U.S. CEO bonuses hit by rough market conditions

By Martha Graybow

NEW YORK (Reuters) - Chief executives of large U.S. companies got lower total bonus pay overall last year, a reflection of tumultuous business conditions, according to a study of 178 corporations that have reported 2007 pay data.

In total, the aggregate value of bonuses awarded to the CEOs covered by the study fell 4.7 percent to a combined $375.1 million last year, down from $393.5 million in 2006.

The payouts include all kinds of cash bonuses, such as discretionary, annual and multi-year performance bonuses, but do not include other things such as stock option grants or restricted stock.

The study, released on Friday, was conducted by Equilar Inc, an executive compensation research firm. With many more companies yet to file the annual shareholder proxies containing yearly pay reports, the data provides a preliminary snapshot of 2007 executive compensation trends.

"It's the first time in several years that we are seeing declines in CEO bonus payouts," said Alexander Cwirko-Godycki, research manager at Redwood Shores, California-based Equilar. "Those declines are being led by a pretty steep drop in annual performance-based bonuses."

The median value of annual performance-based bonuses awarded to CEOs covered by the report fell 18.6 percent in 2007. These awards were given based on an executive's performance in the year based on various measures set by the company's board.

Fewer companies gave out such payments last year, as some executives either did not qualify for the awards or they voluntarily passed them up. The report found 70.4 percent of the companies gave annual performance-based bonuses in 2007, down from 77.5 percent in 2006.

Among those who did not accept a bonus last year was Kerry Killinger, chief executive of savings and loan Washington Mutual Inc (WM.N), according to the company's proxy filing this month. Overall, the value of his total compensation for the year was reduced to $5.25 million, down 63 percent from $14.2 million a year earlier, according to the regulatory filing.

At the same time, the study found that discretionary bonuses and longer-term performance bonuses were up for the year at the companies covered by the report. These payouts, which not all CEOs receive, are less reflective of a company's results for one specific year.

The median value of multi-year performance-based bonuses -- which typically measure performance over a three- to five-year period -- rose 22.9 percent last year, the report found.

The median value of discretionary bonuses jumped 27.6 percent last year, the study found. These payments typically include sign-on and retention awards, and can also include other payouts based on various performance measures.

The study looked at companies with annual revenues above $1 billion whose fiscal years ended on December 31. Of these companies, median annual revenues rose 13.9 percent in 2007 from the prior year, climbing to about $6.8 billion. However, their median net income dropped 8 percent to about $349 million last year.

(Editing by Braden Reddall)