Some analysts attribute this reduction to shareholders gaining the right to vote up or down on executive pay. Though the “say on pay” tally is nonbinding, supporters believe it is placing pressure on companies to be more conservative.
“Say on pay has made everyone more attuned to establishing a dialogue with shareholders ... as a result, you’ve seen a substantial decrease in problematic pay practices — excessive perks, tax gross-ups,” said Mark Borges, a principal at Compensia, a compensation consulting firm.
But critics point out the rich still got richer last year, as even a 2.5 percent rise was greater than what workers overall received. Compensations for private industry employees crept up 1.5 percent for the year, according to the Bureau of Labor Statistics.
And averages are just one measure. Median pay among Washington’s top executives actually shot up 22 percent to $3.1 million in 2011, according to Equilar’s analysis.
“Given that most workers only received a pay increase that barely kept up with inflation, executive raises in the double-digits is extraordinarily healthy,” said Brandon Rees, deputy director of the AFL-CIO’s office of investment.
Public companies in the region did curb cash bonuses and options last year, but instead gave leaders robust stock grants and higher salaries. Since the downturn, boards have given a larger portion of pay in stock and options to align executives’ potential payout with that of shareholders.
Stock grants, up 18.1 percent from 2010, are increasingly tied to company performance, meaning CEOs must meet set goals, such as generating higher profits or revenue, before cashing in shares. Area businesses, however, pulled back from awarding options, down 19 percent from the past proxy season.
“Options are not the best tools for aligning executive and shareholder interests,” said Charles M. Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware. “With restricted stock, if the company does poorly, you see wealth loss. If an option is under water, it just means you’re not going to get a big return.”
In the case of Zaslav, 84 percent of his compensation was derived from stock and option awards, much like the year before. Discovery’s stock was essentially flat last year, but the company credits its chief with tripling the share price from 2008 to 2011.