenure of Motorola Inc. CEO Christopher Galvin. It gave his six years at the helm of the Schaumburg-based electronics firm a grade of "F."
It estimated the firm's annualized total returns were a negative 12 percent, with an average annual CEO compensation of $3.2 million.
During his tenure, 56,000 jobs were cut from Motorola's payroll and shares fell more than 60 percent. Last year the firm lost $1.09 a share but the grandson of the founder got a $1.5 million bonus for profitable quarters.
However, Forbes notes Galvin's compensation is modest in comparison to other corporate high-fliers.
Tenet Healthcare CEO Jeffrey Barbakow made $117 million last year.
The mid-range CEO salary and bonus rose to $1.8 million in 2002, a 10 percent improvement from 2001, according to a survey of executive compensation at 350 large publicly held companies conducted by Mercer Human Resource Consulting.
At the same time, investors have lost an estimated $7 trillion since the stock market's 2000 peak. The jobless ranks swelled by another 1.6 million people last year alone.
"Times are tough, but executives are still living like we're in the Roaring '20s," said Brandon Rees, research analyst for the AFL- CIO, which is lobbying for compensation reform. "It's mind boggling."
Simultaneous to compensation boosts, a number of large companies are setting aside millions of dollars to protect pensions of top executives. Just such a plan caused a firestorm at American Airlines this month. …