“We’re seeing a lot of companies moving to pay their executives in performance shares — stocks that come with certain metrics that executives have to meet,” McGoldrick said. “It’s nice that the stock market is improving, but even aside from that, a lot of companies are moving toward stocks to show shareholders that they’re linking compensation to performance.”
At some area companies, executive pay closely mirrored the firm’s broader trajectory. Cardinal Financial chief executive Bernard H. Clineburg (No. 69), for example, received a 53 percent boost in pay to coincide with a 62 percent increase in profits.
At Washington Real Estate Investment Trust, both the company’s profits and the chief executive’s pay fell by more than 70 percent. George F. McKenzie (No. 76) was paid $1.06 million last year — down from $3.93 million the year before (when he was ranked 31) as the company’s annual profits fell to $23.71 million from $105.38 million in the same period.
Not all firms have managed to align pay with performance. David Schaeffer (No. 9), founder and chief executive of Cogent Communications, received $8.75 million last year — more than five-fold the $1.69 million he made in 2011 — even as the company posted a $4.25 million loss.
Schaeffer’s pay package was rejected by nearly 60 percent of the company’s shareholders in April, making it the second time the company failed say-on-pay. (The first came in 2011).
Cogent did not return calls seeking comment. The company explained Schaeffer’s pay package, which included $8.41 million in stock awards, in a proxy statement filed earlier this year.
“The method of compensation decision making employed by the company does not lend itself to extensive analytical and quantitative disclosure,” the company said. “Most of the analysis that goes into compensation determinations is simply the subjective business judgment of the company’s CEO and the board of directors.”
There is debate about exactly how much progress has been made in regulating executive pay, which has been under increased scrutiny since the economic downturn. The House of Representatives in June voted to repeal a proposed rule that would require companies to report the difference in pay between their chief executive and average worker.
“The gap between the average American and the highly paid is widening, so this issue becomes bigger and bigger,” said Alan M. Johnson, managing director of Johnson Associates, a compensation consulting firm. “What we’re seeing is that the reduction in perks continues. Excessive severance, excessive contracts, excessive retirement benefits have been scaled back significantly.”
Seventeen of the 89 highest-paid executives received bonuses last year, down from 27 the year before, reflecting a broader move away from discretionary payouts. Jay L. Johnson (No. 5), chairman and chief executive of General Dynamics, walked away with the second-biggest bonus, valued at $3.6 million — roughly 20 percent of his overall package.
Seven executives on this year’s list received more than double what they did the year before. Among them: Robert S. Silberman (No. 41) of Strayer Education, whose pay package increased 413 percent; Richard J. Hendrix of the investment firm FBR, up 241 percent; and Martine A. Rothblatt (No. 28), CEO of drugmaker United Therapeutics, up 185 percent.
In the coming year, analysts say they expect investors to continue to ask more questions about exactly how companies are quantifying an executive’s performance.
“The next frontier is looking at how stringent the goals actually are,” said McGoldrick of Equilar. “Rigor in performance metrics is certainly something that’s getting a lot more attention. It’s easy to pay executives based on metrics but if the bar isn’t set high and it’s something they can easily exceed, you’re really not tying compensation to the company’s performance.”