UPDATE 2-Kraft freezes top executives' salaries

* Top 19 executives' salaries frozen in '09, including CEO

* Almost all other Kraft employees to receive merit raises (Adds background on pay issue, examples at other companies)

By Brad Dorfman

NORTHFIELD, Ill., Feb 10 (Reuters) - Kraft Foods Inc (KFT.N) will freeze the salaries of Chief Executive Irene Rosenfeld and 18 other top managers in 2009, though remaining employees will receive raises, Rosenfeld told employees on Tuesday.

The decision to freeze the salaries of Rosenfeld, her executive team, regional and business unit presidents, and some other top managers, was announced as Rosenfeld asked employees to be prudent with spending during a time of economic turmoil.

"I did feel it was important to set the appropriate tone at the top with the extended leadership team," Rosenfeld told Reuters following the meeting.

But she also wanted to assure Kraft's roughly 100,000 employees that almost all would receive raises following a year when the company posted an 18.5 percent rise in earnings per share and a 4.4 percent increase in revenue before acquisitions, divestitures and the impact of the stronger dollar.

"I'm quite proud of the fact that we are giving everybody increases consistent with the terrific performance that they turned in," Rosenfeld said.

Executive pay has once again become a hot-button issue amid outrage over large bonuses paid to some Wall Street bankers, even as their companies received government bailout money.

U.S. President Barack Obama, in one of his first actions in office, froze pay for senior White House staff. He has also called for a cap of $500,000 in compensation for executives at companies receiving the next round of bailout money.

Other companies, like retailer Macy's Inc (M.N) and the Starbucks Corp (SBUX.O) coffee chain, also have taken steps to hold the line on executive pay, though those companies have been harder hit by the recession than Kraft.

Macy's said it would not raise salaries for executives in the spring and would cut the amount for matching 401(k) contributions for the year and Starbucks said CEO Howard Schultz and other top managers would not get raises in 2009.

Rosenfeld's base salary for 2008 has not yet been disclosed. Her 2007 base salary was $1.38 million, a Kraft spokesman said.

Executives whose salaries were frozen will still be eligible to earn bonuses, Rosenfeld said.

Kraft shares closed 3.5 percent lower at $24.98 on Tuesday on the New York Stock Exchange. (Reporting by Brad Dorfman; Editing by Bernard Orr)