Carly's doing it. John's doing it. So are Gordon, Don and Leo.
Even James Cayne, the chief executive of Bear Stearns, whose executives have been widely criticized as paying themselves well -- no, very well, is doing it.
After years in which executive pay marched steadily, if controversially, upward, the trend seems to have begun to reverse course -- in many cases at the behest of the executives themselves.
From Hewlett-Packard to Cisco Systems to Continental, American and Delta airlines, executives are forgoing bits and pieces of their compensation with hardly a squeak. Others are accepting severance packages, either willingly or under duress, that weigh in at far less than what departing executives, even poorly performing ones, received last year.
What gives? "The optimist in me would like to believe that pay for performance is actually working," said Cynthia Richson, director of corporate governance at the State of Wisconsin Investment Board. "The realistic side of me says that for now, it's probably more of a PR move than anything."
Shame, perhaps, is back in vogue. It is moot now, but the biggest example may be the Enron Corp. A takeover offer by Dynegy in early November automatically entitled Kenneth L. Lay, Enron's chief executive, to a US$60 million severance package.
But when employees, many of whom had lost most of their retirement savings in 401(k) plans after the company's stock nose-dived, became incensed, Lay walked away from the money. "How could Ken Lay possibly have withstood the public scrutiny if he had walked away with that US$60 million severance package?" Richson said. "It would have been almost criminal to take a big fat payoff."
It is hardly surprising that chief executives and members of compensation committees are not rushing to the phones to explain their behavior.
But some companies and pay experts would have you believe that executives and board members are insisting that pay match the altered performance of their companies, that as they lay off workers and cut costs to cope with the now-official recession, they are taking a hit themselves.
Last April, for example, John Chambers, the chief executive of Cisco Systems, gave up his right to US$268,131 in salary. Cisco's stock dropped 70 percent in the last fiscal year and earnings plummeted as demand dried up for the company's switches and other products. "His request to the compensation committee was that his pay reflect the current state of the business," said Terry Anderson, a spokeswoman for Cisco.
But cynics -- and after years of skyrocketing numbers it is easy to be cynical about executive pay in the US -- say that much of the sacrificing is more style than substance. In reality, they say, executives and boards are just finding creative ways to cut cash compensation while making up the loss in ways that take advantage of weak disclosure requirements.
Supplemental pension plans are rising in popularity, experts say. They ensure rich retirement pay for executives, and with limited disclosure, because companies can bundle all their pension liabilities, obscuring the increases aimed at senior managers. Companies like Motorola, McKesson and Hershey have all adopted such plans.
Special trusts in favor
Gaining favor, too, are special trusts, such as the one designed for John F. Welch Jr when he left General Electric in September. It allows him to pass his wealth on to future generations with few or no tax penalties.
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